SmallCapPower | April 17, 2018: Emblem Corp. (TSXV:EMC) announced on April 11, 2018, that it has signed a supplier agreement whereby Emblem Corp., via its wholly-owned subsidiary, Emblem Cannabis Corp., will be a preferred cannabis supplier to Fire & Flower Inc. After the approval and subsequent royal assent of the proposed cannabis act (Canada), Bill C-45, and the receipt of required licensing by Fire & Flower, Emblem will supply its branded cannabis products for an initial period of three consecutive years. Fire & Flower is expected to sell the cannabis products in all the provinces in which it operates and, if applicable, in which Emblem Corp. has received a provincial listing. Through the supply deal, Emblem gets a significant opportunity to get their adult-use brands into the hands of consumers across Canada.
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Emblem Corp. CEO Nick Dean remarked, "The retail environment will be critical to generating brand awareness, educating the consumer about products and ultimately driving market share for our adult-use brands. Today's deal with Fire & Flower reinforces our belief that the greatest shareholder value will be achieved in the long-run via channels that give the greatest access to consumers. As Fire & Flower is building a leading retail concept in the cannabis space, we anticipate that this arrangement will assist us in our single-minded focus on driving shareholder value."
Certain directors and officers of Emblem Corp have an ownership stake in Fire & Flower. Emblem's Chairman Harvey Shapiro is a Director of Fire & Flower, owning 19.5% common shares of Fire & Flower and controls an additional ~65% of the common shares through a voting trust. Also, Emblem's Director Maxim Zavet, owns ~4.2% of the common shares of Fire & Flower and Nick Dean, Emblem Corp.'s President and CEO, owns ~0.3% of the common shares of Fire & Flower.
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Fire & Flower CEO Trevor Fencott said, "We are excited to enter into this agreement with Emblem. Their awareness of the importance of the retail channel in cannabis as well as their commitment to creating adult-use brands that resonate with consumers aligns well with Fire & Flower's best-in-class retail cannabis strategy. There is a lot to accomplish preparing for legalization in Canada and having partners like Emblem that can move as quickly and decisively as us in the space is definitely an asset."
Emblem Corp also announced on April 16, 2018, the hiring of a Chief Marketing Officer, a Vice President of Medical Marketing, and a Creative Director.
Emblem Corp stock currently trades at a market capitalization of $194 million with price-to-book multiple of 3.45x. During the past week, shares of Emblem have climbed more than 30% to its current price of $1.64.
Disclosure: Neither the author nor his family own shares in the company mentioned above.
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