Indiva Q&A
Deep Cell is a newer company but their R&D, innovation and product development is tremendous: they have patented a method to mechanically fuse cannabinoids with crystalline structures such as sugar (Ruby Sugar), salt (Sapphire Salt) or even Xylitol. The result is an all-natural product with zero additives: i.e. cannabis sugar or cannabis salt where the only ingredients, in Ruby Sugar for instance, are THC (or CBD, or both) and cane sugar. Deep Cell has named this category “flexible edibles”. We loved the idea that clients could simply add sugar to their coffee or tea, or salt to their veggies or French fries, rather than smoking or vaping, or trying to find a specific product that suits their palate. With flexible edibles, consumers can simply add Ruby Sugar or Sapphire Salt to their favourite foods. The product dissolves wonderfully and the taste does not have a “cannabis flavour” per se. So we think this product can be somewhat disruptive as a way to either consume or even cook with cannabis. One last element we are excited about is the idea of potentially selling these products in licensed establishments, as the law evolves and permits. It is highly doubtful that Canadians will be allowed to smoke cannabis in a public setting or establishment, be it indoor or outdoor, given current anti-smoking by-laws. However, the ability to put sugar in your coffee is neither forbidden nor offensive to others in a coffee shop or restaurant, for instance. So this category of “flexible edibles” could also enable viable venues for public consumption as well.
For the better part of a year now, we have been inundated by the short sellers, contrarian funds, and also by those who just want to see this industry fail telling us how over-valued the industry is and more often than not using Canopy Growth as their measuring stick because of its then $6B market cap.
Canopy’s shares are up over 37% YTD whereas the greater cannabis index is down over 30%. Constellation Brands just injected $5B for an additional 28% ownership. This deal, if approved by all sides including our Federal Government, allows for another 13% to be purchased by means of warrants for $4.5B.
I would never ask or expect you to comment on that transaction or on Canopy Growth … rather, what does that deal tell current and prospective investors about this industry’s valuation? That is to say, and not to lead the answer, would you concur with those who say the entire is extremely over-valued and used Canopy’s $6B valuation as their basis? Readers, pay attention because INDIVA’s share price at time of writing has been steadily increasing for some time now …
68