Botanic Wellness Offer
- Type: Retail
- Total Round Size (min): AUD$250,000
- Total Round Size (max): AUD$1,000,000
Botanic Wellness is now exclusively open for private investments.
- Fees paid by Issuer: 6.00% of funds raised
- Cooling-Off Rights: 5 working days
- Minimum Parcel Size: $500
What is Botanic Wellness?
Botanic Wellness intends to become a leading provider of CBD hemp-based products, initially in the USA and Europe and, in the future, in Australia as laws in relation to importing, growing and consumption of CBD hemp-based products are changed and regulations are further relaxed.
The Company has existing indoor and outdoor CBD hemp seed growing operations in Colorado, Arizona, and Texas, and over 500 acres of CBD hemp crops growing in Arizona and Texas in the USA and processes and sells wholesale and retail CBD products.
The Company also has a seed import licence and hemp growing licences to grow hemp in NSW in Australia and will be planting its first 100 hectare Australian CBD hemp crop in early September 2020. It also has a licence to import and supply Schedule 4 and 8 drug products into Australia which can be supplied under the Special Access Scheme.
Going forward, the Company plans to expand its existing USA and Australian CBD seed and hemp growing operations and further develop its USA and European sales operations. The Company also intends to commence importing CBD hemp products for the Australian market.
- Vertically Integrated Business Model
Presence across the value chain with expertise in seed breeding and production and crop planting and harvesting of CBD hemp. The Company also sells wholesale to producers of CBD products and recently commenced manufacturing its own final products under its own “Opulent” brand for retail sale in the USA, Europe, and ultimately Australia when laws permit.
- Commercially Focused & Adaptive Business Model
Botanic Wellness has entered into a range of agreements in the USA and Australia and intends to continue to invest and develop capabilities in the CBD hemp and related sectors that it considers will be most immediately valuable and strategic in the future. The Company had revenues of AUD$2.3m in FY2020 (unaudited).
- Global Asset Footprint
The Company currently has high quality CBD hemp seed growing operations in 3 states in the USA and over 500 acres of CBD hemp crops growing in Arizona and Texas and plans to replicate its USA operations in NSW and Victoria. It also proposes to expand its sales operations further in Australia, the USA, and Europe to give it greater exposure to the rapidly increasing demand from consumers for CBD hemp products.
- Strategic Relationships
The Company has developed a wide range of commercial relationships with large commercial farmers, product manufacturers and distributors and retailers of CBD hemp products intends to continue to make this a priority in the future.
- Rapidly Growing Markets
Growing markets driven by relaxation of regulation of CBD products, increasing global awareness of the health and wellness benefits of hemp products, and a rapidly growing demand for high quality CBD products at an affordable price.
- Experienced Board, Management & Executive Team
The Team has international experience in all aspects of the CBD hemp industry as well as considerable experience in developing early-stage companies in new and rapidly growing industries and listing and operating companies on the ASX. Botanic Wellness plans to list on the ASX in November 2020.
Innovative Operating Model
Botanic Wellness invests in and provides alternative financing options, industry expertise, and professional networks to CBD hemp farmers and businesses in the USA and Australia.
The Company’s “streaming” financing model is a structure that provides early stage development capital and operational expertise to companies in exchange for a percentage of their equity and a “stream” of the future revenues and profits.
This enables Botanic Wellness to plant and cultivate significant sized crops at a lower price than if it entered into traditional farm ownership or leasing arrangements. Under these joint venture agreements, the Company contributes its various strains of CBD hemp seeds, licenses and permits, and hemp growing expertise and the farmer contributes their farmland, general farming expertise, machinery and labour to plant, maintain and harvest the crops. The costs of both parties are then reimbursed when the product is sold and the profits shared equally.
Benefits of CBD Hemp
In contrast to cannabis, hemp contains only small amounts (less than 0.3%) of THC, and therefore does not have the psychoactive properties of cannabis. There are four usable parts of the hemp plant: the inner fibres (hurd), the outer fibres (bast), the seeds, and the flower.
Hemp has a very broad range of uses (in the region of 25,000) including its use in CBD based nutraceuticals and supplements and in a wide range of industrial applications.
Consumers are becoming increasingly aware of its many health and wellness benefits, and various governments around the world have responded by making CBD hemp products more accessible. Medicinal CBD Hemp is now legal throughout the USA and Canada and most of Europe and expected to become available ‘over the counter’ in Australia in late 2020 / early 2021.
The US market alone for hemp-derived CBD products is estimated to grow from USD $591m in 2018 to in excess of USD $22bn by 2022 (c.150% CAGR).
Key elements of Botanic Wellness’ business strategy are:
- The growing of a variety of genetic strains of seeds, the use of the seeds developed and grown in its joint venture farming operations and the sale of those seeds to third party farmers and others
- The growing of CBD hemp crops for the extraction and production of CBD for processing into crude and distillate for sale to wholesale customers wanting to produce CBD products
- The production of THC free distillate for the Company’s own retail CBD products for online and offline sales initially in the USA and Europe and ultimately in Australia and South East Asia
- Optimising growing, harvesting, extraction, production, and distribution and sales efficiencies and building scale in all parts of the business; and
- Building strategic relationships with key customers and supplier
There are a range of growth opportunities for Botanic Wellness. These include:
1. Increasing seed sales from its existing facilities in Colorado, Arizona and Texas
2. Increasing the amount of land on which it is currently growing CBD hemp in Arizona and Texas and other states within the USA
3. Further developing its hemp extraction and production relationships and capabilities and developing its own production facilities in the USA
4. Further developing the Company’s sales and marketing and distribution capabilities for its CBD hemp-based products for wholesale customers and its own online and offline retail network
5. Developing similar business operations in Australia and South East Asia
Cary Stynes is the Executive Chairman of the Company.
He oversees the operations and investment strategy of the Company. He holds a current legal practicing certificate and is admitted to practice in the Supreme Court of Victoria and High Court of Australia. He is the principal of Stynes Consulting a legal and consulting practice specialising in early stage companies. He was previously a lawyer with international law firm Minter Ellison before establishing his own law firm which he has operated for over 25 years.
Since 2000 he has arranged the ASX listing and been the Managing Director or Chief Executive Officer of ASX listed Software Communication Group Limited, CBD Online, subsequently CBD Energy Limited and The Swish Group Limited. He is also a former Non-Executive Director of Traffic Technologies Limited, MCM Entertainment Limited, Teys Limited (now Oakdale Resources Limited), and arranged the ASX listing and was General Legal and Commercial Counsel for USA (Hollywood) based digital media and advertising company engage: BDR Limited. He also sat on the Board of children’s cancer charity The Koala Foundation.
Donald (Don) Gritten Jr. is a business strategy consultant and is President and CEO of the Company’s USA operations. He was formerly a sergeant in the US Army and on active duty for two years and served for nine years in the US Army Reserves. Don has owned a number of medical related practices, a management-consulting firm, as well as business accounting firm and an insurance brokerage. In the last 15 years he has purchased and sold a number of private companies.
Don began researching and working in the hemp industry in 2015. He has developed the Company’s seed growing operations in Colorado. In Arizona, he has overseen the operation of the Company’s multiple farming operations and production and manufacturing operations focusing on the vertical integration of the business from seed production to wholesale and retail sales. Don has worked with some of the the most experienced operators in the hemp business and brings that experience to the Company.
Joe has a background in finance and economics and has been a business owner and entrepreneur for over 25 years. He understands markets and develops and implements strategies to maximise efficiency and profitability.
He recently became involved in the rapidly growing hemp industry and has used his extensive experience in business development, real estate and mortgage banking to acquire property, create partnerships with large agricultural farmers and developing a vertical integration strategy for the hemp industry.
Prior to his involvement in the hemp industry he was the owner of various property investment companies from 2004 to 2018. These companies bought and sold investment real estate in various parts of the USA during this time.
For more information please see section 2.9 of the Offer Document.
Use of Funds
Key Risks Facing the Business
Botanic Wellness is at a relatively early stage in the development of its business, in an industry that has recently undergone material regulatory changes and is evolving extremely rapidly. As a result, investing in the Company should be considered highly speculative and involves significant risk. The sales potential of Botanic Wellness’s products is still at a relatively early commercial stage. The ongoing and future demand for the Company’s products, in existing and target markets, is still being established and is uncertain. There is a risk that there may not be sufficient demand for the Company’s products for their sustainable commercial exploitation.
Botanic Wellness operates in all the required segments of the CBD hemp business, seed breeding and production, crop cultivation; CBD distillate production and wholesale and retail online and offline sales.
The future success of Botanic Wellness will depend on the Company successfully implementing its business plan in relation to the development of its business. The future success of the Company is contingent on a number of factors and may be impacted by adverse developments relating to the market for hemp and CBD products generally, or in relation to the particular CBD products sold by the Company.
As a result, anticipated sales may not be achieved and even if achieved, may not result in Botanic Wellness achieving and maintaining its margins and planned level of profitability.
Hemp growing and the production of hemp goods is highly regulated by governments at Federal and State levels. Botanic Wellness’s business is dependent on obtaining and then retaining the appropriate licences and permits issued by the relevant regulatory authorities for the cultivation, manufacture and sale of hemp in the United States, Europe and Australia and elsewhere it may decide to operate in the future.
Botanic Wellness operates in an industry that has recently experienced material regulatory and legislative changes. Given that Federal legislation, and state-based legislation, is still in its relative infancy, there is a risk that the interpretation and implementation of the law may change or be subject to legal uncertainties. Additionally, given the varied and evolving regulation of hemp at a State level in the USA, there is a degree of uncertainty that could make ongoing legal compliance challenging.
There is a risk that a change in government or political disposition of governments to the hemp industry may result in a change in government policy and the relevant regulatory regimes under which Botanic Wellness operates, resulting in the loss of certain markets or increased operating costs for Botanic Wellness.
The FDA has published its view as an advisory guidance that CBD products cannot be marketed as foods or dietary supplements in the USA. It is widely considered that this position “is unsettled and unsupported by law or regulations” and “is not a final determination”. Should the FDA consider the sale of CBD hemp or nutraceutical products impermissible, the Company’s business could be impacted and the Company’s financial viability may be at risk.
Botanic Wellness intends in the future to supply a variety of hemp and CBD based products either manufactured from its own hemp or from hemp it purchases from other growers.
As with any product, there is a risk that the products sold by the Company may cause risk or injury to consumers. Should any of Botanic Wellness’s products be associated with safety risks such as misuse or abuse, incorrect labelling or tampering or product contamination or spoilage, a number of materially adverse outcomes could occur.
Why Equity Crowdfunding?
Ahead of an intended listing on the ASX in late 2020, the Company is pre-funding to complete the processing of its first group of crops in Arizona, to continue the planting its expanded second group of crops in Arizona and Texas in the USA, to further expand its valuable CBD hemp seed growing operation for future crops and grow it wholesale and retail product sales businesses in the USA and Europe.
Botanic Wellness has clear plans for expanding existing operations in the US and Australia, and a vision to invest in further similar strategic companies to become a significant player in the rapidly expanding CBD hemp health and wellness industry.
Question & Answers
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Australian Corporations Regulations - Warning Statement About Equity Crowdfunding
Crowd-sourced funding is risky. Issuers using this facility include new or rapidly growing ventures. Investment in these types of ventures is speculative and carries high risks.
You may lose your entire investment, and you should be in a position to bear this risk without undue hardship. Even if the company is successful, the value of your investment and any return on the investment could be reduced if the company issues more shares.
Your investment is unlikely to be liquid. This means you are unlikely to be able to sell your shares quickly or at all if you need the money or decide that this investment is not right for you.
Even though you have remedies for misleading statements in the offer document or misconduct by the company, you may have difficulty recovering your money.
There are rules for handling your money. However, if your money is handled inappropriately or the person operating this platform on which this offer is published becomes insolvent, you may have difficulty recovering your money.
Ask questions, read all information given carefully, and seek independent financial advice before committing yourself to any investment.