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CV Sciences Signs New Distribution Partnership with Southeastern Grocers to sells its PlusCBD Oil Products

14 Nov CV Sciences Signs New Distribution Partnership with Southeastern Grocers to sells its PlusCBD Oil Products

CV Sciences (OTCQB: CVSI), the manufacturer of PLUSCBD range of hemp-based CBD oils, the #1 selling hemp CBD supplement in North America, announced the signing of a new distribution agreement with Southeastern Grocers, Inc. The agreement will enable the Company to launch its PlusCBD oil products at 115 Winn-Dixie stores in Florida and 37 BI-LO stores in South Carolina. The partnership with Winn-Dixie and BI-LO banners will help the Company strengthen its distribution network, and improve the availability of its PlusCBD™ Oil product offerings that include ingestible dietary supplements.

The stores will carry topical products such as PlusCBD™ Oil Extra Strength and Original Balm and PlusCBD™ Oil Roll-On, in addition to PlusCBD™ Oil full spectrum hemp extract dietary supplements, including Gold Formula Softgels, Gold Formula Drops and Gummies, and Total Plant Complex Sprays as per a Company statement.

CV Sciences was also the recipient of the “NEXTY Consumer Choice Award” in the supplement category for its PlusCBD Oil Total Plant Complex peppermint spray at the Natural Products Expo East and West. The awards recognize category leaders who bring innovation, inspiration, and integrity to the market and are awarded on the basis of a rigorous screening and judgment process.

Mr.Dowling, the Chief Executive Officer of CV Sciences commented,

“We are excited to further expand availability of our topicals and award-winning dietary supplements in the food, drug and mass retail channel through our new partnership with Southeastern Grocers, one of the largest supermarket companies in the U.S. Following our initial launch, we anticipate additional distribution gains across the Winn-Dixie and BI-LO banners and new distribution with SEG’s other leading retail banners.”

According to data made available by SPINS and IRI respectively, CV Sciences line of PlusCBD™ Oil is the leading CBD supplement in the Total U.S. Natural Channel, with its Extra Strength Balm featuring at the top of the sales pyramid in two categories, namely Total U.S. Natural Channel and Total U.S. MULO (Multi Outlet), among CBD products within Topical Analgesics respectively. The products are already being sold through more than 5700 retail locations in the U.S alone.

CV Sciences (OTCQB: CVSI)

Market Cap: $143.68M; Current Share Price: 1.41 USDChart
Data by YCharts

Hemp and Marijuana, though used interchangeably, are distinct strains of the Cannabis sativa plant and have different phytochemical uses and composition. Hemp has very low concentrations of THC and is rich in CBD, which results in very negligible psychoactive effects. Hemp is extensively used in industrial and commercial processes such as paper, textiles, biofuel, animal feed and clothing.

The Cannabis plant has an estimated 113 different compounds out of which THC and CBD are the two main constituents. These affect the receptors in the brain to alter an individual’s physical and mental state. THC is mainly responsible for the psychoactive effects or the feeling of “high” caused by the use of cannabis.

CBD on the other hand, has several powerful anti-inflammatory, analgesic, neuroprotective and anti-anxiety properties, which explains its growing popularity to treat a plethora of medical conditions. Unlike THC, CBD does not have any psychotropic effects and hence is widely preferred. It is increasingly being used to treat conditions such as cancer, cardiovascular anomalies, arthritis, anxiety, depression and Insomnia. In addition it has also been proven to possess neuroprotective benefits that can treat diseases such as seizures, Multiple Sclerosis (MS), Alzheimer’s, Parkinson’s and Schizophrenia to name a few.

There is a growing demand for CBD derived from Hemp, as it eliminates the negative effects caused due to THC and ensures a safe product. The U.S hemp industry received an impetus, with the passing of the Agriculture Improvement Act of 2018 . The bill made a clear demarcation between marijuana and hemp, essentially making the sale of hemp legal, thereby boosting the sale of hemp-derived cannabidiol (CBD) products.

According to a report by Grand View Research, the global industrial hemp market is expected to reach $10.6 billion by 2025. We take a look at some pioneers in the field, who are helping redefine the functioning and public perception of the Hemp Industry.

According to statistics published in the Hemp Business Journal, the industry registered sales of $820 million in 2017. In spite of facing regulatory hurdles and legal challenges, the industry grew by 16%.

The industry is poised to grow to $2.1 billion by 2020, a whopping 700% increase from 2016. Those numbers are not only appealing to the players in the CBD market but also serve as an incredible opportunity the pharmaceutical companies to create novel solutions for disease with large unmet medical needs.

The Company develops and markets the PLUSCBD range of hemp-based CBD oils, which is the #1 selling hemp CBD supplement in North America. CV Sciences offers full traceability of the product from Seed to Shelf™, ensuring that the best quality EU certified hempseeds are planted, and the best quality product reaches the store shelves. The Company has a state-of-the-art laboratory that adheres to stringent Good Manufacturing Practices (GMP) guidelines, where its full spectrum hemp extracts are processed, produced, and tested during each step of the process to ensure that the CBD meets standards and is free from contamination.

In addition, the Company’s products are also sent to an independent third party lab for testing to ensure that only the best extract, that is free from any pesticides, molds, bacteria, residual solvents, or heavy metals and true to its potency claims, reaches the final customer. It has data from human clinical trials backing the efficacy of its products, besides being the only CBD brand that offers published toxicology work, which support generally recognized as safe (GRAS) independent conclusion.

The Company offers a whole range of CBD based products such as CBD Balms, Spray, Drops, Soft Gels and capsules edible gummies and oil roll-ons. Furthermore it also offers CBD oils to wholesalers and retailers for further processing, leveraging its reputation as the leader in manufacturing and distributing agricultural hemp-derived cannabidiol in the natural products industry.

CV Sciences operates two divisions-pharmaceuticals and consumer products. The company’s pharmaceutical line is developing CVSI-007, its initial drug candidate for smokeless tobacco use and addiction, which contains a combination of nicotine and synthetic CBD. The drug candidate was initially developed by CanX Inc., which the Company acquired in December 2015. It major focus is on developing synthetically‐formulated cannabidiol‐based medicine that uses cannabidiol as the active pharmaceutical ingredient.

Risk Assessment

  • As per its Q3, 2019 financial results the Company has entered into multiple distribution agreements, such as its distribution partnership with The Kroger Co for an additional 400 locations taking the total store count to 1350 stores, a new agreement with Harris Teeter for 150 locations; a distribution partnership with The Vitamin Shoppe for 383 locations, taking the total count to 150 locations. The creation of a robust distribution network will help the Company leverage on its reach and availability, in the event of legalization of cannabis.
  • CV Sciences is also building an online retail presence and is taking measure to expand its ecommerce reach. The Company reported a contribution of 21.6 percent to the net revenue by its ecommerce sales channel. The increase in internet penetration, rise in disposable incomes and the need for convenience will witness a large number of customers migrate to online channels for their needs in the future.
  • One cause for concern for the Company is the negative YoY growth in sales and a decline in gross margins, its reported revenue of $12.6 million is 7 percent down from the same period last year, while gross margins were down from 71.1% in Q3 2018 to 66.9% in Q3, 2019. The CEO Joseph Dowling attributes this decline to a lack of clear regulatory framework and the low barrier to entry in the cannabis industry.
  • The Competition in the industry is cutthroat, with many players competing for limited shelf-space, which leads to price cutting and decline in gross margins.
  • The Cannabis Industry is governed by stringent regulations and is fraught with uncertainty, the Company will have to be prepared to adapt to any changes in policies or regulatory framework and capitalize on new opportunities that may arise in the future such as heavy taxation or clamp-down on operations.
  • The Company, like many others, had to face the heat owing to vaping deaths and increasing concerns about their long-term impact on lungs. As the industry is still in its nascent-stage, there will be many such concerns and issues raised about products, which the Company will have to withstand to be successful in the long-run.
  • Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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