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Westleaf Cannabis Announces Aggressive Canadian Retail Expansion with Experiential Music Partnership


PHOTO: WESTLEAF INC.

Calgary-based Westleaf Inc. is taking the unique relationship between cannabis and music to grow its Prairie Records retail brand across the country.

Adam Coates who has been spearheading the retail rollout as the company’s Chief Commercial Officer, said the online ecommerce has also been launched recently.

The two Saskatoon stores, both in premium locations, are planned to open in time to celebrate April 20, the day associated with the push to legalize cannabis in Canada.

PHOTO: WESTLEAF INC.

“After the two stores in Saskatoon, we have an opportunity to open another store in Swift Current, Saskatchewan, which will happen this summer likely and then we’re building out storefronts all over Alberta and B.C. With where the AGLC (Alberta Gaming, Liquor and Cannabis Commission) is at right now with not releasing any more licences, we’re busy building out the stores to meet regulation and security requirements and as soon as the AGLC will start issuing more licences we will be in a position to open more stores and enter Alberta,” said Coates.

“Same thing with B.C. We’re going through the different regulators – the B.C. government and the municipal level as well – to hopefully start building and opening stores in B.C. this year . . . We’re planning to open, in 2019, 25 stores and then plan to open as many as 50 stores by the end of 2020. Right now we’re focused on Saskatchewan, Alberta and B.C. and if there’s an opportunity in Ontario, once they start opening up more licence opportunities in Ontario, we plan to have a number of stores in Ontario as well under the Prairie Records brand.”

Westleaf says Prairie Records is focused exclusively on densely populated neighbourhoods, high traffic areas, and tourist destinations and retail stores will be situated in some of the most premium retail locations across the country.

photo: prairie records via facebook

The foundation of the retail concept is ingrained with a desire to create a unique cannabis purchasing experience through tactile in-store features and product offerings that celebrate the relationship between music and cannabis.

“Prairie Records is really the reinvention of the cannabis purchasing experience and what we’ve really done is married cannabis and music together. They’ve been best friends for a long time and we’ve used that as our theme throughout everything that we do from store design as well as the overall consumer purchasing experience,” said Coates.

“So what you’ll find when you walk into a Prairie Records is that it looks like a modern day record shop. However, the bit of the difference is that it’s a cannabis shop. So in a record shop you’d see records. We have records in shelves and racks of records that you would see in any record shop but instead of finding your next favourite band or artist what you’ll find is your next favourite brand or strain of cannabis.

PHOTO: WESTLEAF INC.

“With this record cover concept, it allows us to create a more tactile and engaging consumer experience because right now based on regulations all product needs to be actually under lock and key. And the actual packaging is very restrictive in terms of lots of warning labels and only space for a very small brand element. So what we’ve done with the record covers is taken a lot of the information that you would want to see on the packaging traditionally and put that right on the record cover. We allow consumers to pick up records and explore and really kind of instill this sense of discovery.”

He said another unique store feature is how it organizes products on its record shelves by music type.

“We’ve categorized our store in three categories. One’s called Dreams, a classic Fleetwood Mac song. Walking on Sunshine and Just Dance by Lady Gaga. If you know nothing about cannabis but come into our store I think you should at least get a sense of the type of experience you can expect or the type of products that are in that category,” said Coates.

“And taking it one step further. In a record shop you can listen to music. Well our record shop is no different. However, instead you will listen to music but you’ll listen to the strain of a feature product. So on our top hits wall we have sensory jars that actually has the product inside so you look at it, smell it and the record cover where you can learn a little bit more about the actual product itself and the headphones you can put on where you can listen to a curated playlist that will give you a sense of the mood or the type of experience that you could expect. Really bringing in a lot of sensory in a really immersive experience is really what we’re about as well as providing a really wide range of a great selection of cannabis products.”

The vertically-integrated company also is building a purpose-built indoor cultivation facility in Battleford, Saskatchewan which will be operational by the end of September this year. It also has an extraction processing and manufacturing facility in Calgary which will be completed later this spring.

“Saskatoon and all of Saskatchewan, is proving to be one of the strongest cannabis retail markets in Canada as the sector continues to evolve and mature,” said Scott Hurd, President and CEO of Westleaf. “We have the opportunity to deal directly with licensed producers in stocking our shelves, we are able to sell online across the province through our e-commerce platform, and the ratio of stores to market size make Saskatoon an ideal location to operate cannabis retail.”

PHOTO: WESTLEAF INC.

Recently, Westleaf announced it had entered into an exclusive partnership with cannabis leader Xabis to provide expertise to Westleaf’s Calgary cannabis extraction and production facility. The facility formerly known as Delta West, will be rebranded The Plant by Westleaf Labs. The extraction and production facility under construction in southeast Calgary is expected to produce cannabis derivative products and, after legalization of such products which is expected later this year, consumables, topicals and other cannabis infused products, subject to and in compliance with provincial and federal regulations.

Xabis is a Colorado-based cannabis processing company which provides turnkey operations for companies in the mid-stream of the cannabis industry.

“This partnership is another part of the execution on Westleaf’s strategy of becoming a significant vertically integrated player in the Canadian cannabis industry,” said Hurd.  “We believe a diversified offering of derivative cannabis products will account for a major shift in consumer demand once legal. We are positioning to formulate unique, high quality derivative products and bring in the best minds in the industry to help leverage our expertise in building and running these types of facilities.”

PHOTO: WESTLEAF INC.

Westleaf also recently announced that the Town of Banff has approved its development permit for a flagship retail location in the heart of Canada’s most visited national park. The location on Caribou Street just off famed Banff Avenue, will be developed as a flagship in the Prairie Records brand of cannabis stores.

“Premium retail locations are the cornerstone of our vertically integrated strategy and which we believe uniquely differentiates Westleaf by providing access to wholly owned distribution channels,” said Scott. “We have built our Prairie Records retail brand to be a superior retail experience and have focused on locations with high foot traffic in urban centres and resort destinations. There are very few locations in Canada that tick off as many boxes as the Banff location does. If you have ever been to the intersection of Banff Avenue and Caribou Street on a summer weekend, you will know exactly what we are talking about.”

The store will be in the basement of the historic King Edward Hotel which was built in 1904 and is the second oldest hotel in Banff.

Westleaf Inc (CVE:WL) Partners with Xabis Inc for Extraction Expertise


Westleaf Inc (CVE:WL) CEO Scott Hurd provides an update on the company’s retail strategy and continued rollout in Alberta and Saskatchewan. Westleaf has closed its acquisition of Canndara Canada Inc, a pure play retailer. The deal complements Westleaf’s existing retail portfolio while helping the company scale quickly. The company has consolidated 100 percent interested in its R&D, extraction, processing, manufacturing, and fulfillment centre in Calgary. Westleaf recently announced a deal with Colorado-based extractor Xabis Inc. Xabis will provide extraction expertise to Westleaf’s Calgary facility, which will be rebranded as The Plant by Westleaf Labs. Hurd reveals the company will continue its retail rollout across Alberta and Saskatchewan through its Prairie Record stores.

Transcript:

James West: Scott Hurd joins me now. He’s the CEO of Westleaf Cannabis, trading on the TSX Venture under the symbol WL. Scott, welcome back.

Scott Hurd:   Thanks, James.

James West: Scott, sounds like you’ve had a lot going on. Why don’t you give us a rundown of all that has transpired for Westleaf since we last chatted?

Scott Hurd: So, since going public in early January, we continue to execute and advance our vertically integrated strategy, with really a core focus on premium retail distribution. Notably during the quarter, we acquired a pure play cannabis retailer called Canndara, which provided us significant scale in high quality premium locations that are complementary to our existing portfolio. We secured options to purchase three additional cannabis retail locations in Saskatchewan; we announced one of our flagship locations in Banff, Alberta, which is a tourism mecca in Canada, sees over 4 million visitors a year. And we opened our first Prairie Records location in Saskatchewan, and we announced the opening of two more locations in Saskatoon prior to April 20th.

James West: Yeah, okay, so you’re really building out on the physical retail location model in a big way.

Scott Hurd: We’re pursuing a vertically integrated model, so we’re one of the very few companies that is owning and developing assets across the entire cannabis value chain, from cultivation, extraction, processing, and then right down to wholly owned retail. Notably during the quarter, we also consolidated 100 percent interest in our R&D, extraction, processing, extraction and fulfillment centre in Calgary, and we recently announced an exclusive Canadian partnership with a global leader in cannabis derivative product formulation and manufacturing, called Xabis, out of the US.

James West: Right.

Scott Hurd: This group has operated four supercritical CO2 extraction facilities. They’ve designed about a dozen. And they’ve formulated over 200 distinct cannabis-derivative based product skus. So we’re really leveraging that expertise to be ready with a diversified offering of high quality derivative products when that market opens up later this year in Canada.

James West: Yeah, great. And so, from where you sit, that seems to be happening according to schedule, and it will in fact roll out on October 17th? And if so, what does that all look like?

Scott Hurd: I mean, we’re preparing to be ready for October 17th. We don’t have a formal date yet from the federal government on when the full suite of derivative products will be available, but we’re excited to be offering different modalities of consumption to consumers beyond just the consumption of flower today, and we think that’ll be a large growth segment of the market, and we’re well positioned to serve it.

James West: Fascinating. Tell me about the Prairie Records thing – that sounds like almost social cannabis. Is it the kind of place where you can go listen to be a record you might be interested in as well, while you sample some cannabis products?

Scott Hurd: So our concept for cannabis retail is very unique and different, and I introduced that to you back in January. Our concept’s called Prairie Records, and what Prairie Records really is, is a reinvention of the cannabis purchasing experience that leverages the instinctual tie between recreational cannabis and music in a sophisticated yet approachable environment that we think will appeal to a wide variety of consumers.

Everyone has a relationship with music, and it’s through that relationship and Prairie Records that we think we can align and engage with consumers in ways our competitors can’t. So when you come into our stores, you’ll see a lot of the typical things you’d find in a cannabis retail shopping journey, meaning, the digital assets, the sales associates with iPads. But in our stores, you’ll actually find records, and these are not albums; they’re actually strains of cannabis and products, and they’re effectively a giant brand card. But if offers the consumer a tactile, educational and engaging shopping experience, but also serves as a really interesting medium to showcase brands and give them dimension.

So what we do is, we take all the brand elements that a producer would have wanted to put on their packaging but they can’t; we put it on a record in-store. It’s a really interesting way to give dimension to a brand in an otherwise very regulated and sterile shopping environment.

James West: That sounds very intriguing. I’m going to go on a road trip just to check that out this summer.

Scott Hurd: I don’t know what your plans are for 4/20, James, but we’d love to have you out and host you for a grand opening in Saskatoon.

James West: That sounds like that would be a riot. 4/20 – that’s April 20th, right?

Scott Hurd:  Yeah.

James West: Yeah, I don’t know, maybe! That would be intriguing. I do have reason to be out on the west coast a couple times. All right, Scott, why don’t you tell me a little bit about this Xabis relationship that you have, because that sounds intriguing, as well.

Scott Hurd: So we’ve partnered with Xabis, which is really a global leader in cannabis product formulation and manufacturing. They operate four supercritical CO2 extraction facilities across the US, they’ve designed about a dozen facilities, and notably, they’ve manufactured over 200 distinct product skus. And we’re really leveraging that expertise to bring a high quality, diversified offering of derivative products to the market later this year.

James West: Very cool. All right, so then, what are the big – what are your big milestones coming up yet this year?

Scott Hurd: 2019 is really the year of execution and operationalizing our business. Our current plan has us opening upwards of 20 retail locations by the end of Q3 this year, as well as operationalizing our lab and our cultivation facility.

James West: Very cool. And do you guys have an ambition towards international playing, or are you just focused on Canada right now?

Scott Hurd: We’re really focused on executing domestically within Western Canada right now. We do have an in-house M&A team and we’re constantly evaluating new opportunities, but right now it’s really focused on execution.

James West: Very cool. All right, Scott, when are you in Toronto next? We’ll have to have you in the studio.

Scott Hurd: I should be out there next week; I’ll drop you a note and confirm my travel dates.

James West: Yeah, sounds good.

Scott Hurd: Would love to connect in person again.

James West: You bet. Scott, it was great to talk to you again. We’re going to leave it there for now; thanks for joining me today.

Scott Hurd: Thanks for your time.

Westleaf (WL.V) cannabis concept is music to the ears


In his influential 1949 book: The Organization of Behavior, Canadian psychologist Donald Hebb theorized that “one thought is more likely to trigger another thought” if those two thoughts are linked together multiple times in the past.

This concept has been employed to good effect in the world of branding.

When a Bronx, NY ice-cream manufacturer realised Americans associate Europe with delicious ice cream – it launched Häagen-Dazs – with those impudent umlauts (double dots) hovering over the first “a”.

Häagen-Dazs was more American than Harley-Davidson (HOG.NYSE) – but once that European association was made – it stuck.

The retail concept behind Westleaf’s (WL.V) Prairie Records acknowledges the nostalgic link between music and cannabis.

Hurd accepts that the current Canadian cannabis marketing regulations make it almost impossible to create powerful retail brands.  He’s bypassing that by creating a strong brand association between the customer and the store (rather than the product).

In a recent excellent interview with The Midas Letter, the interviewer James West blurted out: “Nine times out of ten when I went to a record store as a young person, I was high!”

“I first heard about the Prairie Records cannabis retail business model mid last year,” wrote Equity Guru’s Chris Parry, “And my first thought upon seeing it was, this will never be allowed. But here we are, and the first Prairie Records store actually exists now.”

On March 18, 2019, Westleaf (WL.V) announced the execution of a term sheet with a Colorado-based cannabis processing company, Xabis, whereby Xabis will lend expertise to WL’s Calgary cannabis extraction and production facility.

Xabis provides turnkey operations for companies in “the mid-stream of the cannabis industry”. Its team of PHDs and scientists manage all aspects of the extraction and manufacturing of cannabis infused products.

After Westleaf consolidates its interest in The Plant to 100%, the facility formerly known as Delta West, will be rebranded The Plant by Westleaf Labs.

Westleaf is anticipating the 2019 legalisation of cannabis derivative products (consumables, topicals and other cannabis infused items).

After receiving a green light from Health Canada, The Plant by Westleaf Labs is expected to produce cannabis derivative products.

Term Sheet Highlights:

Industry Leading Expertise – Xabis is a leader in design, construction and management of cannabis extraction and manufacturing facilities, as well as product development:

Xabis has developed more than two hundred product SKUs, including oil based oral solutions, gummy edibles, hard pressed tablets, water soluble powders, oil-based capsules, body melt capsules and suppositories.

High Margin Products – a diversified offering of derivative cannabis products will account for the majority of consumer demand. Westleaf is focused on product formulations to produce vape cartridges, edibles, beverages, and topicals to meet this expected demand.

Global Ambitions – The Plant is being built to EU Good Manufacturing Process (GMP) specifications to ensure export capabilities.

Scalability – The Plant’s 15,000 sq. ft. complex can be expanded to 60,000 sq feet. The design includes R&D, processing, extraction, manufacturing and order fulfillment. Construction is expected to be complete in summer 2019.

Multiple Revenue Streams – As well as diversified cannabis derivative products, Westleaf plans to offer white labeling services for 3rd parties, and contract manufacturing services for raw extract and distillation.

Vertically Integration – With cultivation, extraction, processing, manufacturing, distribution and 1005 owned retail assets, Westleaf is positioned to protect margins across the life cycle of the industry.

Xabis has designed, built, and operated facilities in 5 US states where medical or recreational cannabis has been legalized.

The move by Xabis into the Canadian market under an exclusive relationship with Westleaf.

Xabis services:

  • Complete on-site extraction and manufacturing operations
  • Compliance, inventory management, supply chain and HR
  • Facility & systems design and implementation
  • License application support
  • Product development

“We believe a diversified offering of derivative cannabis products will account for a major shift in consumer demand once legal,” stated Scott Hurd, President and CEO of Westleaf, “We are positioning to formulate unique, high quality derivative products.”

Brand round up:

  • ‘General Admission’ – targets the recreational adult market
  • ‘Loon’ – embraces health and wellness
  • ‘Backstage’ – premium label for the recreational user
  • ‘Westleaf Cannabis’ — medicinal cannabis for pain alleviation and healing.

Tilray (TLRY.Q) invested $2.9 million in Westleaf, Vivo (VIVO.V) invested $5 million, and ATB Financial committed $30 million.

“We are entirely focused on the plant-to-product portion of the value chain,” explains Dale Zink, CEO of Xabis. “From the end of the grow to the final processed product shipping out to the retail store or dispensary.”

“We are reinventing the cannabis experience by leveraging a tactile, musically themed, shopping journey through a record store-style concept,” confirmed Hurd in a Trend Hunter interview, “allowing consumers to engage and educate themselves on products.”

Full Disclosure: Westleaf is an Equity Guru marketing client, and we own the stock.

Disclaimer: ALWAYS DO YOUR OWN RESEARCH and consult with a licensed investment professional before making an investment. This communication should not be used as a basis for making any investment.

A Look at Westleaf (WSLFF)(WL:CA) and Vertical Integration in the Cannabis Industry


Vertical integration in the cannabis industry has strong benefits especially in states that are newly passing medical-based legalization. A few of the positive benefits of vertical integration is that on a regulatory side, inspectors do not have to spread themselves thin.Furthermore, as cultivators and retailers work together, the price of cannabis would continue to fall, which would benefit consumers in the long run. In addition, growers essentially have special access to consumers and their preferences, which allows them to track data more directly, and, in turn, make decision at the seed level about what strain to plant for the next harvest.

Westleaf’s Vertical Plan

One Canadian company that is moving fast in this direction is Westleaf WSLFF  (WL:CA[CDX] – $2.20 0.07 (3.08%)   ). First, on the retail side, the company has what we see as a very unique, high-end retail concept. Prarie Records is the name of Westleaf’s flagship retail concept and their first store will soon be opening in Warman, Saskatchewan.

The retail shop links cannabis and music by allowing customers to peruse cannabis strains and profiles like they would at a record shop. In a bin, cannabis descriptions will be printed on albums covers and will include playlists to accompany selections. The company will also have a matching e-commerce site that mimics the engaging in-store experience. Plus, the company is going to open another Prarie Records in Banff, the Albertan resort town, sometime this summer.

The company plans to follow a similar strategy focusing on high foot-traffic and tourist-packed areas. According to their investor presentation, Westleaf is targeting 30-50 retails shops across provinces that allow for vertical integration.

In that regard, the company is developing a series of cannabis brands that are flower or derivatives. At the moment, thanks to the development of their Thunderchild Facility (the cultivation site is located on lands owned by the Thunderchild First Nation and is anticipated to provide a source of long-term employment for as many as 150 people from the region) in Battleford, Saskatchewan, the company has 7,300 kg of flower in process, while 14,600 kg will be available after Phase 2 is complete, and, lastly, Phase 3 will top out at 29,200 kg.

Recently, the company also closed a term sheet with Xabis Inc. that will see the latter offer extraction expertise at their Calgary plant. This was another step in Hurd and Westleaf’s march toward vertical integration and we have a feeling more M&A announcement are up ahead.

Stirring the pot: This veteran went from the Air Force to the cannabis business


Shon Williams knew almost nothing about cannabis a few years ago.

The Air Force veteran’s only personal experience with marijuana was “one little puff” when he was in the ninth grade, which he said he dutifully put on his military security clearance. But when a cannabis company reached out to him on LinkedIn with a job opening, Williams gave it a look.

What he found was a product that he believes in and an industry where he could put his military skills to good use. He is now the chief development officer at Westleaf, a company based in Alberta, Canada, that grows, extracts and sells marijuana products.

“If you go into it with an open mind, you’ll see that people are really benefiting from this plant,” he said. “I’m not saying it’s nirvana and can solve all the world’s problems or anything, but there’s definitely a place for it.”

Williams graduated from West Point in 1994 with a degree in mechanical and aerospace engineering. He would later pick up two master’s degrees, one in astronautical engineering from the Air Force Institute of Technology and another in military operational arts and sciences from Air University’s Air Command and Staff College.

He began his Air Force career in 1994 and retired as a lieutenant colonel in 2014. During his military service, he did everything from flight-testing airplanes to modeling the effects of nuclear weapons to helping facilitate large-scale military sales of fighter planes. Williams also deployed to Afghanistan during his last five years in the Air Force.

“You spend 24 years in uniform, you do a few things,” he said.

Williams even applied and got called in to interview with NASA to be an astronaut, though that ultimately didn’t pan out, he said.

His first job after the military was at an aerospace company. Soon after taking that job, a recruiter from the Denver-based cannabis company Mjardin Group messaged him via LinkedIn. The recruiter was looking for someone based in Denver and from outside the industry to join their team, Williams said.

“When the first company contacted me, I was like, ‘Why would they want somebody like me?’” he said. “But I realized that as the industry matures, it’s a real business and needs people of all kinds of skill sets.”

He took that position, and a year and a half later, he left to start his own cannabis company, with a few friends and colleagues. Ten months after launching that endeavor, Williams sold his company and joined forces with Westleaf.

His military skills have translated well to the cannabis industry, he said, especially his experiences leading, doing organizational tasks, working in the engineering field, and designing and managing programs.

“If you’re going to run a good business and be able to compete with others and deliver good quality products to people that are safe … I found them to be surprisingly transferable and really good skills to have,” he said.

Westleaf is currently looking to expand throughout western Canada, Williams said. It’s constructing a new factory in Saskatchewan, opened its first retail store in January and has another 25 stores planned to open by the end of the year.

There are no current plans to expand to the United States, according to Williams, due partly to the stricter marijuana laws.

Unlike the U.S., both recreational and medical marijuana are legal throughout Canada. Thirty-three states have currently de-criminalized marijuana in some form, and of those, only 10 plus Washington, D.C., have legalized it for both medical and recreational purposes.The Department of Defense has only just begun looking into whether it will allow military personnel to invest in cannabis companies while maintaining a security clearance.

Marijuana is currently classified by the U.S. Drug Enforcement Administration as a Schedule 1 substance, or one the government has decided doesn’t have any medical benefits and can be easily abused.

Williams said he used to believe that marijuana was “a bad drug that’s akin to heroin.” Now he’s convinced that it can help people, including veterans dealing with symptoms related to PTSD.

“The more I’ve learned about the plant and talked to people, I’ve come 100 percent to the conclusion that it doesn’t belong in Schedule 1,” he said. “I’m not saying there are no negatives to it, but overall it has a very important place in some people’s lives.”

He encouraged anyone skeptical of its potential medical benefits — who just consider cannabis companies to be glorified weed dealers — to research before they make a judgment.

“I hope that myself and people like me that aren’t long-time cannabis folks can help to change that stigma,” he said. “I’d also say to people to do their homework. There’s literature about it … Put a body of evidence together for yourself.”

Williams also advised veterans interested in pursuing careers in cannabis to “play to their strengths” that they picked up in the military, just like he did.

“Just have fun with the journey,” he said. “It’s an exciting industry and an interesting plant.”