Unlocking Growth Potential in the CBD Industry

This member company is a vertically integrated CBD/cannabis company operating in the UK and EU. The company distinguishes itself as one of the very few CBD companies worldwide that is truly vertically integrated, encompassing extraction, manufacturing, and retail operations. The company's operations span across the UK and EU, allowing it to service customers without border constraints that often hinder the industry.

With complete control over the supply chain, the company is well-insulated against the margin pressures experienced by its competitors. Additionally, the company is strategically positioned to benefit from the projected 33.5% annual growth of the European CBD market. The company's listing on Aquis and qualification for EIS/VCT further enhance its positioning and credibility in the industry.

The CEO has more than 20 years of experience advising companies on the UK capital markets, and an esteemed background working for well-known investment banks and stockbrokers. The Chairman brings over 30 years of expertise in stockbroking, fund management, and investment banking. Their notable achievements include co-founding two London-listed companies. The Non-Executive Director contributes with over 25 years of experience in senior finance roles, holding responsibilities in various international organisations.

Since its establishment in 2020, the company has made significant strides in building its business. Initially starting as an online CBD and hemp product seller, the company expanded its operations in 2021 by opening three physical stores and initiating trade sales to third-party retailers. In 2022, the company commenced manufacturing its own products, followed closely by white label/private label manufacturing. Notably, in 2023, the company further enhanced its operations by acquiring a Polish extraction and manufacturing facility.

The company's strategic approach revolves around multiple revenue streams, including retail, wholesale, raw materials, and contract manufacturing. In the retail sector, the company plans to enhance its online and physical store presence while updating its social media strategy. Additionally, the company aims to enrich the customer experience by introducing treatment rooms and outdoor seating in its stores and launching a rewards app. In the wholesale segment, the company seeks growth by recruiting new sales personnel, exploring direct marketing opportunities, and implementing lower pricing strategies for its core product range. The company also aims to strengthen its position in the raw materials market and optimise its extraction processes to reduce costs. However, the most significant growth opportunity lies in contract manufacturing, where the company intends to expand by investing in additional staff and machinery to increase automation and output volume.

The company's pricing strategy positions it to reset industry standards and gain a competitive advantage. By producing a 1000mg CBD oil for approximately £3, inclusive of packaging and logistics, and retailing it at £15, the company achieves an impressive gross margin of 76%. Even in wholesale scenarios with a 100% retail uplift, the company maintains a substantial 52% gross margin, surpassing the industry average of £30. This pricing approach enables the company to access new customers and distribution channels, fostering further growth.

To date, the company has invested around £2.5m in building its business, significantly less than many of its competitors. Nevertheless, the company has achieved a more advanced stage of development. Leveraging its pan-UK and EU platform, the company enjoys unique opportunities not available elsewhere. Moreover, the diversified business model contributes to its ability to generate revenue from the fast-growing CBD sector.

In conclusion, the company's vertical integration, experienced leadership team, and strategic initiatives position it for continued growth and success in the CBD industry. The competitive pricing, diverse revenue streams, and adherence to regulatory compliance set the company apart and enable it to capitalise on the expanding opportunities in the UK and EU markets.

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