Creso secures funding for entering into the fast growing Edibles market
Creso Pharma (ASX:CPH) has raised A$17.5 million following a significantly oversubscribed placement.
The capital will enable Creso Pharma to pursue further opportunities in the hemp- and cannabis- derived Edibles space, with introduction of terpene-infused premium Swiss chocolates.
Terpenes are essential oils (organic compounds) found in plants that carry flavour and aroma. The terpenes in the chocolates will carry the characteristic odour and fragrance of cannabis with the same taste and feel but in reality they originate from other plants. This is a huge advantage as it gets around the issue of regulatory restrictions.
Terpenes are safe molecules and are recognized as Safe Food Additives by both US FDA and by the Food and Extract Manufacturers Association and other world regulatory bodies.
Creso has entered a partnership with Swiss chocolate company Aeschbach Chocolatier to develop a premium-level range of unique terpene-infused chocolates.
The two companies plan to distribute the products globally, as made possible by the varying legislative and regulatory changes occurring across multiple developed countries.
It is early stages in this partnership and investors should seek professional financial advice if considering this stock for their portfolio.
Creso is very conscious of legal obligations in all jurisdictions and will only distribute products strictly in compliance with local laws.
Aeschbach Chocolatier is a Swiss company with a significant presence in Europe, which has been creating high-end chocolate and confectionery specialties since 1972. It has the multiple certifications including Controlled Sustainable Cultivation, Certificate for Organic Production, Food Safety System Certification, and Certificate for Fair Trade.
Aeschbach will provide technical expertise, facilities, special ingredients (such as exotic spice mixes), as well as consumer palatability and preference testing settings for the development of new products.
CPH will provide the terpene ingredients and will finance the joint technical development. Once the product has been developed and tested, the parties have agreed to an “on-margin sharing” methodology (agreed in good faith and with mutual interests) regarding ownership of relevant intellectual property rights.
Growing facility to be fast tracked
Along with strengthening its position in the hemp edibles space, the A$17.5 million capital infusion is to be used to fast-track the construction of its medicinal cannabis growing facility in Nova Scotia, Canada. Construction of the facility has already commenced and follows the company’s acquisition of Mernova earlier this year.
CEO and co-founder of CPH, Dr Miri Wernli said: “We are a global leader in cannabidiol innovation and developing hemp and cannabis derived products. Our approach is to partner with industry and technology leaders to develop and commercialise innovative products which will capture the consumers’ imagination.
“Entering the edibles market exemplifies this approach and will build on our scientific and technical expertise as well as on our vast geographical reach for commercialization.”
One of the company’s key commercial markets is likely to be the US, but Creso is very conscious of legal obligations and will only distribute products strictly in compliance with local laws.
CPH Non-Executive Director Dr James Ellingford said: “Early discussions with distribution partners in the USA are moving quickly and have proved most encouraging. We are working hard to achieve a first-rate product targeted towards discerning upper middle-class business people, the fitness conscious and those who simply enjoy experiencing something truly unique.”
Cannabis market update
The cannabis industry in the US was worth an estimated US$7.2 billion in 2016 and is projected to grow at a rate of up to 25 per cent annually. As more US states legalize cannabis for recreational use, edibles like the one CPH is currently developing are generating attention and interest.
In California alone, consumers purchased more than US$180 million worth of cannabis-infused food and drinks last year — which was 10 per cent of the state’s cannabis sales, according to Arcview Market Research.
Sales of pot-infused treats increased 121 per cent last year in Washington state where recreational marijuana is legal. Since Colorado first allowed recreational cannabis use, sales have tripled from US$17 million in Q1 2014 to US$53 million in Q3 2016.