Namaste Technologies Makes a Sweet Investment

Namaste Technologies Inc. (TSXV:N), one of the Canadian marijuana stocks, said it will acquire 49% of chocolate maker Choklat Inc

SmallCapPower | March 11, 2019: Namaste Technologies Inc. (TSXV:N), one of the Canadian cannabis stocks, Wednesday announced that it has taken a big stake in Choklat Inc. in a cash-based transaction valued at ~$1.5 million. Namaste Technologies will acquire 49% of the issued and outstanding shares of Calgary, AB-based Choklat Inc. As part of the acquisition, Namaste will be appointing a member to the Board of Choklat.

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The acquisition will allow Namaste to infuse Choklat’s products with THC or CBD and sell them as edibles. This move comes right before the expected legalization of cannabis infused-edibles in Canada sometime in late 2019. Health Canada proposed draft regulations for the production and sale of cannabis edibles in December 2018.

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Namaste Technologies Interim CEO Meni Morim said, “Choklat is a great acquisition for us with a vast offering of existing products that can be easily infused with THC or CBD and sold as edibles. Their small batch manufacturing model is a great fit within the new proposed regulations for edible cannabis products. This transaction provides the security of supply and manufacturing for our medicinal cannabis customers and provides capacity for the recreational market in the event proposed regulations are passed.”

Choklat is a premium chocolate manufacturer, which uses a bean to bar chocolate manufacturing process. It is the largest premium craft chocolate maker in Canada, with a strong foothold in the luxury chocolate market in Western Canada (~70 different retailers). In addition to a strong distribution network, Choklat sells its products on its online eCommerce site and has secured a supply relationship with Sobeys.

Choklat Founder and CEO Brad Churchill said, “This is a great combination where Namaste recognizes the value of e-commerce and direct to consumer sales and has the vision to help us grow by white-labeling products for all LP’s and distribution through CannMart. Choklat will aim to make products for CannMart and expand its target market to include the overall cannabis space. Almost two years ago I used my own prescription to personally research the concept of infusing chocolate and sugar with cannabis. As one of the only chocolate makers in Canada I had access to equipment and processes that other chocolatiers and confectioners don’t have. My research led me to discoveries which, when legal, will allow us to infuse both THC and CBD into chocolate and sugar in such a way that there is absolutely no discernible “weed” flavour or smell, and with dosage accuracy that is almost pharmaceutical grade.”

Namaste Technologies stock currently trades at a market capitalization of C$243 million with a price-to-book multiple of 3.3x.

Disclosure: Neither the author nor his family own shares in the company mentioned above.

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