Recently, we covered what we refer to as the second wave of cannabis operators: extractors. Typically in a class of their own in reference to profitability within the cannabis sector, these operators approached the market with the goal of solving a problem, rather than looking to make a quick buck in an overhyped environment. In particular, we focused on Pure Extracts, a firm set to go public on the CSE in the third quarter of 2020 with the tentative ticker of “PULL”.
Pure Extracts is an experienced, integrated Canadian extractor currently operating in the Canadian cannabis sector, with further aspirations of entering the functional and psychedelic mushroom sector. Here, the company intends to submit to Health Canada for a Dealer’s License to enable the firm to extract psilocybin while obtaining an early lead in the sector. Further details on the firm and its operations can be found in our extensive coverage here.
Recently, we were able to catch up with Pure Extracts CEO Ben Nikolaevsky for a quick Q&A session.
1. Pure has developed itself into a force to be reckoned with within the cannabis space, what made you pursue the mushroom sector?
Our multi-plant experience and state-of-the-art CO2 and ethanol extraction equipment set us up very nicely for the mushroom sector.
2. What, in your view, sets you apart from your peers within the burgeoning space?
We are deep into edibles which is an ideal entrée to the mushroom space. Our expansion into the mushroom space is built around a profitable, expanding cannabis and hemp extraction business utilizing both our CO2 & ethanol extraction technology that has been battle tested in the field for several years. This is not a science experiment. We already have over 30 tried and tested, full spectrum oil (FSO) vape formulations and years of experience.
3. One thing we frequently see is that firms with mushroom-related operations focus marketing heavily on the psychedelics aspect while discounting the functional market. From an operational standpoint, what excites you more, the psychoactive or the functional market?
Initially, we are concentrating on the key attributes of the functional mushroom market: consistency, potency, efficacy, then psychedelics can benefit from this experience as the regulatory environment unfolds.
4. One thing we find investors ask us the most about is the fundamental aspect of psychedelics-related issuers. Can you speak to that in the case of Pure?
Too early to comment on the feasibility/viability of psychedelics as a stand alone business. Fortunately, we have multiple, profitable lines of business including extracting tolling services, white label products and in-house proprietary branding.
5. Lets switch gears a bit and discuss the cannabis side of your operation. What sets you apart from other extractors?
Previous experience in the sector, proprietary formulations in hand, superior team, purpose built facility, CPG branding & sales expertise in-house, and we have multiple, profitable lines of business including extraction tolling services, white label products and in-house proprietary branding.
6. Your cannabis and hemp operations appear to have strong demand right out of the gate, after having signed multiple agreements before final licensing, while much of the sector languishes. What drove you to go public in the current environment?
Extraction is a major bottleneck in the cannabis sector and the appetite for companies that have a pathway to profitability and can demonstrate efficient use of capital is actually quite robust. Additionally, our valuation is conservative in comparison to our peers.
7. What do you have on the horizon in terms of potential products or formats for your cannabis operations?
Edibles, THC & CBD gummies, vapes, tictures, capsules (white label & in-house brands).
8. When is it anticipated that Pure Extracts will commence public trading?
Q3 2020 (CSE tentative symbol of “PULL”).
9. What keeps you up at night?
Impact of Covid 19 on Ontario dispensary openings and regulatory licensing in international jurisdictions, continuing presence of unregulated, black market products.
FULL DISCLOSURE: Pure Extracts is a client of Canacom Group, the parent company of The Deep Dive. The author has been compensated to cover Pure Extracts on The Deep Dive, with The Deep Dive having full editorial control. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.