Vertical Wellness continues to expand despite the daunting challenges being faced amid the unprecedented coronavirus pandemic and current economic downturn.
The company, faced with its own challenges, inked several partnerships aimed at establishing itself as a leader in the hemp and CBD industry.
Vertical Wellness expanded its strategic processing and extraction partnership with GenCanna. As part of the agreement, GenCanna will deliver more than 15 million pounds of unprocessed hemp to Vertical Wellness’ production facility in Cadiz, Kentucky.
In addition, Vertical acquired Tech Holdings, a company that invented and patented a procedure that allows delivering cannabinoid ingredients in a way that makes them more effective and faster-acting.
Finally, Vertical signed a licensing partnership with Kathy Ireland Worldwide for a CBD product line.
“The team at Tech-Holdings accomplished what few in the industry could by delivering products with the ability to be more effective and faster acting,” Vertical CEO Smoke Wallin told Benzinga. “It’s a game changer that will help distinguish our products from others.”
This, combined with the expansion of Vertical’s relationship with GenCanna to increase processing and extolling ability for higher volumes of biomass, “further positions Vertical Wellness as an industry leader in the hemp and CBD industry, and allow us to continue in an upward trajectory,” he added.
Commenting on Tech Holdings’ technology itself, Wallin said Vertical aspires to be a true health and wellness brand company.
“We understand the branding and distribution world as well or better than anyone in the industry,” he said. “Adding to that capability by strategically bringing in developed IP for better delivery of cannabinoid derived products is a core part of achieving our vision… You can expect more strategic moves along these lines as we go forward.”
Pivot To Survive
Last Fall, Vertical Wellness was 36 hours away from executing a reverse merger with a $230 million Nasdaq-traded SPAC at a $500 million valuation. That deal evaporated in the midst of the hemp and CBD market collapse, which was driven by a massive harvest coupled with a lack of processing solutions and FDA headwinds.
“We harvested 4 million lbs of our own hemp, which we could not easily convert to cash,” Wallin said. “I recognized that the capital markets were going to be tough for some time and getting public was not a realistic short-term funding mechanism. At that point, my team had a series of strategy meetings on how to weather the coming storm.”
Vertical had invested some $22 million in building out the company, but the demand for large amounts of CBD oil was not there yet.
Meanwhile, its brand portfolio was at the launch stage, and required investment. Wallin knew he had to pivot to survive.
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“By February I watched seven of the largest companies in the hemp/CBD processing that together had raised almost $400 million go bankrupt or out of business,” he said. “At that time, I made the decision to lay off 60 members of our team just as the shutdown for COVID19 began. That’s when we pivoted and created Vertical Wellness Services Division to utilize our infrastructure investment in Kentucky.”
Leveraging his investment banking relationships, Wallin landed introductions to some of the groups trying to recover investments in these distressed companies.
“This enabled us to ramp up our services business, help investors in other hemp processors and cover our operating costs,” he said.
The company has since been able to rehire more than 40 of the teammates that had been terminated, and expects to have a larger team than before the pandemic in just a few more weeks.
“In retrospect, we made a great move at the right moment of time to cut costs and survive. Sometimes surviving is the CEOs mission,” he concluded. “Now I’m back to what I love to do, which is growth.”
© 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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