22nd Century Group (XXII), a plant biotechnology company that focuses on tobacco harm reduction, very low nicotine content tobacco and hemp/cannabis plant research, is announcing the initial closing of an investment in Panacea Life Sciences, Inc. Panacea is a rapidly-growing, vertically-integrated, consumer-facing company operating exclusively in the legal, hemp-derived, CBD product space. 22nd Century’s investments in Panacea over the next 12-18 months are expected to total $24 million, in combination of cash and 22nd Century stock in exchange for Panacea-issued debt and preferred equity. In addition, 22nd Century has also received a warrant to purchase preferred stock of Panacea, which upon full exercise will give 22nd Century a controlling equity position in Panacea.
In a press release, Cliff Fleet, president and chief executive officer of 22nd Group, commented: “After a disciplined and thorough review of the opportunities available to 22nd Century to maximize shareholder value creation, we are pleased to announce the Company’s first investment in the legal, hemp/cannabis, consumer packaged goods space. This investment is a major milestone in 22nd Century’s on-going execution of our hemp/cannabis strategic growth plan and offers the opportunity for strong projected shareholder returns.”
Fleet went on to say that 22nd Century’s goal is to build a leading, profitable business in the fast-growing, emerging, legal hemp/cannabis space through Panacea. 22nd Century will provide Panacea with its cannabis-plant research, its expertise in FDA-regulated spaces, and its leadership team’s experience with consumer packaged goods.
Leslie Buttorff, CEO of Panacea Life Sciences, added: “We are pleased to enter into this long-term strategic partnership with 22nd Century. With a strong team and seed-to-sale operations in place, Panacea is on track to deliver sales growth of over 1,000 percent in 2019, with gross margins over 50%. Our success has been possible because of our focus from day one on producing and marketing the highest-quality, hemp-derived, premium CBD products.
“Our supply chain is complete with track-and-trace capabilities and stringent quality control and testing at every step from seed-to-sale, including at our plant nursery and farm on the western slope of Colorado, as well as in our comprehensive extraction, distillation, testing and manufacturing operations located in a former Environmental Protection Agency (EPA) facility in Golden, Colorado. With state-of-the-art CO2 extraction, chromatography equipment to produce THC-free distillate oil, and product manufacturing lines, we can produce over $1 billion of product per year. We have also invested heavily in the development of a full, medically relevant, product portfolio for humans and animals. This is all driven by our talented, dedicated team and supported by a world-class, custom-developed, SAP-based, Cannabis ERP system that tracks the full chain of custody for every product we sell, which we believe clearly sets us apart from most other companies in the space. 22nd Century’s investment will allow us to continue to scale our business – including the acceleration of our online and retail sales and marketing efforts focused on the Panacea brand.”
Details of 22nd Century Group’s investment in Panacea are described in a Form 8-K filed with the Securities and Exchange Commission.