professional report (only got part and copied from a bb)18 Feb 2021 19:23
- FDA regulation covers Tobacco/Nicotine only. We have spoken to three legal firms in US, in summary there are no issues for the Zoetic CHILL brand and it is best summarized by the following quote:-
“The FDA has consistently declined to interpret “tobacco products” so broadly as to include products free of nicotine or tobacco.”
The Share Prophets thesis on regulation falls away entirely. Share Prophets have either mistakenly or intentionally misinterpreted the FDA’s position.
- Regarding CBD edibles and other CBD products the FDA has sent cease and desist letters to companies who either have incredibly high CDB content and/or THC which isn’t declared. Or are directly making specific medical claims about the product. Well manufactured CBD products and smoking alternatives are not subject to their jurisdiction (see page 24). The FDA has consistently confirmed this. Note certain State’s regulations do vary, but the tide is clearly one way in this respect and CDB operators/distributors are very aware of State by State variations.
- FCA - as we discussed previously and best summed up by the internal comment “if you describe people as floor-****ters how do expect to be taken seriously”
- Funding - we know of three entities (including us) that have offered financing over the last 4 months, all have been refused. Our read is that that is due to the margins and credit partners, ie large distribution companies there are offers of financing being proposed/offered to the company that will comprise a mixture of invoice discounting and credit lines
- Having to spoken to a number of people within the European Distribution market for healthcare products we understand that the New Distributor is one of the largest from within the EU currently, heavy presence in the UK and Europe but with increasing additional global reach. The UK will be the first market with the rest of Europe to follow. It is expected that the Distributor will roll-out into the largest UK retail healthcare names in Q2. The largest UK healthcare names include Boots, H&B, etc.
- Novel Foods regulation in the UK will knock out most small or “Mom and Pop” operators in the CBD market in the UK. Concentrating the supply of products into the few large CBD companies and distributors.
- We anticipate that the distribution deals, AATAC, European Distributor and the new ones, will have commitments and clauses along the lines that they will only distribute or prioritise CHILL and Zoetic products in their categories. Win/Win of course
- The analysis we have done on the share register and trading over the last month shows that the larger holders (Top 30) have in the substantial majority been increasing their holdings. With regard to the short position our estimate is between 2.5-4m. With 1.5m of that added in the last ten days. Of the three largest spread betting firms one had no short positions, one >2m and the other we were unable to get a read. Outside the spread betting firms t