Xebra Brands Ltd. (CSE:XBRA) (OTCQB:XBRA) is looking to raise $150,000 through a private placement while settling $450,000 in debt, the company announced late Tuesday.

The company said it will issue up to 3 million units priced at 5 cents each, with each unit containing one common share and a half-warrant exercisable at 10 cents for two years.

The debt settlement involves issuing up to 9 million shares to company insiders and service providers at the same 5-cent valuation.

Last year, Xebra said it completed its first manufacturing run of Elements CBD products through Restorative Botanicals, aiming to import them into Mexico through its subsidiary once permits are granted. The company previously secured a distribution deal with ICAN Pharmacies FADERMEX to sell the products across seven pharmacy locations. The company previously secured a unanimous Mexican Supreme Court decision supporting its cannabis operations there in 2021.

“By focusing on strategic partnerships and accretive M&A in both the U.S. and Mexico, along with our robust commercial activities, we are well-positioned to capitalize on the significant opportunities in the CBD market in Mexico ahead of legalization,” Rodrigo Gallardo, interim CEO of Xebra Brands, said in a news release last summer. “Our dedicated team is working tirelessly to ensure that Xebra’s Elements brand becomes a household name, delivering exceptional products that meet the highest standards of quality and consumer satisfaction.”

The company, which claims exclusive rights to produce and sell cannabis products (containing less than 1% THC) in Mexico, projects the country’s cannabis market could reach $3.2 billion by 2026, with CBD sales accounting for $210 million, according to company market research citing Statista Market Insights data.

Xebra around that same time tapped veteran consumer goods executive Melise Panetta and her consulting firm. Panetta, who held senior roles at PepsiCo and SC Johnson, brings cannabis industry expertise including work with Keef Colas and High Times brands, according to the company.

Company officers and directors are expected to participate in both deals, which require Canadian regulatory approval. Xebra indicated it would use proceeds for working capital and general corporate purposes. The company aims to close both deals by Jan. 30.

The Food and Drug Administration (FDA) is asking for comments from the public, particularly veterinarians, regarding the use of cannabis-derived products in animals, with an emphasis on cannabidiol (CBD) products. The FDA said it is interested in general trends associated with those products, including information about usage trends, quality standards, benefits of use, potential drug interactions, adverse events and safety problems, and toxicological concerns. Electronic or written comments must be submitted by April 16, 2025.

The FDA said that companies marketing CBD products for use in animals often make claims regarding a wide variety of diseases or conditions. Some products claim to enhance general wellness and promote longevity. These products are sold in many different formats, such as tinctures/oils, treats/chews, pellets for large animals, capsules, and sometimes as food toppers. Topical products infused with CBD, such as balms and shampoos, are also available for pets.

The notice added that the Center for Veterinary Medicine (CVM) is particularly interested in input from practicing veterinarians, whose expertise and experience can help inform the FDA regarding the use and effect of CDPs in animals.

Million dollar market

According to Grand View Research, the market was valued at approximately $248.39 million in 2023 and is projected to reach $1.72 billion by 2030, expanding at a compound annual growth rate (CAGR) of 32.47% from 2024 to 2030. Grand View also found that North America dominated the CBD pet market in 2023, accounting for over 40.22% of the global revenue. This research determined that Americans spend big bucks on pet care and have increasingly accepted CBD products for their pets.

Dogs are the biggest CBD patient population among pets and owners mostly use the products to treat joint pain. Grand View found that the joint pain market segment is expected to dominate the market, driven by the increasing prevalence of arthritis and other joint-related issues in pets.

Mordor Intelligence found that some of the top CBD pet product companies include Charlotte’s Web (OTC: CWBHF), Honest Paws, Pet Releaf, Canna-Pet and Green Roads.

Even Martha Stewart launched a CBD pet product line with Soft-Baked Chews and Oil Drops in 2021. These products were created with Canopy Growth Corporation (NASDAQ: CGC). “My dogs are not only my companions, but they are part of my family, and I prioritize their emotional and physical well-being as I do my own,” said Martha Stewart. “Just as CBD can support human wellness, it’s been shown to improve the quality of life for pets as well. With the help of the scientists and veterinarians at Canopy Animal Health, I’ve created CBD oil drops and savory soft-baked chews designed to support the health of dogs of all ages, sizes, and breeds in delicious gourmet flavors that your canines won’t be able to resist.”

FDA has not approved these products

Currently, there are no FDA-approved, conditionally approved, or indexed animal drugs that contain CBD. However, FDA has approved one cannabis-derived drug product for humans: EPIDIOLEX (cannabidiol), and three synthetic cannabis-related drug products: MARINOL (dronabinol), SYNDROS (dronabinol), and CESAMET (nabilone). It is worth noting that under the Animal Medicinal Drug Use Clarification Act of 1994 and its implementing regulations at 21 CFR part 530, veterinarians can lawfully prescribe approved human drugs for use in animals in an extralabel manner.

FDA said it has made the regulation of the CBD market a priority, including products marketed for animals. “While there is some limited published information about the use of CDPs in animals, significant data gaps exist surrounding many aspects of CBD and other CDPs in animals, and further research is necessary to assess the safety and effectiveness of these products. FDA is seeking a better understanding of what veterinarians are experiencing related to CDPs in their patients, such as general patterns of use, quality standards, benefits of use, potential drug interactions, adverse events and safety problems, and toxicological concerns,” said the notice.

New Jersey-based Specialty Oil Services, Inc., is suing Stessa Thompson, Crownland Investments, Ag Marvels, Renegade Nation, Inc., and Todd W. Smith, aka Charlie Renegade, for delivering poor-quality hemp worth far less than the company paid.

Specialty Oil is a licensed hemp producer and extractor that purchases hemp biomass and uses it to extract CBD oil and other products that it sells to customers. In early 2024, Specialty Oil claims it had discussions with Thompson about purchasing high-quality CBD-rich hemp biomass. In February 2024, Specialty Oil and Stessa worked out an agreed price of $3.25 per pound of hemp biomass that Stessa represented would be 9-11% CBD. Specialty Oil says it paid her $156,992.50 for 46,148 pounds of conforming hemp, which included $4,600 for shipping.

Instead, Specialty Oil claims it received two truckloads of low-quality, low-CBD hemp that tested far below the promised range. They say they took photos of the product and told Thompson of the problem, but because they had customer orders to fill they used the product they claimed was inferior. Due to the poor quality, Specialty Oil said that they used 42,923 pounds of hemp for extraction, which yielded 3,211 pounds of winterized crude (7.5% per weight). They said if the quality were better it would’ve been 15% per weight. According to the complaint, Thompson and Crownland acknowledged the problem and promised to make up the shortfall.

Once again, needing to fulfill orders, Specialty Oil ordered an additional 38,000 lbs. of premium hemp, which was supposed to have 9-11% CBD. The company paid $126,100, including $2,600 for shipping. However, when the shipment arrived, the company rejected the truckload due to visibly poor-quality hemp and unusable biomass.

They allege in the complaint that the truck was originally loaded with the correct hemp, but that Smith ordered the truck to be loaded with the poor quality hemp instead.  Thompson and Smith allegedly agreed to rectify the situation, to make up for Specialty’s losses. Instead, more sub-par and unusable hemp was delivered.

Based on the quality of the hemp received and its CBD potency, which was measured and recorded, the hemp provided by Defendants was worth only $.35 per pound not the $3.25 per pound paid by Specialty Oil.

Losses

Specialty Oil claims its damages totaled $227,372.50, not counting incidental and consequential losses. The company also claims it lost customers, profits, and its reputation. Specialty Oil paid $283,092.50 for 93,038 pounds of 9-11% CBD hemp.

Specialty Oil claims that Thompson received a commission for the sales when she never delivered the goods she promised. The company wants to be compensated for its losses.

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