Canada-based CPG cannabis company HEXO is eyeing a spot in the top three of global cannabis players. The firm is banking on the strategy of forging partnerships with Fortune 500 companies to meet their vision.
HEXO Company Overview
HEXO was incorporated as The Hydropothecary Corporation in 2013, by CEO and co-founder Sébastien St-Louis. He expects to spend about $6 billion within the coming decade to propel the cannabis company to the desired spot.
HEXO’s footprint spans across 1.8 million square feet of production facilities in Ontario and Quebec. The company’s production center based in Belleville, Ontario is also a manufacturing center-of-excellence and is slated to receive the product from all cultivation sites operated by the company.
HEXO Cannabis Markets
The firm sells its products all across Canada with Quebec, Alberta and, Ontario commanding maximum sales. HEXO operates under a license in Greece and aims to use its presence to expand to other EU markets like the U.K. and France.
HEXO has planned to expand its footprint to eight U.S. states by 2020. Hemp-based products are the focus for these states.
Distribution Scheme
HEXO aims to capitalize on the well-established international distribution system of the Fortune 500 firms. It is collaborating with players of the likes of Molson Coors. It is a symbiotic relationship. HEXO supplies expertise and technology and gains the distribution network in return. Molson Coors is the leading beverage distributor in the U.K.
Opportunities
The Canadian firm is targeting product launches across categories like edibles, vape oils, beverages, and health & wellness.
St-Louis is aiming to make it big in the cannabis beverage segment by offering superior quality. HEXO’s beverage is intended to taste good and have a consistent effect and a quicker, less-than-ten-minutes onset. Come December, HEXO’s beverage line will be available in Canada. Molson Coors will provide the network required for making deeper inroads into the U.S. market.
Investment
St-Louis believes that careful deployment of capital is the key to success. R&D, manufacturing and growth initiatives are the areas commanding maximum focus and investment.
Financials
HEXO is listed on the NYSE and has a share price of $4.18 up from 1.48 in Q1 2017. The share made a 52-week-high in April this year at $7.8 apiece.
Road Ahead
Development of product and associated technology is a key focus area for the company to achieve its goals. The company is in active conversations with other Fortune 500 companies to bank upon their strengths.
St-Louis anticipates product effectiveness as a major entry barrier in the coming times. To lead the technology race, HEXO has an in-house team of 30 chemists and PhDs researching to further improve their offering. Odorless, tasteless products with a higher shelf life and faster-onset are the intended targets.
HEXO is also working on a “diet” product which is non-psychoactive and acts as an appetite suppressant.
Cannabis, also known as marijuana, was legalized in some U.S. states in 2018 and is slated to become a multi-billion dollar market. Widely misused as a recreational drug, marijuana has intoxicating properties. Many of the products offered legally are free of THC, which is the active ingredient of marijuana and is responsible for the intoxicating effects.
