PURA acquires CBD sun care business as part of expansion strategy

08 Jun 2020 --- Puration Inc. (PURA) has acquired an unnamed cannabidiol (CBD)-infused sun care product business in a bid to enter the CBD branch of the sun care market, which as a whole, is valued currently at US$8.5 billion and forecasted to grow further. The move marks the third acquisition for PURA within a year, as the CBD company also seeks to enter the CBD-infused beverage, edible and topical businesses. PURA says it has launched a campaign targeting “creative and promising young companies starved for investment in the cannabis capital market.” Previously, PURA also acquired a CBD confections company and a CBD pet products company.

Beyond food and nutraceutical applications, CBD’s potential for the personal care industry is increasingly recognized. CBD is touted for beneficial properties, such as calming and nourishing the skin, in addition to its supplements that may boost skin health from the inside out. While regulatory hurdles keep CBD applications in food and beverages in the gray zone, the personal care sector is set on “clearing the air.” 

In April, during the 12th Cosmetic Compliance Spring 2020 Summit, in New York, US, federal and state lawmakers and regulatory affairs specialists from both big and independent cosmetic brands pushed for practical strategies to remain compliant in a constantly changing regulatory landscape.

Click to EnlargePuration Inc. (PURA) has acquired an unnamed cannabidiol (CBD)-infused sun care product business in a bid to enter the CBD sun care market, which is valued currently at US$8.5 billion. PURA targets CBD product acquisitions that can be enhanced with its own patented technology. The company owns a license to a US-patented cannabis extraction process backed by extensive university medical research. The license, issued by NCM Biotech, is suitable for beverages, edibles and cosmetics among other uses. NCM Biotech is focused on medical research and PURA has access to that research.

In February, PURA secured a US$5 million investment  to fund its expansion plans. The venture is structured as a debt facility whereby funds can be drawn as needed to fund acquisitions. The drawn funds would be secured by the acquired asset and the debt can be repaid in stock at US$0.10 per share. The company’s management is actively pursuing additional investment to increase the potential of the current acquisition campaign.

PURA’s acquisition priority is to concentrate on opportunities that can be purchased in exchange for a royalty agreement. Management's preference is to concentrate its investment funds on the rebranded sales and marketing of acquired assets and not the actual purchase of the asset itself. The CBD sun care acquisition was purchased in exchange for an ongoing royalty issued to the seller.

The company’s management is looking for CBD acquisition opportunities where the operations can be absorbed into PURA’s existing production capacity; product formulations can be enhanced with PURA’s patented technology; and the sellers’ benefit is derived from the ultimate success of the asset. 

PURA reported US$2.7 million in revenue in 2019, up 121 percent from 2018. Revenue is generated primarily from the sales of PURA’s own EVERx CBD Sports Water. PURA anticipates 100 percent revenue growth in 2020 from ongoing sales of EVERx.

NutritionInsight previously reported on the CBD market and how it is shaping up amid the COVID-19 outbreak. Most recently, flavors and fragrances heavyweight Symrise announced that it has developed a cannabinoid that it expects will “revolutionize the pharmaceutical market.” 

Edited by Kristiana Lalou

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