Adastra Holdings (CSE:XTRX, FRA:D2EA) Ltd. CEO Michael Forbes says the company is restructuring operations to become leaner and more cost-efficient.
In a letter to shareholders, Forbes said the restructuring will allow the company to reduce its monthly expenses by $70,000 in the second quarter of 2021, compared to the fourth quarter of 2020, while simultaneously increasing production output.
“Having done so, Adastra can now focus more on the following key growth sectors, which we anticipate will create far more value for our shareholders,” Forbes said. “Over the coming months, Adastra intends to aggressively pursue opportunities with carefully selected partners in strategic locations around the globe.”
Going forward, Forbes gave a rundown of what is in store for the company:
Medical Extraction
The company, formerly called Phyto Extractions Inc, believes that medical extraction is poised to be a growing sector as big pharmacies, retailers, and various demographics use cannabis as an alternative to mainstream pain rubs, anxiety medications, sleeping aids, and pain relievers.
In addition, with support from medical doctors, Adastra intends to develop topical body creams, cosmetic creams, capsules, and tinctures to address a growing international market segment.
Premium Branded Extraction Products
The company intends to release Phyto Platinum (AIM:ZERO) and Gold Vape Pens in the near future. Premium, full-spectrum craft biomass will be extracted using hydrocarbons to create the firm's vape product and marketed to upmarket consumers. This is anticipated to be a popular product among those who prefer premium, full-spectrum products with cannabis-derived terpenes.
Adastra believes this move will position it to take full advantage of a shift in Canadian cannabis consumer preference towards premium craft products.
Flower Products
The Phyto Extractions brand is rapidly becoming a household name and enjoys shelf space in over 1,300 retailers across Canada. To leverage Phyto Extractions' brand recognition and retail footprint, the company plans to offer dried cannabis targeted at the cost-conscious and the premium craft markets. This will include pre-rolls and dried flower offerings.
Drug Formulation
On the production front, Adastra has been accepted for review by Health Canada for a Dealer's Licence to possess and conduct activities with controlled substances legally. Once approved, Adastra's 13,500 square-foot lab will be permitted to assess and formulate MDMA, LSD, and psilocybin into new proprietary delivery systems and formulations to address anticipated market demand. Pending Health Canada approval, Adastra is poised to be a drug formulation and development leader in this exciting new sector.
With the recent acquisition of PerceiveMD, Adastra acquired a multidisciplinary centre for medical cannabis and psychedelic therapies, which it believes will support new regulated formulations and delivery systems for innovative treatments. Adastra expects to work alongside doctors and healthcare professionals within the regulated environment to help create superior drugs that address the actual needs of patients.
Additionally, Adastra has been busy creating new hydrocarbon-derived cannabis extract products to follow on the successful launch of Phyto Extractions Shatter into the Canadian market and to satisfy growing demand. In the coming months, it anticipates listing several new products across the country. These will include the already announced shatter pen, along with sugar waxes and crumbles. In addition, the company will continue to convert legacy consumers to the regulated space by offering tested, safe, high-quality products at attractive prices.
Strength of Sales
The strength of Phyto Extractions sales initiatives is beginning to pay off. Boots on the ground brand representatives from coast-to-coast have contributed to a 190% growth in revenues for the three months ended June 30, 2021, over the same period last year.
The company expects sustained robustness in sales for forthcoming quarters as market share expands and new products enter the market. In July and Aug 2021, the company generated over $990,000 in unaudited gross revenue, bolstering its strongest sales quarter-to-date.
“As CEO, it is my responsibility to lead Adastra towards our goal of becoming a significant player in the cannabis and psychedelic space,” Forbes said.
“I feel a tremendous responsibility to return maximum value to our employees, stakeholders, and shareholders, and I have been and will continue to work tirelessly towards that goal. I would like to thank the past management team for driving the company to where it is today. Without your hard work and dedication, Adastra would not have the top-tier facility it has today. However, to get to where we want to go, we need change. To that end, we've been busy onboarding experienced senior management and directors to manage growth properly and who are passionate about taking the company to the next phase of our exciting journey.”
Contact the author: patrick@proactiveinvestors.com
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