OTCMarketsinsider.com News Commentary
There has been a wave of acquisitions and investments among Canadian and U.S. listed cannabis and hemp companies in 2018, and there is no indication that it will change in 2019. Interest has piqued in the space following the widespread legalization of recreational and medical marijuana, the full legalization of marijuana in Canada, and the Passage of the 2018 Farm Bill Legalizing Hemp and CBD, investors should take note of the M&A climate that is bound to heating up in 2019.
The beverage industry is one sector that is poised to see a flurry of M&A activity. Canaccord’s Bobby Burleson and Jonathan DeCourcey claimed that infused beverages could be poised to outpace general demand for marijuana products by two fold, taking 20% of the existing market for cannabis edibles by 2022.
Here are some of the highlights in 2018 of cannabis companies partnering with large beverage industry players:
— Coca-Cola says it’s monitoring the nascent industry and is interested in drinks infused with CBD, the non-psychoactive ingredient in marijuana that treats pain but doesn’t give the psychoactive effects of THC
— Corona beer brewer Constellation Brands Inc. announced it will spend $3.8 billion to increase its stake in Canopy Growth Corp
— Molson Coors Brewing Co. is starting a joint venture with Quebec’s Hexo Corp., formerly known as Hydropothecary Corp., to develop cannabis drinks in Canada
— Diageo PLC, maker of Guinness beer, is holding discussions with at least three Canadian cannabis producers about a possible deal
— Heineken NV’s Lagunitas craft-brewing label has launched a brand specializing in non-alcoholic drinks infused with THC, marijuana’s active ingredient
American Premium Water Corp. (OTC:HIPH) could be one of the most logical takeover candidate in the cannabis beverage industry after Coca-Cola Co. said it’s eyeing to enter the CBD market, becoming the latest beverage company to tap into surging demand for marijuana products as traditional sales slow. Coca-Cola says it’s monitoring the nascent industry and is interested in drinks infused with CBD.
“We are closely watching the growth of non-psychoactive CBD as an ingredient in functional wellness beverages around the world,” Coca-Cola spokesman Kent Landers said in a statement to Bloomberg News.
American Premium Water Corp began selling its LALPINA Hydro CBD product on August 27th on its website and select retail channels. The Company recently announced a fulfillment and distribution agreement with Growpacker (www.growpacker.com) that will provide the Company the capacity and network to fill the burgeoning demand for CBD and THC infused products in 2019. The Growpacker agreement provides a direct link to California dispensaries, which is a key channel for the Company, considering they announced the acquisition of proprietary infusion formulations, including THC. The Company is the first public company to have any form of infused THC product.
This proprietary Hydro-Nano infusion technology, which the Company also has CBD and energy formulations, allows the consumer to have up to a 90% higher absorption rate than regular infused beverages. This Company could be the biggest bargain of them all, as it recently closed below $0.04, well below it’s recent price target of $0.30 by SeeThru Equity.
SeeThruEquity analysts have placed a price target on HIPH common shares at $0.30, which represents a potential upside of over 800% from the recent price of $0.032 on Dec. 26th, 2018. In the report, the firm further outlines expectations for the Company, as the launch of its CBD beverage enables HIPH to enter the large and rapidly growing CBD market, which, in the U.S., generated sales of $820 million in 2017 and is projected to grow at a compounded rate of 54% to reach $3 billion by 2020, according to Greenware Advisors.
It has been reported that the Company has already been engaged in discussions with NASDAQ listed beverage companies. The Company’s proprietary infusion technology is attractive to many of the players in the beverage industry who could license it in a strategic partnership before acquiring the company, a “try before buy” scenario. An agreement in this structure would bring significant awareness and revenue to the Company, which would most likely significantly increase shareholder value
With lots of proprietary technology and an established brand, American Premium Water Corporation will be receiving a lot attention from industry players looking to get into the CBD space. Now is the opportunity to take advantage before one of the larger guys beats the small investor to the punch.
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