Hollister Biosciences Inc. (CSE: HOLL) (OTC: HSTRF) (FRANKFURT: HOB) (the “Company“, “Hollister Cannabis Co.” or “Hollister“) a diversified cannabis branding company is pleased to announce that it has commenced pre-roll production and distribution in Arizona to complement the Company’s existing cannabis concentrate product suite in the state through its wholly owned Venom Extracts (“Venom“) subsidiary.
Pre-roll production will initially be launched for existing and new white-label customers and will be expanded to include branded offerings in Q3 that leverage Venom’s strong existing brand equity in the state. The company has prepared for initial production of up to 10,000 units per day, with plans to expand capacity to 30,000 units per day by Q4.
“As a result of adult use legalization in Arizona, we have witnessed growing consumer demand for pre-rolls in the state. Integrating our capabilities and brands between California and Arizona has been a key operational initiative for the Company and we are proud to share this exciting update. We look forward to introducing our California Hashbone pre-roll brand and our brand partners into Arizona to broaden our higher margin product offerings throughout the state”, shared Carl Saling, Co-Founder and CEO of Hollister.
Arizona Market
The state boasts a population of 7.3 million, approximately 70% of which are of legal consumption age, which makes it the 5th most populous state with an active legal adult-use market. Arizona is one of the largest medical marijuana markets in the world with over $1 billion in 2020 sales. The state has nearly 308,000 registered medical patients, making it the third largest medical program in absolute terms, and the second highest in terms of patient penetration rate. Legal sales of adult-use cannabis in Arizona commenced midday on Friday January 22nd, several months ahead of industry expectations, and the fastest that any of the 15 states with recreational marijuana has gone from voter approval to actual sales. The state realized over $2.9 million in recreational sales within 10 days of legalization. “Marijuana Business Daily projects that the state’s recreational market could generate up to $400 million in revenue its first year and more than $700 million by 2024.”
“Arizona transitioned to adult-use in late January, but this is the first month that BDSA included adult-use sales. Total cannabis sales grew 68% to $124.9 million, with adult-use representing $52.8 million. Medical cannabis sales fell 17% to $72.1 million. Growth was strong across all categories, but the highest growth by far was in pre-rolls, which gained 156%.” – New Cannabis Ventures
Venom Highlights
In March 2020 Hollister Biosciences completed the acquisition of Venom Extracts, one of the industry’s premier award-winning cannabis concentrate brands. Venom sales were consolidated with Hollister’s sales starting after the closing in March and contributing approximately 95% of the Company’s overall sales. Venom’s product suite is a category leader in Arizona with over 4 million grams sold in 2020, accounting for up to 30 percent of category sales state-wide (per BDS Analytics). Venom is positioned for continued growth in Arizona, it has a strong brand recognition and distribution network, with products in the vast majority of dispensaries statewide.
Venom operates an 11K sq. ft. facility located in Phoenix, AZ which can produce approximately 5 million grams of extract annually in its current configuration. With planned equipment and production enhancements its expected production capacity will be greater than 15 million grams of concentrate products and over 8 million pre-rolls per year.
- In 2020 Venom produced greater than 4 million grams of product
- In Q1 2021 Venom produced approximately 2 million grams of product
This expansion reinforces the company’s focus on operational efficiencies and profit margins through product mix and same customer sales. Adding Pre-Rolls as the next product category for Arizona leverages existing capabilities from California, and a large existing distribution network to enhance revenue and profitability of the Arizona operations. The Company looks forward to sharing additional details as this initiative progresses.
