Blue Sky Sells Hemp Division To Manitoba For Cannabis Arm Scale-Up

Privately-held Canadian company Blue Sky Hemp Ventures is getting out of the food business, announcing it has sold its hemp ingredients division to Fresh Hemp Foods, the parent company of legacy grower Manitoba Harvest, which is owned by Tilray Wellness, for an undisclosed sum.

Blue Sky is now shifting focus to scaling up its cannabis arm around cannabis extracts and contract manufacturing agreements.

“Thanks to a differentiated strategy and disciplined execution, Blue Sky has delivered two consecutive years of positive EBITDA and net earnings – an uncommon achievement in this sector,” said CEO Andrew Potter, in a statement.

In the coming months, Blue Sky said its 15,000 sq. ft. cannabis processing facility will secure full EU-GMP compliance, enabling global manufacturing and extraction partnerships. That compliance will allow the company to scale beyond topicals and oils by building out a contract manufacturing arm around vape pens, pre-rolls, and softgels.

According to Potter, despite the company’s limited resources it managed to build a “high-growth, EBITDA-positive food business over the last few years,” particularly around its refined hemp seed oil ingredient. Potter said the deal with Manitoba Harvest and Tilray Wellness will take its ingredients business to “the next level” and noted that Blue Sky will continue to support its growth.

Blue Sky was founded in 2017 and claims it is one of the largest independent extractors in Canada, with the capacity to process 20,000kg of dry cannabis flower per month. Following the transaction, the company will operate two core business units: contract manufacturing for finished cannabis products and cannabinoid extraction and refinement.

“[Blue Sky’s] spirit of innovation will continue to drive our cannabis operations,” he added. “After strong growth in both our food and cannabis divisions, we reached a strategic crossroads. With limited physical space and capital, we concluded that monetizing our successful hemp food business would allow us to better scale our cannabis operations and drive long-term shareholder value.”

Fresh Hemp was acquired by Tilray in 2019 for CAD$419 million. The company produces a range of inputs such as hemp seeds, protein and flour as well as coarse hemp powder and hemp seed oil in addition to manufacturing hemp foods including baked goods, beverages, dairy alternatives, snacks, cereals, dips, alternative proteins, spreads, beer and more.

“We welcome Blue Sky’s customers and suppliers to Fresh Hemp Foods,” said Jared Simon, president of Manitoba Harvest and Tilray Wellness, in a statement. “Blue Sky has championed whole plant utilization, and we intend to carry that forward alongside our own industry leading sustainability efforts. Fresh Hemp Foods remains focused on bringing nutritious, sustainable hemp foods to more and more customers and consumers.”