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Valens Exec: Cannabis Oil Market Is Being 'Substantially' Underestimated

June 18, 2019 1:30 pm
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Valens Groworks Corp (OTC:VGWCF) is working to make a mark in the areas of custom manufacturing and white label services in cannabis.

Everett Knight, executive vice president of strategy and investments for Valens, spoke with Benzinga after Health Canada released its initial rules on edibles and concentrates.

Knight said he supports 60-day application periods: "It's not always about getting products on the shelf. It's about getting quality product that the consumers want."

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A Third-Party Strategy

Valens has released its own news of late, including the enhancement of a prior deal with Tilray Inc (NASDAQ:TLRY).

The new terms saw an increase in Valens' minimum production for Tilray from 15,000 to to 60,000 kilograms.

“If you look at this agreement, it's really the first agreement we've kind of come out with and said, ‘hey, we're going to do custom manufacturing for this client and we've been really building out our white label services.’”

Valens is ahead of its own expectations for white labeling and sees it ramping up as additional products become available, Knight said.

"We believe we are going to be the largest third-party vape pen and cartridge filler and manufacturer in Canada."

Customization represents an important aspect of the company's business, as it shows its ability to white- and private-label a growing list of products for its clients, the exec said.

Cannabis 2.0

In addition to the Tilray deal, Valens has 10 publicly announced concentrate contracts, including with Hexo Corp (NYSE:HEXO), OrganiGram Holdings Inc (NASDAQ:OGI) and Canopy Growth Corp (NYSE:CGC).

With Canada's regulations set to expand, Knight said he sees the corporate relationships as critical.

"They're one of the biggest platforms for products today," Knight said of Canopy Growth. "And if you look at going to edibles and concentrates, they're going to be there as well. We're just really excited to do extraction services with them and build that relationship going forward."

This is the year of Cannabis 2.0, Knight said.

He expects the market share for oil-based products to grow, sending the segment's 50% share in the U.S. today to around 75%.

"I think people are underestimating that market substantially, especially when you get in the CBD space," he said.

Valens continues to focus on extraction technology and product development for clients rather than vertical integration, Knight said.

Related Links:

Valens, Tilray Increase Extraction Volume, Add Manufacturing Option To Contract

Valens GroWorks, The Green Organic Dutchman Sign Cannabis, Hemp Extraction Agreement

Public domain photo via Wikimedia.

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