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Zoetic International makes rapid progress with CBD business

Snapshot

  • Zoetic last year moved fully to focus on hemp growing and production of consumer CBD products 
  • A deal has been agreed to sell its legacy natural resources assets
  • Registered as a hemp seed distributor in five US states
cannabis plants

Quick facts: Zoetic International PLC

Price: 23.1 GBX

LSE:ZOE
Market: LSE
Market Cap: £44.95 m
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What the company does

Zoetic International plc (LON:ZOE) is a vertically-integrated cannabinoid (SBD) and hemp business, specialising in seed genetics and cultivation operations through to consumer-facing brands.

Its Chill tobacco-alternative brand, including CBD chew pouches and pre-rolled ‘smokes’, is stocked across the US and with new distribution deals signed in Europe, while Zoetic skincare products are currently focused on the UK.

Following an initial retail distribution and sales agreement for Chill with Schrader Oil’s US-wide chain of convenience stores, gas stations and Ox Distributing network, the Schrader family has built up a 13.3% stake in the business as part of the deal.

 

How it is doing

Trevor Taylor and Antonio Russo were promoted to co-chief executive in April 2020, having served as its chief strategy officer and chief revenue officer respectively and seen by the board as “instrumental” to the success of its US CBD business.

In June 2020, the pair had amassed distribution agreements for the Chill brand to be sold in over 6,000 retail outlets across the US and soon added Chill's first international distribution agreement, covering the Czech Republic and Slovakia, with a larger European deal following in September.

Taylor and Russo have also streamlined Zoetic's cultivation strategy, terminating the lease on a Colorado production facility in order to expand the company's seed testing programme via a partnership with GVB Biopharma and via a new joint-venture signed with a "trusted" partner in Europe to grow high-quality hemp seeds.

In September 2020, the pair also completed a significant piece of desk clearing, by agreeing sales of the group's legacy oil and gas assets, which will clear most of the group's debt and eliminate its most substantial liabilities and operating costs.

Last interim results showed revenues of £1.15mln, up from £0.52mln the previous year, with £1mln cash in the bank.

In March, the Schrader family invested £1.2mln and Zoetic raised another £350,000 in June by selling stock to an existing individual shareholder.

 

What the bosses say: co-CEOs Antonio Russo and Trevor Taylor

“We've got a very big footprint in place, thousands of stores and we're really excited. We think the timing's right with some of the recent crack-downs on flavoured tobacco it's really opening up a great opportunity for an herbal alternative – and that's exactly what we've got. We couldn't be more thankful for the position we're in right now and we're really optimisitc for this fall,” Taylor said in September. 

After filing US patent applications the method of manufacturing its tetrahydrocannabinol (THC)-free Chill CBD products, Russo said: “The filing of the smokable non-provisional patent is yet another step in Zoetic's journey to lead the industry in innovation and product development.  We believe there is a major shift in how tobacco users will make the transition from traditional tobacco products.  We believe our first-mover position will have substantial benefits as other competitors begin to enter the market.”

On July's changes to cultivation strategy, Taylor said: “As our Chill products enjoy sustained growth in their popularity, now is the right time to modernise the company's infrastructure and bring production into line with our vision.”

 

Video

 

Inflexion points

  • More distribution progress and increased sales of Chill products
  • Harvests of its feminised hemp seeds
  • Potential progess from new cultivation strategy 

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