Xebra Brands Ltd.’s (OTCQB:XBRAF) (CSE:XBRA) (FSE: 9YC) management has resolved to exit Colombia and the Netherlands and prioritize activities in Mexico where it has an outright first mover advantage, and in Canada, where it has developed beverage brands and formulations.
Canada
Xebra is launching its Vicious Citrus brand of cannabis infused lemonades nationally in Canada this summer. Vicious Citrus been presented to provincial cannabis boards across the country with accepted sales listings in major markets including the Province of Ontario where approximately 1,100 retail cannabis store licenses have been issued. National sales coverage is in place to support the rollout, as well as ongoing consumer education and marketing efforts for cannabis retailers. This summer, Vicious Citrus "OG" Lemonade will be the first of three SKUs to hit the shelves, combining 10mg of THC with 2mg of CBN. Vicious Citrus "OG" is one of only a few beverages in Canada containing CBN.
Mexico
Xebra announced on December 2nd, 2021, that the Mexican Supreme Court granted Xebra an irrevocable cannabis injunction, through its wholly owned Mexican subsidiary, Desart MX, SA de CV ("Xebra Mexico"). On March 24th, 2022, Xebra announced that the Supreme Court issued and recorded the official final written resolution supporting the injunction, and directed the Federal Circuit Court to enforce the Supreme Court decision. Xebra is awaiting the formal cannabis authorizations to be issued by the Mexican Health Regulatory Agency (COFEPRIS), with the aim of commencing commercial cannabis activities this 2022 calendar year.
Xebra is presently evaluating several opportunities to partner in cannabis cultivation, processing and manufacturing. Xebra Mexico's injunction applies specifically to cannabis with low-levels of THC (under 1%), therefore, in practical terms, to hemp cultivation and processing, and to the manufacture and sale of mainly CBD, CBG and CBN products, such as tinctures, oils, topicals, edibles, beverages, concentrates, distillates, emulsions, and biomass etc., and certain uses of the cannabis flower.
Colombia And The Netherlands
The Colombian cannabis landscape is saturated with hundreds of cannabis licenses, making it in Xebra's opinion very difficult to gain a competitive edge, or to create a profitable business model with scale, even in the longer term.
In the Netherlands, Xebra harvested and delivered its first cannabis crop in March in a competitive pilot trial for an exclusive government contract to supply medicinal cannabis. The selection process includes among other things, the submission of samples from three cannabis trial crops by March 2023, evaluated for certain criteria, including consistency and technical parameters.
Xebra's first crop was marginally near the desired ideal THC and CBD target ratios, which if successfully contested could be adjusted under a second crop to achieve the desired outcome, however it became evident from the expenditures associated with performing the first trial, that the costs of cultivation in the Netherlands are far too high, and that operating there would be contradictory to Xebra's objective of being a lowest cost producer and exporter of cannabis products.
Xebra will endeavor to recover costs by selling any equipment of value in the Netherlands and Colombia.
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