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Canafarma Hemp Products boss looking to build a major player in the hemp, cannabis industry

The firm is a vertically-integrated start-up, which grows, then manufactures, markets, and ships its own hemp-based full spectrum cannabidiol (CBD) products

Canafarma -
The hemp-sourced CBD market in the USA is projected to reach an eye-watering US$24.4 billion by 2025

David Lonsdale has spent his career in 'disruptive technology' so perhaps it’s no surprise that he now finds himself in the vanguard of a potential multi, multi-billion dollar new global industry.

Previously, the experienced executive and entrepreneur developed and sold three venture-funded technology firms to Microsoft, Sun Microsystems and Click Commerce. He also ran private investment bank Allegiance Capital for ten years, honing his skills at asset buying and selling.

It was after he founded his own boutique investment firm The Lonsdale Group, that he came across and ultimately was asked to become the CEO of CanaFarma Hemp Products (CSE:CNFA).

The firm is a vertically-integrated start-up, which grows, then manufactures, markets, and ships its own hemp-based full-spectrum cannabidiol (CBD) products.

The phyto cannabinoids derived from the hemp plant, and their ability to supplement the endo cannabiods which exist in the human body has been described as a "dawning of a new industry". While Medical Science has some catch-up work to do, it is already obvious that there are a multitude of benefits that accrue to the body from CBD.

In December 2018, the US Farm bill made hemp and the cannabinoids derived from it legal, on the condition that the THC hallucinogenic element content was less than 0.3%. This meant a huge opportunity for CanaFarma.

The landscape in the US for CBD is still a little complex in how it can be used, however, since the Food and Drug Administration (FDA) has still not approved it to be used in food currently, despite the Federal legalization.

That said, the hemp-sourced CBD market by 2025 in the USA is projected to reach an eye-watering US$24.4 billion and Lonsdale already reckons that's 'under-egging' it.

There are four prongs to the CanaFarma business -  a grow operation at a 100 acre hemp farm in upstate New York, an extraction capability, a certified manufacturing unit, and a proprietary direct-to-consumer sales and marketing effort.

"Medical science has miles to go in terms of catching up with why any of this works and the regulatory authorities have a long way to go as well," says Lonsdale.

He is already clearly a convert to CBD's benefits. He cites a UK report from earlier this year, which states that CBD is known to assist with reducing anxiety in humans, nausea associated with chemotherapy and spasticity associated with the illness multiple sclerosis (MS). 

So far, CanaFarma has started out with a small but successful group of products, which, as Lonsdale highlights, have been developed based on science - the group retains a team of full-time R&D scientists - and it has certainly already become a disruptor in the space.

CanaFarma's products can be broadly divided into three areas: confectionary, beauty and pain relief.

The company currently sells seven SKUs and its brands include YOOFORIC, a hemp oil-infused, gluten and sugar-free chewing gum, with an 84% absorption rate of CBD, a YOOFORIC oil tincture and an infused cream for joint and muscle pain, HERBAL STATE OF MIND in a tincture and a cream format. It is also developing a cream for acne and is set to launch two new hemp oil-infused chewing gums in July this year.

The group also expects to begin manufacturing a center-filled gum, an extension to its YOOFORIC hard-shelled gum which was launched a year ago and generated C$70,000 in sales in the first month alone, and by month six achieved sales of over $750,000.

Lonsdale is quick to emphasize, however, that this was no flash-in-the-pan and CanaFarma is here for the long game. He is keen that regulators and the medical profession catch up with understanding the CBD space, as it will show the quality of the company's offering.

"A lot of people think of the hemp, cannabis market as a get-rich quick scheme. We are not here for a get rich quick scheme. We are here for the long haul. We're here to build a major player in the industry," he says.

Key to Canafarma's business and the sales success enjoyed so far is its 'direct to consumer' model, which allows it to use an established network of affiliates - influencers, bloggers - which then promote its products.

Lonsdale says two of CanaFarma's executives have 20 years' experience in this field. It means the firm pays for an actual sale rather than leads, which, though more expensive, gives certainty to revenues gained.

"We can dial up and dial down the number of sales that we make. If we have good science-based products and we can get to a consumer and the consumer likes the product, then we're off to the races," he says.

Millennials, which are also the main target audience for CBD products, make over 50% of their purchases online, so these factors also all work in the group's favour.

The firm launched affiliate sales in June last year and in the first six months, sales revenue reached over $4 million. The company is projecting sales of $70 million in annual revenue for 2021.

Summing up what sets CanaFarma apart, Lonsdale highlights the group's clear vision for the future and its focus on science and research.

He also points to the company's strong balance sheet, having raised almost $12 million before it went public in January this year.

Those companies that cannot ride through the undoubted lumps and bumps in the road of a fledgling sector due to not being well-capitalized will inevitably get swallowed up, he suggests.

CanaFarma has a long road ahead on its CBD journey, but the basic foundation it stands upon and its route planning so far certainly appear to point the company in the right direction.

Investors seem to think so too. Shares have nearly doubled in the last six months to stand today at C$0.90.

Quick facts: Canafarma

Price: 0.43 CAD

CSE:CNFA
Market: CSE
Market Cap: $80.55 m
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