Companies in this category grow cannabis and hemp. These companies hold or have applied for cultivation licences, which vary depending on the scale of production and where the facility is located.
This vertical also includes the production of cannabinoids, terpenes, and flavonoids through fermentation.
After decades of prohibition, cannabis and hemp are generally not yet understood as well as other crops. This can pose challenges for large scale cultivators. We think successful companies in this vertical will leverage innovative techniques from adjacent
industries and invest in automation to help enhance product quality and keep variable costs low. Cultivators with superior harvests and growing techniques will likely have more loyal consumers and sell their products at higher price points.
When new geographies enact policies legalizing medical or recreational cannabis, licences are typically in short supply. For cultivators, securing a first mover advantage can be critical in these undersupplied markets.
Fermentation is a process commonly used in other analogous industries, such as food and beverage. We expect that fermentation may also enable companies to produce cannabis and hemp-derived ingredients at a lower cost, in higher quantities, and with greater
consistency. Companies with fully-realized fermentation solutions may be able to scale quickly through supply agreements with industry players.
1Source: Prohibition Partners - “The Global Cannabis Report” (2019)
2Source: Statistics Canada (for the period from October 2018 - September 2019)
This is not an offer to sell or a recommendation to trade in any securities. This information is provided as of the date hereof. This document contains data obtained from third parties that RIV Capital has not independently verified. This document also contains forward-looking information within the meaning of Canadian securities law, which is based on certain assumptions. While management believes these assumptions are reasonable based on information available as of the current date, they may prove to be incorrect. Many assumptions are based on factors outside of RIV Capital’s control and actual results may differ materially from current expectations. Forward-looking information involves risks, including, but not limited to, the risk factors set out in RIV Capital’s most recent Management’s Discussion and Analysis and Annual Information Form. You should not place undue reliance on forward-looking information. Except as required by applicable law, RIV Capital assumes no obligation to update or revise any forward-looking information to reflect new events or circumstances.
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