CiiTECH Ltd aims to come to the public markets next year as a stronger company, after making the decision in March to walk away from a potential reverse takeover deal.
Founder and chief executive Clifton Flack says there have been some big changes in the cannabis industry since London saw a big influx of companies in early 2021.
One thing that has not changed for Flack is his ambition to take the company public, he says, and not only that, he aims for CiiTECH to become the biggest cannabis company on the London Stock Market.
“And I think that should happen certainly by the end of next year, short of some other crisis,” he told Proactive.
After walking away from the talks with an AIM-listed shell company, Flack said he learnt a lot from the process and, from his ongoing contact with several of the companies that did list on the market, believes in hindsight the company may have benefitted from missing out on London’s 2021 cannabis rush.
“We thought that would open their floodgates to a whole swathe of cannabis companies hitting the London markets and raising huge amounts of capital. Well that didn't happen, and it wasn't just us and by the time we got to last summer, the hype had come off the markets a little bit, not just cannabis.
“Through the summer some of the Canadian companies began to struggle, with a knock-on effect across Europe and then we just got to towards the beginning of this year.”
After Russia’s invasion of Ukraine, CiiTECH decided a listing at the time was not viable.
“It was a tough decision because it's a long process, we've been through a lot, it cost a lot of money.
“I know now with hindsight, six months on, it was the right decision. We weren't able to raise the amount of money that we were hoping to raise so we would have had to have gone out with less money in the bank.”
Expectations of being able to do secondary funding rounds once public again, with hindsight, he says were also unlikely to have happened.
Having done a lot of the preparatory work, a listing is now pencilled in for next year.
But as, Flack says, “I mean who knows? You have to watch this space.
“You might get some inkling [of the timing] if you look at the global markets and see how they're settling. If I was to guess right now, and really it is just a guess, probably second or third quarter next year, but it depends on how the rest of this year goes.”
Following the disappointment of the end of the talks but amid some big changes in the cannabis market and wider global economy, including the pandemic, rising inflation and the introduction of new novel food guidelines by the UK Food Standard Agency (FSA), CiiTECH has been sticking to its knitting.
“Our focus right now is really, like many others, just to get through this year,” says Flack.
“We've done some consolidation in the business. We're focusing much more on the core product lines and the core markets.
“We're very much looking to stabilize and make the business strong moving forward and that makes it a far better proposition when we do make the announcement to go public.”
The cost of living crisis has coincided with prices being pulled down by competition following the FSA novel foods move, he says, while the power of brands, such as CiiTECH’s Provacan, Impact and Hugg, are more important than ever.
“So we're seeing not just the cost of goods falling but retail prices are coming down which will open up a whole new world of customers,” Flack says.
“We sit at the consumer end of the industry. We create desirable trustworthy credible brands that consumers trust and they believe in.
“Behind the scenes, the ingredients that are going to the bottle or the capsules are very much commoditised.
“With novel foods [regulations from the FSA] it's very much more difficult for a company to get approval for a full-spectrum oil, so what we've seen is more and more either isolate or broad-spectrum products coming through to market.
“It means that the products are less able to be differentiated from one from another um again we have to rely more on the brand and the brand equity that a company brings to the products.”
But on the other hand, he says the cost of producing these products has become “much, much cheaper”.
Brand-led companies such as CiiTECH get their CBD oils and other products made by third-party contract manufacturers.
These manufacturers are now competing with each other for business more fiercely than ever, he says, which can enable brands to keep their costs down and pass on cheaper prices to consumers.