Between January 9 and 11, RichTV took part in the Lift & Co Cannabis Expo in Vancouver, Canada. There, Rich interviewed nearly a dozen players in the cannabis space, from up-and-comers to established big-wigs. Today, we look at Rich’s interview with Everett Knight, EVP of Strategy & Investments at The Valens Company (TSXV:VLNS) (OTCQX:VLNCF).
Valens is the largest cannabis extractor and white label manufacturer in Canada, and one of the few pot stocks to show growth in 2019.
Valens came in at number three on Rich’s top ten pot stocks to watch in January 2020. So right away you know this is a company worth following. Let’s dive right into what The Valens Company is currently doing and what it has on the horizon.
Valens Signs Two Major Supply Agreements
In the waning days of 2019, The Valens Company signed two extraction, white-label, and supply agreements that should keep the company well-funded through 2020 and beyond.
The first deal was a four-year extraction and white-label agreement with Emerald Health Therapeutics Inc (TSXV:EMH) (OTCQX:EMHTF). Through the deal, Valens will supply an annual minimum quantity of 10,000 kilograms of cannabis and hemp biomass.
Next, Valens entered a multi-year distillate supply agreement with confectionery company Dynaleo Inc. The agreement has an initial two-year term, with two automatic one-year renewals.
In the first year, Valens will supply Dynaleo with distillate containing a minimum of 40 kilograms of THC or CBD for use in the production of edibles. Afterward, Dynaleo will purchase from Valens a minimum of 50 kilograms of distillate in year three and 75 kilograms in year four.
“We currently have 11 extraction contracts and 11 white label contracts,” says Knight. These agreements ensure that Valens can execute its growth strategy, which begins this year.
The Valens Company in 2020
Discussing the opportunity that the new year provides, Knight explains:
“What we’ve been focusing on since we were founded is launching our customers’ products. Now, with Cannabis 2.0 starting, we have a chance to showcase everything we’ve been working on. So we’re excited to get some products on the shelf.”
Knight goes on to explain that the company has—combined—more than 100 years of cannabis extraction experience. This provides Valens with a significant advantage in the Cannabis 2.0 market, which relies heavily on extraction practices.
Products that rely on extraction include vape pens, beverages, and edibles. In Canada alone, experts estimate that the 2.0 market will generate $2.7 billion.
In addition, The Valens Company is quickly expanding its operations beyond Canada. It now reaches into emerging markets such as the European Union, Mexico, and Australia. In these markets, Valens is strategically positioned to deliver extraction services.
Since the start of the year, shares in The Valens Company have risen from $3.53 to $3.92. That’s an increase in value of 11%.
Knight says the reason for the stock’s success is that investors have confidence in Valens’ growth strategy. Now that the strategy is really kicking in, investors should watch VLNS very closely.
“Everyone’s been focused on revenue, but this year I’d encourage investors to benchmark us on net income and cash flow,” Knight says.
What do you think? Is The Valens Company a pot stock worth watching? What other companies do you think stand to have a great 2020? Let us know!
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