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Takeaways From The Palmetto Harmony And RE Botanicals Merger

August 22, 2019 10:04 am
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Takeaways From The Palmetto Harmony And RE Botanicals Merger

By Sean Octavius Murphy, Founder, Hemp Business Journal

Hemp Business Journal has been tracking Palmetto Harmony since its founding in 2015, and last year projected the Conway, S.C.-based outfit as a company to watch among those analyzed in The CBD Report. Given its developmental trajectory, the company's announced merger with RE Botanicals of Boulder, Colo., should come as no surprise to industry insiders.

Since the 2018 Farm Bill was signed last December, there has been a surge of mergers, acquisitions, and investment activity in the North American hemp industry. While much of the attention has been paid towards publicly traded companies, the Palmetto Harmony-RE Botanicals deal signals a new wave of private company deals poised to define the hemp industry for years to come. Such companies are expected to offer innovative and safe hemp-derived botanical and herbal products as organic alternatives to GW Pharmaceutical's isolate-based CBD drug, Epidiolex.

Palmetto Harmony was founded by Janel Ralph, who was inspired to start the company for her daughter Harmony, who endured severe and debilitating seizures (readers will note that Charlotte's Web was named by its founders in honor of Charlotte Figi).

Palmetto Harmony has a strong retail presence in the southeast U.S., and distinction as being among the first hemp-CBD companies to obtain USDA Organic Certification. Palmetto Harmony's products remain among the best of breed with strict adherence to organic farming, GMP processing certifications, and regulations set forth by the FDA for dietary supplements under the Dietary Supplement Health and Education Act (DSHEA).

Though Epidiolex is an FDA-approved (Schedule V) drug, and regardless of the U.S. government's 20-year-old patent on "cannabinoids as antioxidants and neuroprotectants", a consensus exists among many medical professionals seeking to conduct more clinical research, gather the resultant data, and gain clarity from the FDA before making any formal recommendations or determining official policy on hemp-derived CBD.

"We focused primarily on growing and manufacturing the highest quality organic products while building trust with consumers through transparency and integrity," Ralph said in announcing the merger.

Ralph added that while most mergers in the hemp industry are typically motivated by the desire to expand and improve shareholder value, one of the most significant factors in her company's merger was the shared values and vision held by the two companies. "[RE Botanicals founder and Chief Hemp Officer] John Roulac's shared values played a paramount role in my decision to merge," she said. "His passion for regenerative agriculture, the planet, and women-owned businesses is unwavering."

In addition to shared values, both companies recognized synergistic strengths. With an extensive national footprint, RE Botanicals can provide deeper market penetration, while Palmetto Harmony's production capacity offers greater control over the supply chain, both in terms of access and quality.

Though RE Botanicals has operated for little more than a year, the company has experienced explosive growth, growing from four retail locations in November 2018 to more than 1,200 outlets today. For context, the national retailer Walgreens recently began carrying CBD topicals products through approximately 1,500 stores; Tilray announced that Manitoba Harvest's broad-spectrum CBD product is being distributed to 1,000 stores; and the store counts for national distribution leaders CV Sciences' PlusCBD Oil and Charlotte's Web respectively totaled 4,591 (in June) and 8,000 (in August).

Under the merger agreement, the newly formed RE Botanicals, Inc., will access over 1,800 retail locations nationwide. Ralph will serve as Chief Operating Officer and be responsible for overseeing the company's cultivation and manufacturing facility in South Carolina, while Roulac will serve as Chief Operating Officer.

The privately held companies did not disclose their revenues to Hemp Business Journal, but the merged iteration is preparing for a Series A fundraising round, suggesting a post-money valuation of the newly merged company greater than $50 million, with estimated revenues exceeding $15 million by the end of the year.

With a quickly growing retail footprint, adherence to strict product quality and safety standards, and a robust supply chain built to meet the FDA's regulations for dietary supplements and USDA organic certification, RE Botanicals, Inc., is positioning itself to become an early leader in the U.S. hemp industry to serve consumers and patients alike for years to come.

Sean Murphy

Sean Murphy is Director of Hemp Analytics at New Frontier Data and founder of Hemp Business Journal. He is frequent speaker at hemp, cannabis and natural product industry events and source to the media on industry economics and investments, including Forbes, New York Times, The Wall Street Journal, Rolling Stone and Entrepreneur.com. Contact him at SMurphy@NewFrontierData.com

The post Takeaways from the Palmetto Harmony and RE Botanicals Merger appeared first on New Frontier Data.

Image Sourced from Pixabay

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