Pasha Brands (CRFT.C) fills marijuana supply gap with North 40 Cannabis deal

After a series of acquisitions, distribution deals and nationwide expansion efforts, Pasha Brands (CRFT.C) is targeting another segment of the marijuana industry: microprocessors like North 40 Cannabis.

On Monday, Pasha Brands announced that wholly-owned subsidiary, BC Craft Supply, reached a new supply agreement with North 40 Cannabis, Canada’s first licensed microprocessor to supply the domestic market with dried flower and other cannabis products. Under the agreement, North 40 will supply all of its annual production to BC Craft for sale and distribution.

With the deal, Pasha Brands kills two birds with one stone (or would ‘takes two pulls from one blunt’ be more fitting?). Either way, it takes a step forward in filling the marijuana supply gap and reaffirms BC Craft’s business model of helping craft growers expand their business opportunities across the country.

Through its various supply agreements, including the one with North 40, Pasha believes that each micro cultivator in Canada will be able to produce roughly 500 kilograms of cannabis per year while each microprocessor can process up to 600 kilograms per year.

North 40 Cannabis and BC Craft Supply Co reach an agreement with major implications. | Source: North40cannabis.com

The new supply agreement was inked three weeks after North 40 Cannabis became Canada’s first licensed microprocessor.

The Saskatchewan-based company received its Health Canada licenses for micro-cultivation and microprocessing July 26. It plans to break ground this month and harvest later in the fall.

Gord Nichol, founder of North 40 Cannabis, says the supply deal ensures that craft producers have a place at the table post-legalization.

“I’m absolutely thrilled to have signed an agreement with a company like Pasha,” Nichol said in the press release. “They have shown micro cultivators like me that they are dedicated to ensuring craft producers in Canada will flourish under legalization. I’m excited to move ahead and looking forward to our first harvest this year.”

North 40 Cannabis: all about the craft

Canada may have been the first G7 nation to legalize recreational cannabis, but the transition from backstreets to Main Street has been a painful one.

In typical Canuck style, overwhelming bureaucracy and Health Canada backlogs kept legal production and marketing at a virtual standstill.

Craft cannabis producers were among the hardest hit. Just take a look at this little headline from CTV News from less than four months ago:

At the time, some 120 companies had applied for micro-grow licenses with Health Canada. Only one company, somewhere in B.C., received approval. (Before you ridicule my journalism skills, keep in mind that (1) I’m not a journalist and (2) Health Canada refused to say what company got approved).

Against these odds, North 40 Cannabis got the green light.

Pasha Brands after learning that North 40 Cannabis had secured first microprocessing license in Canada. | Source: GIPHY

Jason Longden, CEO of Pasha Brands, says North 40 Cannabis aligns with BC Craft’s business model, which is aimed at supporting craft growers transition into the legal market.

“North 40 has established a state-of-the-art cultivation and processing facility and we are proud to work with such an innovative team. This is simply the next step in fulfilling our goal of becoming the biggest producer of craft cannabis products in Canada and I’m confident North 40 will help us bring Canadians more of the cannabis that they’re looking for.”

–Jason Longden

Pasha stock update

Shares of Pasha Brands opened sharply higher on Monday, reaching a peak of USD$0.5385. Before you get too excited, keep in mind that such massive jumps are due to exceedingly thin trading volumes. The stock has since moderated back down to around $0.32. Still, it’s up more than 3% on the day.

Pasha’s stock is trading in a more predictable range after opening sharply higher on Monday. | Source: Yahoo Finance

Despite underlying volatility, CRFT.C outperformed the Canadian Marijuana Index, which is down 0.9% at the time of writing.

At current values, Pasha’s stock has a total market capitalization of $58.6 million.

Volatility is the name of the game for most budding marijuana plays. This is especially the case for Pasha, which began trading under its current exchange symbol merely two months ago. Prospective investors should evaluate the company’s distribution network and acquisitions before sizing up whether it’s worth a shot.

–Sam Bourgi

Full Disclosure: Pasha Brands is an equity.guru marketing client.