The company is expected to close its SPAC merger with Schultze Special Purpose Acquisition Corp. (NASDAQ: SAMA) in Q4 under the new ticker “CLVR.”
Clever Leaves is a multinational operator and licensed producer of pharmaceutical-grade cannabinoids with its primary operations in Colombia. We are bullish on SAMA/CLVR and believe in the opportunity ahead for the company: the company is early stage, the global cannabis opportunity is significant, and Clever Leaves appears to be positioned for material revenue growth coupled with a very enviable cost structure in 2021 and beyond. We will be sharing more of our thoughts on the company in our upcoming industry Black Book in early December.
Clever Leaves announced today that it had expanded its Brazil operations through a commercial agreement with GreenCare, a pharmaceutical company in education and medicine, access, and distribution of products in the Brazilian cannabinoids market. GreenCare has agreed to license and distribute certain Clever Leaves’ white label finished cannabis-derived products manufactured in their EU-GMP certified facilities in Colombia. The three-year agreement provides that GreenCare will purchase at least $4 million of product from Clever Leaves, and $2 million was paid to Clever Leaves upon the execution of the contract. Its anticipated that the first commercial shipment under the agreement will reach the Brazilian market by Q2 2021. This agreement could serve as template for further supply agreements in Latin America. Their B2B agreement pipeline may have potentially expanded with Mexico’s recent significant legislative progress putting adult-use legalization and unlocking cannabis commercialization within sight.
Over the past few months, Clever Leaves has reported several business updates:
- As of Q4 2020, the company hit an operational milestone with the successful exportation of cannabis products to 14 different countries and 5 continents. The products range from raw materials, including active pharmaceutical ingredients (APIs), and semi-finished products, including white label products. The company’s products' portfolio has been exported to Australia, Brazil, Canada, Chile, the Czech Republic, Germany, Israel, Netherlands, Peru, Poland, Spain, South Africa, the United Kingdom, and the United States.
- In late September, the company gained a special priority status after its Colombian operations were named a Project of National and Strategic Interests ("PINE") by the Government of Colombia. The PINE designation offers Clever Leaves accelerated and simplified administrative processes as the company continues to develop new products and services and bring them to market.
- In August, Clever Leaves’ Portugal operation was granted a license to cultivate, sell, and export medical marijuana by INFARMED I.P., the Portuguese regulatory authority overseeing the country’s pharmaceutical industry. Their Portuguese facility sits on 9 million sq. ft. of land and currently has 110,000 sq. ft. of greenhouse facilities. The license, while provisional due to the COVID-19 pandemic, allows Clever Leaves to cultivate, import, and export dry flower for medicinal and research purposes.
Clever Leaves is set up to capitalize on more countries legalizing cannabis. Two weeks ago, Israel took steps toward legalizing cannabis by the end of 2021. Last week, the Mexican Senate approved an adult-use legalization bill, passing 82 votes in favor, seven abstentions, and 18 against. The bill still needs approval from their lower legislative chamber, and President Andrés Manuel López Obrador needs to sign the bill into law. If Mexico passes adult-use legalization, it will become the third nation, following Uruguay and Canada. This has potential to be a big positive for our LONG bias in Clever Leaves (SAMA). The company has mentioned it has received several investments from future customers/operators in Latin America, including Brazil and pharmaceutical businesses in Mexico.
The company is on track towards becoming a formidable competitor to Canadian LPs in the European market as a MNO. The company has one of the most extensive cultivation and extraction operations in Latin America and is among the world's largest, including Canada's licensed producers and top extractors. The company has the advantage of low-cost operations due to favorable climate conditions and cheaper labor than its Canadian peers. The average cost per gram by Clever Leaves' Colombian operation is USD 0.20 – Canadian operators run upwards of USD 1.71 (average of APHA, ACB, OGI, and TLRY). As a sign of its B2B market potential with established cannabis operators, Clever Leaves has already signed a regional supply agreement with Canopy Growth (CGC) – the Canadian company outsourced its LatAm operations to Clever Leaves in April 2020. Under the one-year deal, Clever Leaves will supply CGC with cannabis extract products with an option to renew for two additional years.
