The deal between Creso’s acquisition target Sierra Sage Herbs could potentially open up a huge opportunity for new markets.

Creso Pharma (ASX:CPH)’s target acquisition company, Sierra Sage Herbs (SSH), has secured a private label agreement with a leading New York-based consumer health and wellness online retailer, Health-E Commerce.

Health-E Commerce owns a family of brands with strong US market penetration, and is the leader in the direct-to-consumer e-commerce market for pre-tax health and wellness benefits since its inception in 2010.

The pre-tax health market is made up of around 70 million Americans who are enrolled in flexible spending accounts (FSAs) and health savings accounts (HSAs).

People in these programs are allowed to use their pre-tax income to pay for qualified healthcare expenses.

Under the deal with Health-E Commerce, SSH will produce its first ever collection of plant-based first-aid products, expected to be launched  on the Health-E Commerce platform as a private label brand this coming November.

The products will target those millions of customers under the FSA and HSA programs, providing both Creso and SSH a new market opportunity and potentially a large new sales channel.

In 2020 alone, there was over US$2.34 billion being contributed to the FSA program.


Big new opportunity for Creso

The agreement requires SSH to oversee and manage product development, as well as supply chain logistics and production.

The initial product offerings, which will be available in 1.82 oz. recyclable travel tins, include  First Aid, Tattoo Aftercare, Pain Relief, Poison Ivy and Burn Repair salves.

Product development is currently underway, with Creso and SSH already ensuring that the whole collection will be animal cruelty-free.

Creso CEO, William Lay, says the agreement is testament to SSH’s ability and standing in the market.

“The agreement with Health-E Commerce provides considerable validation of SSH’s product and manufacturing capabilities,” Lay said.

Health-E Commerce is the only family of online marketplaces that caters to the audience of  pre-tax health beneficiaries.

With exclusively eligible products and over 70 million participants, it’s the industry’s most comprehensive eligibility list.

“Importantly, the agreement provides Creso Pharma and SSH with access to a new large market opportunity, and provides another revenue channel that can underpin SSH’s growth,” Lay added.


New Bill set to open up US cannabis markets

Meanwhile, in a major regulatory development, Senate Democrats are expected to introduce the Cannabis Administration Opportunity Act.

If the bill was passed, it would remove cannabis from the list of drugs covered by the Controlled Substances Act.

The Act however won’t stop each state from maintaining and creating their own prohibitions on the production and distribution of marijuana.

The new bill is expected to create grant programs that will aid communities and individuals impacted most by drug offences.

It will also establish funding programs to provide loans to small cannabis businesses owned by disadvantaged individuals.

At a Federal level, it will require that non-violent cannabis related convictions and arrests be expunged within a year on enactment.

The new laws highlight another potential step forward towards the legalisation of recreational cannabis in the US, which follows on from the passing of the Marijuana Opportunity Reinvestment and Expungement Act in April.

In addition, the US House of Representatives has also just approved a bill that would enable cannabis advertisements in states with legal cannabis programs to be aired on television and radio.

At present, most television and radio stations in states where cannabis is legal do not receive ads from cannabis businesses, due to licensing and existing federal laws.

If this new law was passed, it would provide Creso Pharma with the opportunity to target advertising campaigns for SSH products.

The Cannabis Administration Opportunity Act could also provide Creso with an entry point into a market that is expected to reach US$130 billion in sales by 2024.

“We will continue to monitor the potential legislative shifts occurring in the US,” said Lay.

“The proposed Senate bill highlights the ongoing push for recreational cannabis legalisation across the nation and has the potential to unlock significant opportunities for Creso Pharma.”


This article was developed in collaboration with Creso Pharma, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.