2020 has been a challenging year for the global economy as well as for general health and overall wellbeing. The COVID pandemic has put additional stress on the average person and this is a trend that is expected to continue until we find a vaccine.
So far this year, we have noticed a shift in human behavior and consider COVID to be the primary reason for the shift. In the new market environment, consumers have been focused on improving mental health and have been getting into new routines to accomplish this.
Science and technology have changed the world for the better and these advancements are supporting consumers during the pandemic. From cannabidiol (CBD) all-natural health products to nootropics, we believe that the average consumer is more open to trying new products that support mental health.
One of the CBD companies that we are excited about is HempFusion Wellness Inc., which is a leading health and wellness CBD company that utilizes the power of whole-food hemp nutrition. In 2019, we started to follow HempFusion and met with the management team in Denver. We left the meeting feeling impressed with the operation as well as the strategy to increase market share.
A CBD Execution Story to be Following
In less than one month, HempFusion expects to commence trading on the TSX exchange and has reserved the symbol, CBD.U. This is a story that we have been following since late 2018 and believe that our readers need to be aware of it.
We believe that HempFusion is executing on a strategy to become a leading global CBD brand and expect it to enter into several strategic distribution agreements in the near future. Since inception, HempFusion has taken an uncompromising approach to regulatory compliance and we expect this focus to allow the brand to enter major retail channels that may not be available to the vast majority of CBD companies. The channels that HempFusion will focus on include: Big Box (Food/Drug/Mass), Doctor/Practitioner, and Convenience.
HempFusion owns a portfolio of brands that it distributes to all 50 states in the US and is executing on a multi-national growth strategy. The brands that fall under the company’s umbrella include HempFusion, Probulin Probiotics, Biome Research, and HF Labs. We are favorable on the diversity of the platform from a revenue generation standpoint and believe that this will play an important role in the success of the business over the long-term.
The diversity of HempFusion’s product line is an attractive aspect of the story and believe that this helps differentiate the business from its competition. The company’s product portfolio includes 46 products that are on the market and include condition-specific products for sleep, stress, and, energy. HempFusion’s line of topical products include creams and balms that specifically target acne, anti-aging, sports pain relief, eczema relief, wound care, and more.
So far this year, HempFusion has reported an increase in the number of stores that carry its products. Currently, the company sells products in approx. 4,000 retail locations and we are favorable on the strategic nature of the distribution outlets that it has formed relationships with. The outlets that HempFusion is using are Amazon, Whole Foods, Sprouts, Vitamin Shoppe, Fresh Thyme Market, and a major unannounced national FDM retailer.
An Emerging Opportunity that has Multiple Revenue Stream
HempFusion is executing on a multi-faceted growth strategy that is centered around innovation and having a first mover advantage in strategic verticals of the CBD sector. The company is one of the few businesses to be selected to participate in an industry-first human safety study (Liver Toxicology, 2020) with ValidCare in response to FDA questions in the public realm.
As it relates to future growth, we believe that HempFusion is in the early innings of a major growth cycle. Currently, the company has more than 30 products that are under development (ingestibles and additional topicals) and has USDA certified products already on the shelves of major retailers.
One of the ways HempFusion has differentiated itself from its peers is related to its wholly owned Probulin Probiotics subsidiary. The brand is considered to be one of the fastest growing probiotics company in the US. Going forward, we expect HempFusion to benefit from the existing relationships that it has through Probulin. The company expect Probulin products to act as a gateway to increased international distribution and approved vendor status with major retailers. We are favorable on this strategy due to the distribution infrastructure and the revenue that Probulin contributes to the entire company.
On the international side of the business, Probulin has been selling products in Mexico, South Korea and the United Arab Emirates (UAE). We are favorable on the relationships that have been formed on the international side of the business and expect it to accelerate HempFusion’s global expansion strategy.
HempFusion is Well Positioned and Well Capitalized
We believe that HempFusion has significant near-term potential catalysts for growth and believe that our readers need to be aware of this. HempFusion recently developed plant-based CBD gummies that are designed specifically for the convenience store distribution channel. This is a distribution outlet that is not overly saturated with CBD products and believe that it provides HempFusion with leverage to a segment of consumers that tend to impulse purchases. Based on personal experience, we are bullish on this strategy and have definitely made a wide variety of impulse purchases at these types of stores.
Another attractive aspect of the HempFusion story is related to the strength of the balance sheet. From a capital markets standpoint, the team that is behind the opportunity has a proven track record of success at raising capital and consider this to be a key pillar of the business. Currently, HempFusion has the second largest cash position in the sector ($18,315,734 USD as of June 30th) and no debt.
HempFusion has GRAS Affirmation (October/November 2020 publishing) and has completed the NOAEL Safety Review for all topicals and for a newly approved USDA organic product that is expected to rollout in the second quarter. We expect the company to benefit from selling organic products and believe that the affirmation enhances the brand’s credibility.
HempFusion’s has an extensive leadership team that has experience in capital markets, cannabis, legal, consumer packaged goods (CPG), corporate governance, and merger and acquisition (M&A) experience. We are favorable on the diverse expertise of the executive team which is bolstered by a board of directors that has significant public market experience.
A Pre-IPO Opportunity to be Aware of
HempFusion has always had a strong focus on research and development (R&D) and has an additional 30 products under development. The company’s wholly-owned subsidiary, Probulin Probiotics, is one of the fastest-growing probiotics companies in the US (according to SPINs reported data) and we are bullish on the impact that it has had on the entire business.
If you are interested in learning more about HempFusion’s CBD products and be informed about the upcoming listing, please send an email to [email protected] with the subject “HempFusion” to be added to our distribution list.