Dear Shareholders and Debenture Holders,
Greetings for the New Year,
By any measure, 2020 was an extraordinary year, and against the challenging backdrop, our team at Hemptown hopes your families are staying healthy and safe. We thank you for your ongoing trust and investment in Hemptown as we continue to navigate through the pandemic. It is with great enthusiasm that I report the cannabis sector has been off to a stellar beginning for 2021.
The recent shift in political leadership in the executive branch and the Senate is ushering in a new era of promise and progression for the cannabis sector. The Biden administration has reactivated stalled cannabis reform laws that bolster the potential of federal legalization. Consequently, many Canadian cannabis stocks and the US Multi-State Operators have seen positive share price appreciation over the past eight weeks. Hemp Fusion (CDB.U: TSX) has completed a successful IPO in January, and increased in value from its $100m, pre-money IPO valuation, to over $300m this year already. TAAT (TAAT: CSE), another competitor in the hemp smokables arena, has also seen its value rise from a $200m market cap to over $500m in a short time-frame.
Hemptown’s debut on the nationally branded show Americas Next Investment has proved successful, as investor leads our pouring into our CRM database. The exposure from this media channel alone has helped us raise an additional USD 1.5m in new equity investment. We are in the process of seeking the required approvals to extend the maturity date of all convertible debentures to the second quarter of 2021 and to add a forced conversion provision so that all debentures convert to equity shares in the company on the closing of the RTO.
The company has completed its much-anticipated IFRS 2019 and 2020 financial statements that are now being audited by Davidson & Co. We expect this process will take as long as six weeks and is therefore anticipated to push our current RTO plans into the early second quarter of 2021.
In terms of business operations, the Kirkman Group, Hemptown’s wholly-owned nutraceutical manufacturing facility in Portland, Oregon has exceeded its financial goals for 2020. The success of the Kirkman Group is reflected in a statement from Rob Fenty, Kirkman’s COO, “During 2020 we were able to streamline manufacturing operations and switch the focus to driving sales and accelerating the growth and profit of the company, ultimately increasing Hemptown’s bottom line.”
Processing continues to operate at full capacity on the farm in Oregon, where our new CBD/CBG flower product is expected to be distributed into both the wholesale market and smaller unit retail, direct to the consumer market, which offers significantly higher margins. The hardworking crew members took a long-deserved holiday during January after the harvest was prepared for processing. Our team at Hemptown continues to increase the production speed of the CBD/CBG flower to meet consumer demand.
The Board of Directors is in the process of renewing the terms of agreement with Hemptown’s CEO, Eric Gripentrog, which will continue for another annum, effective April 1st, 2021. While Mr. Gripentrog’s cash compensation will remain substantially the same, the updated contract will include additional performance-based equity incentives. Mr. Gripentrog has agreed to relocate to Portland, near the Kirkman facility, to help centralize company-wide operations. His objectives include building a sales and e-commerce team that strengthens our key brands Hemptown USA and Kirkman, but also to create new brands that are targeted at new growth sectors. This strategic direction of leveraging our FDA-registered, cGMP facility will be the focus, helping us deliver on our 2021 goals.
The team at Hemptown is proud of what we have accomplished to date and looks forward to a near-term liquidity event. This new chapter is expected to unfold quickly, utilizing the resources that the cash infusion will bring, in addition to eliminating the burden of several millions of dollars of annual interest the company has been incurring to date.
Hemptown is producing a unique smokable blend of our premium CBD/CBG flower direct from our Oregon farm. The first of its kind, with 100 % filter-flavoring technology, the smokable blend of CBG flower features flavor profiles including Pineapple Express, Mango Madness and Spearmint Rhino. The flavor additions come from flavor pops in the filter similar to the Camel Crush brand of cigarettes.
Hemptown Hemp Stix are currently available for sale onhemptownusa.com. We proudly offer a discount to Hemptown shareholders on all new products with the discount code HTO15.
It is with great pleasure that I announce Zayn Kalyan has been appointed to the Board of Directors effective January 29th. We are confident in his exceptional abilities to manage the expected growth in the hemp smokables industry, while driving future financial returns.
Hemptown Naturals has commissioned a comprehensive PR and marketing company to implement a strategic, results-driven, multimedia strategy in order to increase the scope of our company’s brand exposure and digital presence. The agency will be focused on elevating the smokables brand through an omnichannel of social media avenues, interactions with brand ambassadors, sponsored events, personalized merchandise sales, and promotional giveaways. The agency has extensive experience in building and executing unique marketing strategies which leverage both digital and traditional mediums of marketing including print, broadcast, billboards and radio. The agency has also worked with a number of leaders in the hemp and cannabinoid industry, experience that Hemptown looks forward to leveraging.
Hemp industry observers say “smokable hemp is one of the fastest-growing and most lucrative segments in the nascent hemp and CBD industry, with expectations that the market will experience fivefold growth in the next five years”. By 2025 Nielsen expects the smokable-hemp market to reach $300 million to $400 million, representing roughly 5% of the potential 7 billion hemp-derived CBD consumer products category.
I am enthusiastic about the future of the cannabinoid industry and the future of our company. On behalf of the Hemptown team, we wish all of our shareholders, investors, and supporters, a happy, healthy and prosperous and 2021.
President, Director and Co-Founder
About Hemptown Organics Corp.
Hemptown is diversified, industry leading cannabinoid company delivering a diverse product offering across the value chain, in multiple sales channels, to meet the growing global demand for cannabinoid-based products. State of the art cultivation in Oregon’s Rogue Valley, FDA-licensed and cGMP certified product manufacturing, and a strong leadership team with Fortune 500 experience, including Kellogg’s, Nike and Intel, are the pillars for Hemptown’s growth model as the Company pushes into the consumer-packaged goods sectors with top quality white label and branded product lines for the consumer market. For more information, visitwww.hemptownusa.com.
Hemptown Investor Relations
Hemptown Sales and General Inquiriesinfo@hemptownusa.com1-888-CBG-NOW1 (1-888-224-6691)
Disclaimer for Forward-Looking Statements
This letter contains forward-looking statements that involve various risks and uncertainties regarding future events. Such forward-looking statements are based on current expectations of management, involve a number of risks and uncertainties, and are not guarantees of future performance. These statements generally can be identified by the use of forward-looking words such as “may”, “should”, “will”, “could”, “intend”, “estimate”, “plan”, “anticipate”, “expect”, “believe” or “continue”, or the negative thereof or similar variations. Forward-looking statements in this news release include statements regarding potential reforms in US cannabis laws, the future growth of the cannabis and hemp industries, the plan to amend the terms of Hemptown’s debt obligations, Hemptown’s proposed RTO transaction with Spectre Capital Corp. and Hemptown’s strategic and marketing plans for the future. Forward-looking statements are necessarily based on a number of estimates and assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties and other factors that may cause actual results and future events to differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results or events to differ materially from current expectations include general market conditions, significant business, competitive, political and social risks and other factors beyond the control of the Company. The Company expressly disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law.
None of the securities issued in the proposed RTO will be registered under the United States Securities Act of 1933, as amended (the “1933 Act”), and none may be offered or sold in the United States absent registration or an applicable exemption from the 1933 Act. This letter shall not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of the securities, in any state where such offer, solicitation or sale would be unlawful.