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TSX-V:WL

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.