Midas Letter

The Hydropothecary Corporation (CVE:THCX) (OTCMKTS:HYYDF) (FRA:74H) is a cannabis distribution company currently focused on medical patients. CEO Sebastien St. Louis talks to James about expanding to the Canadian recreational market once marijuana has been legalized in 2018.

TRANSCRIPT:

James West:     Sebastien, thank you for joining us once again.

Sebastien St. Louis:     Thank you for having me.

James West:     Sebastien, you guys have been putting out a lot of news lately, which indicates that Hydropothecary is making great strides in its business execution. Why don’t you update us on the latest in your development?

Sebastien St. Louis:     We’re extremely pleased with all the hard work we’ve been putting through and our ability to serve more and more patients. We’ve most recently announced a 250,000 square foot expansion, which ties in very nicely with the announcement today we’ve heard by …

Original article: Hydropothecary CEO Sebastien St. Louis on Competing with the Marijuana Black Market and Adapting to the LCBO-Style Model

©2017 Midas Letter. All Rights Reserved.

Teranga Gold Corporation (TSE:TGZ) (OTCMKTS:TGCDF) (FRA:0TGA) currently averages gold production of 200,000 ounces at the Sabodola mine in Senegal. President and CEO Richard Young talks about the new Banfora mine (expected to be ready by 2019) in Burkina Faso, which the company predicts will bring production to a total of 500,000 ounces a year.

TRANSCRIPT:

James West:     Richard, thank you for joining us today.

Richard Young:     James, it’s a pleasure to be here.

James West:     Richard, let’s start with an overview of exactly what Teranga Gold is up to in Senegal.

Richard Young:     Well, Teranga operates the only commercial gold mine in the country. Came into production in 2009. We just released an updated technical report for the project in July, and it increased reserves to 2.7 million ounces. We have a remaining mine life of 14 years, all-in sustaining costs sub-$900 an ounce, which we believe is quite competitive.

Over the next five years, we will average 200,000 ounces per year, and 176 life of mine – and there’s still a lot of exploration potential both on the mine license and our regional land package. So we expect to continue to add reserves to Sabodala, and would target to be able to maintain 200,000 ounces per year beyond the next five years.

James West:     Okay, so one of the first questions that pops into anybody’s mine when they hear about anywhere in Africa is, what’s the political climate like there in terms of stability and insurgent activity, if any?

Richard Young:     Well, Senegal is possibly the most democratic country in Africa. Since it gained independence from France in 1960, there have been peaceful elections. In 2012, on the tail end of the Arab Spring, there was an election which the incumbent president was running for a third term, and he lost, and he had peacefully handed over control of the government to the incoming president, and the rule of law is followed.

Senegal and all of French West Africa is very closely aligned with France, Europe and North America, and it’s very easy to do business. In terms of insurgencies, whether it’s Senegal or anywhere else in West Africa, it’s quite limited to tourist locations, and there have been a few instances in West Africa – again, it’s all focused on tourist locations similar to what we’ve seen in London and Paris. But otherwise, Senegal, as well as elsewhere in French West Africa, is pretty safe and stable.

James West:     Sure. Okay, well, that’s relieving! Tell us a bit abou

Maricann Group (CSE:MARI)(OTCMKTS:MRRCF)(FRA:75M) is one of Canada’s ACMPR growers producing 2,000 kilograms of medical cannabis, but plans are underway to expand that to 22,400 kilos per year with the addition of a new 217,000 square foot facility.

TRANSCRIPT:

James West:    Ben, thanks for joining us today.

Ben Ward: Pleasure to be here, James. Thanks for the opportunity.

James West:    Ben, can you give us an overview: what exactly is the business model of Maricann?

Ben Ward: Maricann is a vertically integrated cultivator, processor and distributor of medicinal cannabis in Canada, operating under federal license. We’re located in Langton, Ontario, two hours southwest of Toronto, and we operate an existing retrofitted 44,000 square foot facility. We produce around 2,000 kilos of product a year, and those are the humble beginnings of the company.

We’ve now entered into and are moving ahead with an expansion of 217,000 square feet, the first phase, and that will produce about 22,400 kilos of product; that will be online and producing early next year, in Q1, and now we’ve moved forward with the second phase of that expansion as well, to produce another 35,000 kilos of product a year.

So we’re building out domestically in Canada in our licensed operation to be able to support different medical and pharmacy initiatives that we have for distribution, and then in Germany, we have a facility that’s 1.15 million square feet. We’ve already built 75,000 square feet of that out to be able to cultivate specifically for the German market.

So that’s the basic background and progress of the company.

James West:    Wow. Okay. When did you get your license?

Ben Ward: Our license was achieved in March of 2014.

James West:    So you’re one of the originals.

Ben Ward: Yeah, we are. We were the 14th license issued, and we were the 256th applicant to the process.

James West:    That’s interesting. Okay, so what differentiates Maricann from other ACMPR producers of medical cannabis?

Ben Ward: One of the main things that differentiates us are our low production costs and the future production costs that we’ll have. We’re in a traditional agricultural area; previously it was a tobacco-growing region, great infrastructure available for us. So we’re on a 100-acre footprint. We have all the requisite licenses, we cultivate and sell flower, we process and extract cannabis and then distribute it as well as the others. But one of the other key differentiators is the acquisition we just made, which is

Stephen Goldner is the co-inventor of the liquid formulation of methadone, the only real option in the treatment of opioid addictions currently in wide use. Dr. Goldner has created a new line of medical products based on cannabinoids, which are going to be available under the brand name “Pure Green”. He joins us today to discuss his illustrious career and what drove him to cannabis.

James West:    Stephen, thank you for joining us today.

Stephen Goldner:     Thanks so much. I really appreciate the opportunity, James.

James West:    Stephen, you have had what is best categorized as an utterly fantastic, interesting, diverse career across sectors that intersect and also don’t intersect. In this conversation, I’m interested in learning about the trajectory that has taken you to the point of our meeting, and we’ll get into that a little later. Let’s start off with, what is it you actually do? And, how did you come to be doing that?

Stephen Goldner:     Well, that’s a great question, and there certainly has been a trajectory to it, so I’ll just try to hit the highlights out of this 45 years of professional work or so, starting as a forensic toxicologist and running through 18,000 autopsies as a New York Medical Examiner. I developed the techniques, the methods to detect recreational drugs of abuse, like LSD, marijuana, cocaine. It’s important to do in forensic toxicology.

James West:    I didn’t know those were recreational, I thought those were cultural!

Stephen Goldner:     Good for you. Well, they’re not necessarily medicinal. So there are people who take some of those just for the pure recreation, I suppose.

So that started my first testing laboratory on Long Island, and that created an industry called drug testing, or urine screening for employment, much to my surprise. And the next year I formulated a liquid drug that people could drink and use to get off of heroin, and it’s called methadone.

James West:    Wait a sec. You’re the one who created methadone?

Stephen Goldner:     Well, somebody has to do it all the time, you know? There were other drug companies that had done it, but I made a product that w

Organigram Holdings Inc (CVE:OGI)(OTCMKTS:OGRMF) CEO Greg Engel joins James for an update on the buildout of the company’s next phase of growing capacity, and emphasizes their preparation for Canada’s legal recreational marijuana market, slated to go live on July 1st 2018.

Transcript:

James West:    Greg, thanks for joining me today.

Greg Engel:    Thanks for having me today.

James West:    Greg, why don’t you give us an update on what’s going on with Organigram these days?

Greg Engel:    Yeah. So we’re working hard right now to be prepared for the launch of the adult recreational program in the Canadian market next year, so as we’re seeing significant growth today in the medical market, but we certainly anticipate that next year’s launch of the adult recreational cannabis market’s going to be significantly larger than the current medical market. So really a lot of our efforts are going into building out our facility, so we’re adding another 100,000 square feet of three-tiered production by the end of this year, and then next year we’ll have another almost 40,000 square feet that’ll bring us up to around 200,000 square feet of production, which is a pretty large facility overall.

James West:    Sure. So that’s all still in Moncton?

Greg Engel:    All still in Moncton; we’ve been expanding kind of in our existing footprint, and the key for us is that that’s fully funded, so we’ve got the capital to do that buildout, and that’s going to bring us up to 16,000 kilos by the end of this year annually and about 26,000 kilos by the end of next year. So big production out of our facility.

James West:    Okay. I wouldn’t be credible if I didn’t ask, what kind of hit did you take in your client registrations after the issue with the pesticides?

Greg Engel:    Yeah, certainly we did see a bit of a slowdown in terms of our patient base, but we’ve been working very hard in improving our quality and focus on quality production right now, and if you went to Lift, for example, to look at reviews of our product, you’re seeing kind of 4.5 out of 5 is our rating right now. so producing a high quality product, and we’ve been really happy with kind of the uptake that we’ve had with patient numbers coming back with us or new patients

CannaRoyalty Corp (CNSX:CRZ) (OTCMKTS:CNNRF) (FRA:CY4) CEO Marc Lustig joins us to shed light on the factors weighing on the Cannabis sector in Canada, and tells us why his royalty model will ultimately deliver value to investors.

Transcript:

James West:    Hey, Marc, I see that you’ve been making great strides in your business model as a royalty company in the cannabis space. Your balance sheet from your last financials shows a dramatic increase in assets over the same period in the previous year, and a dramatic increase in cash, yet the stock has not reflected that. Why the juxtaposition?

Marc Lustig:   Well, I think that the stock has been under pressure, like a number of other cannabis stocks in the public markets, for the last maybe six weeks, or two months. In our case, there’s certainly nothing that I can point to other than, like I said, the general weakness of the cannabis sector, and our view is that the stock price will take care of itself as we execute more transactions and as people start to see the numbers that those transactions start to lead to.

So nothing in particular; in fact, our shareholders or prospective investors, if they look at CannaRoyalty, would just see a very nice sequence of deals that just continue to add value, and I think that’ll be recognized in the stock in time.

James West:    Yeah, sure. Actually, that’s what seems to be happening. Now, can you give us an example of one of the better deals that has worked out, and then we’ll follow that up with one of the ones that hasn’t panned out quite as expected, and how you deal with that.

Marc Lustig:   Sure. In the case of a deal that we’re extremely happy with and think that it will only continue to get better and better, both the asset itself and how it leads to synergies for the company, would be our River transaction. So River is the largest distribution company in the state of California, and we closed that deal in the middle of Q2, so about a month ago. It’s a combination of an investment directly into streams of royalty-like returns, and at the same time, an agreement that our products can be distributed preferentially by River for the California market, which is obviously the largest cannabis market in the world at the moment as a state goes.

So that’s worked out phenomenally well. They’ve been great partners, and as I said, it’s a two-part transaction. So the first part is a payment in return for our investment that equates to about 2.25 percent of their top line revenues until we’re paid

MedReleaf Corp (TSE:LEAF) (OTCMKTS:MEDFF) CEO Neil Closner makes no bones about the fact that his company’s marijuana is the highest quality available in Canada. With an impressive depth of knowledge in the space, and as the country’s only “significantly profitable” ACMPR grower, Neil illuminates the reasons for that positioning, and the company’s plans to capture recreational market share.

Transcript:

James West:    Neil, thanks for joining us today.

Neil Closner:  Thank you very much. Great to be here.

James West:    Neil, maybe we could start with an overview: what is the value proposition for investors in MedReleaf?

Neil Closner:  The value proposition is that we happen to be a producer of the highest quality cannabis, we believe, in Canada. When I say ‘we believe’ that’s validated by the fact that patients, by and large, are purchasing products from us that are at a higher price than the average market price, which seems to be a validation point on the quality of our products.

We’re the lowest cost producer on the market, and we’re the only substantially profitable licensed producer in Canada.

James West:    Hmm. Okay, so when you say the highest quality, and you’re not obviously targeting a low price, is that your primary competitive differentiator then, is that the quality of your product is much higher than everyone else’s?

Neil Closner:  That’s certainly one of them. I mean, it’s a number of the factors that go in to producing that high quality product that we believe provide us with a sustainable competitive edge over the others.

James West:    How long has MedReleaf been producing marijuana?

Neil Closner:  We received our first license in February of 2014, and we’ve been shipping product since August of that year.

James West:    Okay. And how many –

Neil Closner:  Just coming up on three years.

James West:    Sure. And how many clients or patients do you have, presently?

Neil Closner:  So patient numbers is something t

New Cannabis Ventures and 420Investor CFA Alan Brochstein joins to talk about the emerging opportunities in the Cannabis space such as MedReleaf Corp (TSE:LEAF) (OTCMKTS:MEDFF), Canopy Growth Corp (TSE:WEED) (OTCMKTS:TWMJF) (FRA:11L1), and Cannabis Wheaton Income Corporation (CVE:CBW) (OTCMKTS:KWFLF) (FRA:3KF)

Transcript:

James West:    Alan, thanks for joining us today.

Alan Brochstein:     I’m so excited to be here. thank you, James.

James West:    Alan, let’s start off with an overview: what is it that New Cannabis Ventures does, and what’s your revenue model?

Alan Brochstein:     Sure. So New Cannabis Ventures is actually my second cannabis effort, and the goal is to better connect cannabis investors and operators. We’re a content source; a lot of it is aggregated content, and there’s some original content as well. But what we do, James, is we save people time. We’re really focused on the cannabis industry.

James West:    Okay, and how did you get involved in the marijuana business?

Alan Brochstein:     So I kind of stumbled into it in 2013. I was a prolific blogger over at Seeking Alpha; I had a large

Invictus MD Strategies Corp (CVE:IMH)(OTCMKTS:IVITF)(FRA:8IS1) Executive Chairman Dan Kriznic sat down recently and laid out the company’s goal of becoming one of the top licensed ACMPR cannabis producers in Canada.

James West:    Dan, thanks for joining me today.

Dan Kriznic:   Thanks for having me.

James West:    Dan, why don’t we start with an overview: what’s the value proposition for investors in Invictus MD Strategies Corp?

Dan Kriznic:   Yes. At this point, our main goal is to be one of the top licensed producers in Canada. We’ve since acquired over the last six months, two licensed producers, a third in Hamilton, Ontario, a company called A B Laboratories, and another one we just acquired two weeks ago, 100 percent of Acreage Farms, the second actual licensed producer out in Alberta.

James West:    Okay. So you’re a consolidator of ACMPR licensees in Canada?

Dan Kriznic:   At this point, consolidator wouldn’t be the right word. We’re looking at a footprint across the country, but not necessarily in every single province. So we’d like to kind of build out economics with the current ACMPRs that we have, but we’ll continue to look at other opportunities if they arise. But I would say at this juncture, we’re looking for definite expansion, because we’ve got 150 acres in Alberta; we’ve got, we’re just about to acquire another 100 acres in Hamilton, so we’ve got a very large land footprint to be able to build as many square feet as we require for the upcoming recreational market.

James West:    Right. Okay, so are you – how many acres or square feet do you have under cultivation collectively right now?

Dan Kriznic:   Currently we have 7,000 over in Alberta, with a 30,000 square foot expansion plan currently underway, and then we’ve got 16,000 square feet in Hamilton, Ontario. And with our expansion plan on the 100 acres within the next 12 months, we plan to put on another 42,000 square feet.

James West:    How many ACMPR patients do you have?

Dan Kriznic:   Right now we’re still in cultivation only, so AB Laboratories just received their license to cultivate on October 21st, and Acreage Farms just received their license to cultivate last month.

James West:    Mm-hmm. Okay, so in that you’re targeting becoming one of the largest, so you’re setting you

Cannabis Wheaton Income Corp (CVE:CBW) (OTCMKTS:KWFLF) (FRA:3KF) CEO Chuck Rifici, who has a co-founder of Canopy Growth Corp (TSE:WEED)’s Tweed Marijuana – the first and largest ACMPR-licensed grower in Canada to become publicly traded – knows a thing or two about cannabis economics. He joins us to explain the business model of his most recent venture.

James West:    Chuck, thanks for joining us today!

Chuck Rifici:  A pleasure to be here, James.

James West:    Chuck, give us the overview – what is the value proposition for investors in Cannabis Wheaton?

Chuck Rifici:  Well, Cannabis Wheaton really came from three gaps identified in the market for developing the Canadian cannabis industry. Really, a lack of a diversified, risk mitigated platform for investors; a really inefficient distribution between licensed producers today and going into the adult rec market; and most importantly, just the difficulty in finding accretive capital to finance the obviously significant expansion

So that’s – enter Cannabis Wheaton, the world’s first cannabis treatment company. What we do is, we’re fundamentally trying to change the investment model for how the industry works together, to really broaden the opportunities for both our investors and our streaming partners. And we do that by providing CapEx financing, CapEx through equity, for our regulated licensed producers and late-stage applicants to either build out their initial facility or to expand their capacity.

And then in exchange for that, we take a minority equity interest at an agreed-upon valuation up front, as well as a portion of that partner’s cannabis cultivation yield, at an agreed-upon price. And then so, aside from those two primary economic components of our agreements, then we also provide our management and advisory team, which I think are arguably top experts in their field in Canadian cannabis. You know, we help our partners to basically build on their strengths and help with their weaknesses as they execute their own business plans to further their growth.

James West:    Okay. So on May 1st, Bruce Linton at Canopy announced the rollout of Canopy Rivers, which sounds to me like pretty much exactly the same thing. Are you familiar with that offering, and if so, how similar is that to what you’re doing?

Chuck Rifici:  Well certainly I’ve heard of it; they haven’t disclosed very much, but I think they – well, they first announced, Cannabis Wheaton, when it was trading under its, before its