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Valens revises its Licensing Agreement with SōRSE Technology to include New International Markets

18 Dec Valens revises its Licensing Agreement with SōRSE Technology to include New International Markets

Valens GroWorks Corp (OTCQX: VGWCF), a vertically-integrated cannabis player providing extraction products and services, announced the signing of an amended manufacturing and sales licence agreement with SōRSE Technology Corporation for use of its proprietary SōRSE emulsion technology to produce, sell and distribute cannabis-infused products. SōRSE is a water-soluble CBD and hemp emulsion technology that offers numerous advantages such as homogeneity, stability, improves bioavailability and optimal dosing to name a few. The Sorse emulsion uses three steps namely emulsification, refinements, and infusion so that a Company can develop signature formulations consisting of CBD, THC, and terpenes.

Jeff Fallows, president of Valens commented

As we move into “Cannabis 2.0” in Canada, we believe the products that offer consistent, high quality and predictable user experiences, like those we are able to create with SōRSE, will capture the lion’s share of attention and be the hallmark for brand development in a strict regulatory environment”. He further added, “As we move into “Cannabis 2.0” in Canada, we believe the products that offer consistent, high quality and predictable user experiences, like those we are able to create with SōRSE, will capture the lion’s share of attention and be the hallmark for brand development in a strict regulatory environment,” 

 The technology can convert cannabis oil into water-soluble forms that can be used in beverages, edibles and other products and offers consistency and stability, in addition to lowering dosages and improves shelf stability.

The agreement will give Valens an exclusive license to use the technology in Canada, Europe, Australia and Mexico for an initial five-year term and comes with certain performance milestones. It will see a significant expansion in addressable market from the current 37 million in Canada to 700 million people in the newer markets. Furthermore the agreement will also enable Valens to establish non- exclusive agreements to sell cannabis-infused products in the U.S Market and other markets worldwide.

Valens GroWorks Corp (OTCQX: VGWCF)

Market Cap: $286M; Current Share Price: 2.30 USDChart
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report by Grand View Research, Inc predicts that the global legal marijuana market will be worth over USD 146.4 billion by 2025. The same report pegs the U.S market size at USD 7.06 billion in 2016 which will grow at a CAGR of 24.9% from 2017 to 2025. Medical marijuana (OTCPINK: MJNA) alone will be worth USD 100.03 billion by 2025.

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.

Image Source: Canopy

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.

In 2017, The WHO expert committee on Drug Dependence (ECDD) concluded  that in its unadulterated form, CBD does not cause harm or have abuse potential. While further research is underway on the subject it has been proved that CBD is well tolerated in humans and is safe.

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.

Valens offers best-in-class and diverse extraction services based on extraction methods such as Supercritical CO2, Ethanol, Hydrocarbon, Solvent-less and Terpenes. The Company has a Health Canada license and has applied for an EU GMP certification, ensuring quality and consistency. The services of the Company also encompass extraction assistance to licensed producers in the areas of crude oil processing, refined oils and white-labelling of ready-for-market oils. Valens has an expansive 25,000ft² extraction plant which also doubles up as a research and development facility.

The Company in association with Thermo Fisher Scientific, has developed a “Centre of Excellence in Plant-Based Science”, an ISO 17025 accredited first-of-its kind research facility in Canada. Valens also provides third party testing services as well as undertakes academic and commercial research projects for its clientele. The lab services test for metals, pesticides, residual solvents, terpenes and microbials along with developing cannabinoid profiles. The facilities can be used by licensed producers, individual producers, medical cannabis patients and natural health product industry.

Valens offers a wide range of services beginning with crude oil processing, refining and customization in the form of tinctures, capsules, vape cartridges and beverages. The Company also offers comprehensive white-labeling services. It is soon going to launch the Tarukino beverages to the Canadian market, which are made with SoRSE emulsion technology.

The Company has recently signed a multi-year white label agreement with BRNT Ltd, for production and sale of a guaranteed minimum of 2.2 million BRNT-branded vape pens, with a gross revenue potential of over $50 million in the first two years. In addition Valens will also provide high-quality cannabis extracts, filling services and national distribution of a line of custom-formulated BRNT-branded vape pens as per a Company statement. 

Risk Assessment
The Company is a leading provider of extraction products and services for major Canadian players. With the introduction of “Cannabis 2.0” in Canada, many of these players will start producing cannabis derived products such as edibles and beverages. The Company has full potential to become of the most valuable supply chain asset for these companies owing to its differentiated and high-quality offerings.

-There is a growing demand for the legalization of cannabis, however the biggest concern for regulatory bodies is the quality of produce and concerns about contaminated products. Valens is an ISO certified extraction service provider which is focused on providing top quality product that is free of terpenes and other pollutants. This assurance would hold the Company in good stead.

-The Company, like many other, 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. The Company’s agreement with BRNT Ltd will see it producing an estimated 2.2 million BRNT-branded vape pens, which might pose a challenge considering the present scenario.

-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.

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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