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CanaFarma Hemp Products Corp poised to be industry leader in rapidly growing market driven by its own brand machine

Snapshot

The company offers a range of hemp-related services, including growing, processing, and selling hemp-based products to consumers

Canafarma -

Quick facts: Canafarma

Price: 0.4 CAD

CSE:CNFA
Market: CSE
Market Cap: $76.8 m
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  • Uses direct-to-consumer (DTC) marketing engine for sales
  • US hemp CBD Industry projected size to increase 40-fold by 2022
  • Experienced management

What Canafarma Hemp Products does:

Canafarma Hemp Products Corp (CSE:CNFA), based in New York, wants to be an industry leader in the branded hemp product space.

Describing itself as a 'full-service' company, it offers a full range of hemp services, including growing, processing, and selling hemp-based products to consumers.

Significantly, in that last strand, the firm uses a direct-to-consumer (DTC) marketing engine. In simple terms, this generates internet-based sales by using affiliates - websites, influencers - to drive traffic to the Canafarma products. The firm says this method bypasses traditional retail hurdles and can be scaled up rapidly.

The US 2018 Farm Bill has opened up a huge opportunity for hemp-based products in the states, CanaFarma has noted, and with an 18.4% compound annual growth rate (CAGR) expected between 2018 and 2022, hemp-sourced CBD is outpacing medical and recreational marijuana.

CanaFarma, which is led by an experienced management team, says it has a vertically integrated ‘farm-to-table’ strategy and creates high-grade hemp-based formulations supported by science and innovation.

It sells seven SKUs (stock-keeping units) and brands include YOOFORIC, a hemp oil-infused, gluten and sugar-free chewing gum, a YOOFORIC oil tincture and an infused cream for joint and muscle pain, HERBAL STATE OF MIND in a tincture and a cream format.

How is it doing:

In April this year, CanaFarma inked a letter of intent to purchase a 25,000 sq ft facility in New Jersey from an unnamed private company, where it can potentially expand its use to manufacture its YOOFORIC hemp oil-based consumer goods. So far, it has been using a third party manufacturer.

In May, the firm said it expects to launch a new hemp oil-infused cream to combat skin conditions, specifically acne, by the end of the second quarter and also announced that it is expanding its marketing strategy through the creation of Confectionary, Beauty and Pain Relief categories for its hemp oil-based products.

Confectionary will deliver its chewing gum and confectionary-based products; Beauty incorporates acne solutions, face creams and serums; and Pain Relief includes topical creams and oils.

On May 20, the group explained the metrics-based analysis it uses to ensure that its sales efforts boost efficiency and contribute to the bottom line, noting that the right metrics make a difference.

It revealed that analysis from June through to November last year, which tracked the introduction of its YOOFORIC hemp-infused chewing gum, had yielded strong results.

The company said unique customer count grew an average of 75% per month, while unique customer order count grew an average of 96% per month. Most importantly, gross revenue grew by an average of 103% per month.

On the financing front, in May, CanaFarma announced a private placement to raise up to C$28.3 million (US$20 million) to fund the potential acquisition of manufacturing and extraction facilities, increase the acreage of its grow business, and for a scaling up of its sales and marketing activities.

And in April it promoted seasoned executive Frank Barone to the role of chief operating officer (COO). He has co-founded several consumer goods and services companies, including Barmensen Development, Next Gen Health Solutions and Associate Design LLC.

Inflection points:

  • More product development, deals and tie-ups
  • More sales activity

What the boss says:

CanaFarma chief executive David Lonsdale spoke to Proactive on May 14 and explained how there were four pillars to the group's business -  a grow operation, a manufacturing component, an extraction facility and the sales and marketing effort.

On the group's potential acquisition of the New Jersey facility, he said: "We recognize the importance of growing right from the seed. We realize that we will have our own extraction facility to take the seed to oil. We will then use that oil in the manufacturing of our own consumer products, then selling it through our direct to consumer sales engine, so we are very focused on the vertical integration of those components of our business."

On sales potential, although the firm has not put out any had forecast numbers, Lonsdale said: "We saw extremely rapid growth during the first six months." He added: "We certainly are expecting significant growth in our revenue as we move forward."

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