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Friday, December 2, 2022

A Close Look at Hydropothecary Corp (OTCMKTS: HYYDF) (HEXO)

Hydropothecary Corp (OTCMKTS: HYYDF) (HEXO) has had a year to remember making a huge run up the charts. Volume has increased significantly since the recent joint venture with Molson Coors Canada was announced.

HEXO operates in the red hot cannabis market responsible for many of the hottest stocks and biggest winners in the markets. This is a booming sector as legal marijuana sales are expected to grow to more than $20 billion by 2022 according to Marijuana Business Daily. October 17, the day when legal cannabis goes on sale in Canada is looming large and giving the whole industry a huge boost.

Hydropothecary Corp (OTCMKTS: HYYDF) (HEXO) creates and distributes innovative, easy-to-use and easy-to-understand products to serve the Canadian cannabis market. One of the country’s lowest-cost producers, HEXO is rapidly increasing its production capacity in the lead up to the adult-use cannabis market. The Company currently operates with over 310,000 sq. ft. of production capacity with construction on another 1,000,000 sq. ft. expansion set to be complete by year end. HEXO will serve the adult-use market under the HEXO brand, while continuing to serve its medical cannabis clients through the well-known Hydropothecary brand.

The Company was founded in August 2013 in Quebec and received its first cultivation license in November 2014 which was later amended to include cannabis sales in May 2015. Later that year  Hydropothecary completed the 7,000 square feet facility greenhouse facility it uses to produce cannabis and in December 2016, they completed another 35,000 square feet facility. In March 2017, the Company was licensed to sell cannabis oil.

Earlir this month HYDDF announced the first harvest of plants from its new 250,000 sq. ft. greenhouse. HEXO’s 250,000 sq. ft. greenhouse expansion, together with the manufacturing expansion, brings the Company’s total production space to over 310,000 sq. ft. Construction on the Company’s one million square foot facility is set to be complete by year-end.

HEXO is also making progress outside Quebec, the Company recently entered into a supply agreement with the Ontario Cannabis Store. Under the deal, the Company will supply the province with its award-winning Elixir product line, along with its newly launched Fleur de Lune, an intimate cannabis oil. The Elixir product offering includes several formulations such as THC, CBD, or 1:1 in either a peppermint oil or a medium-chain triglyceride (MCT) carrier oil. Elixir and Fleur de Lune are smoke-free, easy-to-use and will be sold in childproof packaging.

On August 1 Molson Coors Canada, the Canadian business unit of Molson Coors Brewing Company and leading Canadian cannabis producer, The Hydropothecary Corporation announced they have entered into a definitive agreement to form a joint venture to pursue opportunities to develop non-alcoholic, cannabis-infused beverages for the Canadian market following legalization.

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The joint venture will be structured as a standalone start-up company with its own board of directors and an independent management team. Molson Coors Canada will have a 57.5% controlling interest in the JV, with HEXO having the remaining ownership interest. The new company will combine the proven beverage experience of Canada’s leading brewer with a recognized innovator in the fast-growing cannabis sector to explore the highly anticipated consumable cannabis market, which is expected to be legally permissible in Canada in 2019.

Closing of the transaction, which is targeted to occur before September 30, 2018, is subject to the satisfaction of certain conditions, including execution and delivery of various transaction agreements, including governance documents and R&D and supply agreements. In connection with the closing of the transaction, subject to the final approval of the Toronto Stock Exchange, HEXO will issue to Molson Coors Canada warrants to purchase shares of HEXO.

On August 29 the Hydropothecary Corporation announced it has changed its corporate name from “The Hydropothecary Corporation” to “HEXO Corp.” effective today. The change of the Company’s name to “HEXO Corp.” follows the Company’s previously announced launch of “HEXO” as its new brand for the adult-use cannabis market, while continuing to use the “Hydropothecary” brand for the medical cannabis market.

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Currently heading northbound HEXO is the largest licensed producer based in the province of Quebec and is uniquely positioned to become the dominant supplier for the second largest province in Canada and potentially other provinces. The Company has quickly established itself as the clear leader in the Quebec cannabis market currently with over 310,000 sq. ft. of production capacity and construction on another 1,000,000 sq. ft. expansion set to be complete by year end. We will be updating on HEXO when more details emerge so make sure you are subscribed to Microcapdaily so you know what’s going on with HEXO.

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Disclosure: we hold no position in HEXO either long or short and we have not been compensated for this article

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