Exploiting the online cannabinoid niche
by Don Hauka
Relevium Technologies uses twin-track strategy to launch new cannabis line
The global wellness industry is one of the fastest growing worldwide markets, worth an estimated $3.72 trillion US. This vast space is filled with a galaxy of products, from traditional vitamins and probiotics to the latest weight-loss fads. Similarly, the investment landscape in the industry offers a huge range of companies to choose from. Investors have to be careful they don’t put their money behind something that turns out to be bad for their financial health.
As if it wasn’t complex enough, now there’s a newcomer making waves in the nutraceutical space. Fine, young cannabinoids like CBD (short for Cannabidiol) and Cannabigerol (CBG) are emerging as a major trend in the nutraceutical business, promising exponential growth over the next four to five years. And unlike the looming legalized recreational marijuana market, with its trendy storefronts and cafes, much of the sales volume for CBD and CBG products is expected to be online.
So when Montreal-based Relevium Technologies Inc. (TSX.V: RLV) was charting out its plans for 2018, it only made sense to bring their established health and wellness e-commerce model and apply it to the cannabinoid niche in order to maximize its potential.
Relevium announced the launch of its two first cannabis brands, LeefyLyfe and Biocannabix in April, gearing up to offer cannabis products in the North-American and European markets. LeefyLyfe and Biocannabix brands are part of their wholly owned Biocannabix Health Corporation. The company feels confident branching out into the cannabis space because of its firm foundation in more traditional nutraceuticals like its core Bioganix brand. Relevium will apply the same approach of building brand trust to its cannabinoid products.
“The key to success in the CBD market is building credible, trusted, and recognizable brands,” says Relevium CEO, Aurelio Useche. “We’re building on our current branding and online abilities and putting all our resources to fast track the company in the consumer products cannabis space.”
Useche says Biocannabix will target the Canadian market, which is governed by Health Canada’s Access to Cannabis for Medical Purposes (ACMPR) regulations while LeefyLyfe is being positioned to target CBD sales outside of Canada, complying with a wide range of local legal and regulatory frameworks. He says with branding and e-retail, the company will be able to monetize CBD and CBG based consumer products outside of the Canadian market while the application for an ACMPR license for Canada is in process.
“We believe this approach provides the best balance of short and mid-term ROI and an ideal risk ratio,” says Useche.
Useche brings over 20 years of education and experience to Relevium’s management team. A graduate of the MBA program at Queen’s University, he has a CPA and a CMA, as well as a Master Certificate in Risk Management from York University’s Schulich School of Business. His business experience ranges from manufacturing, mining exploration, consumer goods, and entertainment. His past roles have included being COO and CFO, in addition to being Relevium’s CEO.
Relevium is not a complete newcomer to the cannabis space, having already conducted the initial joint-launch of five products since March 2018 under the Planet Hemp brand with HEMPCO whose majority shareholder is Aurora Cannabis. But the launch of LeefyLyfe and Biocannabix under the umbrella of their new, wholly owned Canadian subsidiary Biocannabix Health Corporation signals a major commitment by Relevium to become a player in the burgeoning legal cannabis market. A report by Ameri Research Inc., valued that market at $14.3 billion in 2016, and forecast it to grow to $63.5 billion by 2024, a compound annual growth rate of 21.1 per cent. North America accounts for over 49 per cent of the market, with the U.S. being the single largest market.
Relevium will use its established e-commerce channels for sales in the USA and Europe via Amazon and Walmart, as well as their own Bioganix.com storefront. Acquired in June 2017, Bioganix generated $3,157,644 in sales revenues, with a gross profit of $1,806,515 during the nine-month period ended March 31, 2018. Their gross margin of 57 per cent remains stable and adjusted EBITDA for the brand remains positive at 25 per cent.
To help expedite the ACMPR licensing process, Relevium has hired cannabis industry veteran consultant Georges Routhier and PipeDreemz. PipeDreemz was instrumental in designing the H2 Biopharma facility in Lachute, which was acquired by Aurora Cannabis. As at January 1, 2018 PipeDreemz had 23 highly advanced facilities under construction across Canada. Useche says the ACMPR license application should be ready for submission this summer.
While the license is in process, the company is swiftly pushing ahead with plans to establish its own production facility located close to the downtown core in Montreal. It will grow specific CBD-focused strains for LeefyLyfe and Biocannabix products. Focusing on CBD gives Relevium an advantage, Useche comments.
“We’re not the first player in the cannabis market by any means, but we might be one of the only ones that are really looking at the CBD-specific space as opposed to the medical marijuana, THC, or the recreational THC market,” says Useche.
“I think we have a certain edge with regards to the CBD side, whether those products are used for nutraceuticals or they’re more for pharma-type applications. Our Board is very biotech and pharma heavy and it is just a less crowded space at the moment.”
Relevium is following the model established by Namaste Technologies, the Toronto-based company that went from startup to be the largest online retailer for medical cannabis delivery systems globally in a few years. Namaste distributes vaporizers and smoking accessories through e-commerce sites in 26 countries and with five distribution hubs located around the world.
Useche notes, Relevium is following a similar path to Namaste Technologies and is about 12 months behind that company’s trajectory.
The focus on the cannabis space doesn’t mean that Relevium is putting their bread and butter brand Bioganix on hold. In fact, the company already has over 25 products being sold on Amazon, with more coming online imminently. The company has added weight loss products oriented towards the ketogenic and Paleo diets, as well Ketoblast, an energy driver.
In the near-term, Relevium (TSXV: RLV) will follow this twin-track strategy of generating growing revenue from the Bioganix brand of nutraceuticals, fitness nutrition, and cosmeceuticals, while aggressively expanding into the cannabis/CBD space domestically and internationally via LeefyLyfe and Biocannabix. The approach is consistent with the company’s mission statement of providing health to consumers and wealth to shareholders.
Long and short-term, Useche says the company will continue to play to its strengths — building strong, trusted brands in the ever-expanding health and wellness sector.
“The specialty of the company is really in building brands, creating brand value, and launching products,” he says.
“Whether you’re selling omegas, probiotics, or CBD-infused products, it’s very much the same process. This seems a very natural direction for us to go in.”