Last month, CBD company HempFusion Wellness (TSE:CBD.U)(OTCMKTS:CBDHF) shared big news regarding acquiring a presence on the world’s two biggest ecommerce platforms in Amazon and Tmall. CEO Dr. Jason Mitchell is back this week on The Dales Report to talk about HempFusion Wellness’ acquisition of Apothecanna.
Here’s some highlights from the interview.
HempFusion and Apothecanna: how it makes strategic sense
For those who may have missed the news, earlier this week, HempFusion signed a definitive agreement to acquire 100% interest in APCNA Holdings LLC – the producer of the brand name Apothecanna. Apothecanna’s product line features CBD body care and topicals.
Dr. Mitchell says, “What’s really special for us was that because they’re so hyper-focused on topicals – and we have been since our inception hyper-focused on ingestibles … it affords us a unique opportunity to literally infuse their company with an entire ingestible program.”
Apothecanna, Mitchell says, has been a brand in the CBD world since 2009, and is well-known and respected, having been recognized as the top CBD topical for a period of time. HempFusion, according to Mitchell, is the second most recognized brand currently.
How Apothecanna fast-tracks HempFusion Wellness’ plans
Roughly half of Apothecanna’s business is online, Mitchell says, and with nearly the same percentage of all CBD product sales generally happening online, acquiring companies with that model affords HempFusion an opportunity to accelerate their own actions.
The acquisition of HempFusion doubles their revenue right out of the gate based on 2020 reports. But it also creates a performance target for Apothecanna of between six and eight million dollars in the next 12 months. If they hit their targets, he says, which they’re highly incentivized to do, they will double in size as well.
Despite stock price tumble, Mitchell says that nature of what the company is trying to build is “solid”
He admits that the volatility on stock price has been frustrating. “The challenge is that people don’t realize the implications that regulatory headwinds have on the business as a whole, and the challenges that come with that,” Dr. Mitchell says.
The CBD industry has its challenges, part of which are the regulatory headwinds, as Mitchell puts it. But also, there are companies who “muddy the waters” by making health claims and who do not have the regulatory and quality standards that HempFusion makes a priority.
“We might be one of two or three companies ready for regulatory guidance from the FDA,” Mitchell says. HempFusion might be poised to have their standards pay off if the bills land in front of congress soon.