Midas Letter

Canaccord Genuity Group Inc (TSE:CF) (OTCMKTS:CCORF) (FRA:C6U) Analyst Matt Bottomley shares his thoughts on recent M&A activity in the cannabis space. Bottomley breaks down HEXO Corp’s (TSE:HEXO) (NYSE-A:HEXO) (FRA:74H) announced acquisition of Newstrike Brands Ltd (CVE:HIP) (OTCMKTS:NWKRF) (FRA:0N8). He emphasizes that the deal provides HEXO with indoor cultivation, which is necessary to export to Europe, but provided no premium to Newstrike. This represents a significant issue for Tier 2 names, which might have to take smaller deals to grow with bigger names. Bottomley thinks MSOs are the best play for 2019 and believes that while Canadian LPs have greater international optionality, the global industry is a longer term play with more risk. Bottomley is not surprised Nelson Peltz’s deal with Aurora Cannabis Inc (TSE:ACB) (NYSE:ACB) (

Canopy Growth Corp (TSE:WEED) (NYSE:CGC) (FRA:11L1) CEO Bruce Linton joins James West for a wide-ranging discussion on the cannabis industry. Linton is thrilled with the company’s recent moves, especially Canopy’s multi-year retail partnership with convenience store giant Alimentation Couche-Tard Inc (TSE:ATD.A) (OTCMKTS:ANCUF). As capital continues to move out of the Canadian cannabis market, Canopy is increasingly looking at international opportunities. Canopy values the US space and secured a hemp license in New York State in January. Linton highlights the significance of the New York market and notes that its population, relatively small illicit market, and acceptance of CBD products make it an ideal state in which to operate. He believes intellectual property is the great differentiator in the cannabis space, as it drives new product developments and formulations. Linton is excited about the legalization of edibles, beverages, and vapes in Canada this fall and indicates the rollout process for these products will be much smoother. He’s also enthusiastic about the global medical cannabis space and sees a role for medical cannabis in Japan’s geriatric health care, as well as the potential for China to develop into a significant CBD health and wellness space.

Narrator: Canopy Growth Corporation is a diversified cannabis and hemp company offering distinct brands and curated cannabis varieties in dried, oil, and softgel capsule forms. Canopy Growth operates 10 licensed cannabis production sites, with over 4.3 million square feet of production capacity, including over 500,000 square feet of GMP certified production space.

The company operates Tweed retail stores in Newfoundland and Manitoba, and has entered into supply agreements with every Canadian province and territory.

Canopy Growth Corporation trades on the New York Stock Exchange under the ticker symbol CGC, and on the Toronto Stock Exchange under the symbol WEED.

Cannabis Compliance Inc is a global licensing and regulatory company. Director, Quality and Regulatory, Brenna Boonstra explains that the consulting firm helps medical and recreational cannabis companies obtain licenses and achieve government compliance. While the bulk of Cannabis Compliance’s clients are located in Canada, the company is beginning to advise companies operating in the EU. In terms of the Canadian market, Boonstra identifies the evolving regulatory framework, from the MMPR, to the AMCPR, and finally the Cannabis Act, as one reason for licensing delays. Boonstra reveals that Cannabis Compliance has worked with one Ontario retail lottery winner during the entire process in preparation of the April 1 launch date. Boonstra emphasizes that the lottery period in Ontario is only in effect for one year and then is automatically repealed in December 2019. As a result, Boonstra is anticipating an open retail market in Ontario later this year.

James West:   Brenna Boonstra joins me now. She is the Director of Quality and Regulatory at Cannabis Compliance, Inc. Brenna, welcome.

Brenna Boonstra:   Hey, thanks for having me, James.

James West:   Brenna, tell me about your role at Cannabis Compliance, and give me an overview of what Cannabis Compliance actually does.

Brenna Boonstra:   Yeah, so we are a global licensing and regulatory company helping everyone in the cannabis industry achieve their goals. So born from licensing under the MMPR, ACMPR, now the Cannabis Act, and operating on a global scale now.

James West:   Wow, fantastic. And where do you conduct most of your licensing activity?

Brenna Boonstra:   Our head office is in Toronto; the bulk of our clients are in Canada for the time being, but starting to move towards doing a lot more work in the EU, as well.

James West:   Right. And what about in the United States?

Brenna Boonstra:   Not a lot of work in the US – of course, cannabis not legalized there on a Federal level yet, so it’s a real patchwork. CBD is coming to the forefront, of course, with the passage of the Farm Bill recently, but not a lot of work in the States for the time being.

James West:   Right. And so, is the fact that the United States is this fractured sort of closed internationally market off to the side there, doing their own sort of wonky thing – is that representative of the huge opportunity for Canadian companies to sort of seize the global opportunity?

Brenna Boonstra:   Absolutely. Canada is at the forefront of the legal cannabis market, of course. The second country to legalize cannabis on a Federal level, so it’s a real opportunity for Canada to push forward here.

James West:   Right. And so, what is the typical sort of engagement that a company would look for from Cannabis Compliance? Is it strictly licensing, or is it the whole ball of wax?

Brenna Boonstra:   The w

Charting Man Dan McDermitt, founding partner and analyst with the Chart Guys, praises the recent media blitz by Curaleaf Holdings Inc (CNSX:CURA) (OTCMKTS:CURLF). Curaleaf announced multiple catalysts in succession, such as the investment of $11 million by institutional investor BlackRock, a major distribution deal with pharmacy chain CVS Health Corp (NYSE:CVS) (FRA: CVS), and the acquisition of Acres Cannabis. McDermitt observes that the PR blitz gained considerable attention for the company and he indicates it was a perfect play by Curaleaf’s management. The company’s stock has soared as a result and McDermitt believes Curaleaf is now the leading name among US MSOs. He addresses the recent $250 million Gotham Green investment in MedMen Enterprises Inc (CNSX:MMEN) (OTCMKTS:MMNFF) and explains how the news might shift momentum for the company, which missed out on the sector-wide industry upswing during the winter months.

James West:   Joining me now via Skype from Asheville, North Carolina, is Charting Man Dan McDermitt from thechartguys.com. Dan, welcome again.

Dan McDermitt: Glad to be back.

James West:   Dan, incredible week in the cannabis space. Why don’t we start with the – let’s start with the Fed move, and the effect that that had on broader markets.

Dan McDermitt: So yeah, the FOMC pretty much came out and said ‘We’re not going to raise rates in 2019’ which is what the market wants to hear in terms of, you know, having confidence, and we saw a significantly bullish reaction, but it’s been a very wild two days for the market overall, because in the initial reaction to the FOMC, it was all bull – and then at the end of the day, it dumped pretty hard. Then the next day, which was yesterday, it was all raging bull, some of the strongest buying that I’ve seen in one single day for the S&P 500, and now today it’s a complete dump again.

So in the past two days since the FOMC, we’ve seen straight bull, straight bear, bigger bull, bigger bear; so this just is overreactions in both directions, which are making it very interesting in terms of trying to get some clarity as where we’re heading in the short term.

James We

Green Relief Inc produces medical cannabis and oils using an aquaponic growing system, which provides significant cost savings. New CEO Dr. Neilank K. Jha discusses Green Relief’s corporate governance and explains the company’s plans for future growth. Dr. Jha is thrilled with the success of Green Relief’s Sunrise Oil and notes that the product is always oversold whenever it becomes available. Dr. Jha sees the success of Green Relief’s cannabis oils as an opportunity to grow the company’s operations. Shareholders have recapitalized Green Relief and the company is breaking ground on a 175,000 square foot facility shortly. Green Relief is heavily invested in research and development through Green Relief Innovations. The company is developing products for medical conditions such as PTSD, anxiety, depression, and traumatic brain injuries.

James West:   Neilank K. Jha joins me now. He’s the CEO of Green Relief. You’re the incoming CEO of Green Relief, and the company has been sort of plowing forward – I mean, I can say without any reservation that you guys make the best CBD oil in the world.

Neilank K. Jha:    Well, we’d like to think so, and I think based on the clients that we have, we’re oversold with Sunrise even before it comes out on the market at any given time. I think that’s a lot related to the genetics that we have, the labs that we’ve had, and we’ve invested a ton in infrastructure to produce a medical-grade product. And I think the consumers are demonstrating to us that that’s what we’re doing.

James West:   Yeah. So based on the fact that I’ve been consuming your product for almost a full year now on a daily basis, and I have experienced that, when I go to the store, if I don’t buy it right away upon receiving notice that it’s available again, I lose out. And so to me, that’s got to be one of the best problems you can have as a provider of cannabis products.

Neilank K. Jha:    Yeah, you know, when I entered as CEO two weeks ago, people said we have a supply problem. I said, actually, I think we have a supply opportunity. So I brought our team together, and we sort of doing our forecasting and our analytics, and we determined that even if you took this entire block of King Street West here, the entire corner right to Earl’s, whole little block, and if we produced Sunrise oil out of that entire facility, we would still be oversold.

So what we determined is, we required a grow. And we’ve identified that if we produce facilities for $15 million in infrastructure, we could produce free cash flows of $50 million to $60 million a year.

So when I came in as CEO two weeks ago, I immediately called some Town Halls, and we had the greatest shareholders in our company: 500 shareholders. And I explained this challenge to them, and immediately these shareholders stepped up to the plate and re-capitalized the company.

James West:   Great. Yeah, well, obviously, who wouldn’t? Okay, so how quickly will you be able to ramp up to meet that supply shortage?

Neilank K. Jha:    Well,

insuranceataglance.ca is an insurance aggregator that collects details from major Canadian insurance providers and lets users search for the least expensive premiums best on their needs and biographical details. Founder and CEO Adam Niman visits the Midas Letter set to answer questions about insurance and cannabis consumption. Niman provides information about the ways in which cannabis consumption impacts life insurance plans. Niman discusses benefit plans and reveals that many insurance companies are allowing cannabis coverage for medical consumption. Niman walks through the Medical Expense Tax Credit and its application to the medical cannabis space.

James West:   Adam Niman joins me, now. He’s the CEO and founder of insuranceataglance.ca, and Adam is an expert on cannabis and insurance. Adam, welcome.

Adam Niman:   Thank you very much for having me.

James West:   Adam, tell me about – so you are in the business of creating policies for cannabis users in the medical realm?

Adam Niman:   No, no, no. So I just broker insurance policies. So because I’m open about my activity in the industry, people are more likely to speak to me and ask me questions with regards to how their conception of cannabis works in the context of not only life insurance policies, but also, most importantly, benefit plans.

So if you are a recreational smoker of cannabis and you don’t smoke too much, you can get a non-smoking policy, even though a few years ago they would consider you a smoker and you would pay twice the healthy rate compared to a non-smoking individual.

James West:   Okay, so I smoke cannabis as a medical method of delivering cannabinoids to my bloodstream; I can get deemed a non-smoker by an insurance policy?

Adam Niman:   So with insurance is about health, and with health, everything is a matter of degree, right? So if you smoke too much, or you have a prescription that says you smoke 2-3 grams a week, the insurance company is going to look at that and probably want you to pay a little bit more. But if you’re a normal, healthy individual, and you smoke recreationally, you know, 1-3 times a week and you control your consumption, technically, based on what the science says, it really doesn’t have any, what we know, adverse long-term effects compared to that of a non-smoking individual. So they will charge you a healthy non-smoking rate.

A few years ago that changed so people have policies that they were honest about their marijuana smoking, and it’s been a few years since, they should go back; they could probably save some money.

James West:   Right. Interesting. Okay, so, are we at the point yet in Canada where employers are making the coverage of cannabis a benefit by default? Or is that something specialized and rare at this point?

Adam Niman:   So it’s happening slowly, mainly because of how much insurance there is in the space, and also mainly because how many people are u

iAnthus Capital Holdings Inc (CNSX:IAN) (OTCMKTS:ITHUF) (FRA:2IA) CEO Hadley Ford discusses recent developments with the company and implementing the MPX acquisition. The company’s footprint now includes 11 states, 21 dispensaries, with licenses for a further 63 dispensaries. Ford explains that iAnthus is permitted to grow and process cannabis in those states and the company has a combined 600,000 square feet of cultivation across its holdings. The company is focusing on continued US expansion and Ford explains that iAnthus is not interested in building bricks and mortar infrastructure internationally. Recently, iAnthus announced the closing of a US $35 million private placement of unsecured convertible notes. Hadley explains that the financing allows the company to strengthen its balance sheet while continuing to expand.

Narrator: iAnthus Capital Holdings, Inc. owns and operates licensed cannabis cultivation, processing and dispensary facilities throughout the United States. iAnthus recently announced the acquisition of MPX Bioceutical Corp. The combination, valued at $835 million, makes it the largest public cannabis transaction to date in the US.

iAnthus Capital Holdings is listed on the Canadian Securities Exchange and trades under the ticker symbol IAN.

Chemesis International Inc (CNSX:CSI) (OTCMKTS:CADMF) (FRA:CWAA) is a licensed producer and manufacturer of medical and recreational cannabis with operations in California, Puerto Rico, and Colombia. CEO Edgar Montero is thrilled with the company’s recently announced exclusive partnership with First Medical Cannabis LLC. The deal provides Chemesis with access to 1,000 acres of agricultural land for hemp cultivation with an option for an additional 5,000 acres. Montero explains that Chemesis intends to grow hemp with high yields of CBD and that the deal is an important part of establishing Chemesis as a competitor in the hemp space. Montero highlights the company’s geographic advantages, noting that its operations in Colombia and Puerto Rico allow Chemesis to grow more crops per year.

James West:   I’m joined now by Edgar Montero, CEO of Chemesis International, trading on the CSE under the symbol CSI. Edgar, how are you today?

Edgar Montero: Hi, how are you, James? Fine, thank you. Very excited to be on your program.

James West:   Ah, great. Okay, well, so let’s start the conversation off with an overview: what is Chemesis International all about?

Edgar Montero: Well, I think I – I talk

Phivida Holdings Inc (CNSX:VIDA) (OTCMKTS:PHVAF) is a US-based functional food and beverage company operating in the health and wellness space. CEO Jim Bailey shares details of the company’s major retail launch in April. Phivida is building its brand through traditional retailers, which are interested in the infused-beverage category because of its high margins. The company recently secured its first major retail partner, Safeway, and Phivida CBD-infused, Oki-branded waters and iced teas will be available in Colorado Safeway stores next month. Bailey believes beverages will be a differentiator for the company and will generate customer interest in the other Phivida products, such as tinctures. Phivida is also launching a direct-to-consumer online platform. Bailey believes the platform will complement the company’s wholesale revenue.

Narrator: Phivida Holdings, Inc. is a Vancouver-based premium food and beverage company focused on whole plant nutrition and natural ingredients to maintain overall health and balance in the human body.

The company infuses organic active hemp extract into a variety of premium beverages and clinical products for everyday health. Brands include Oki, beverages infused with active hemp extract, and Vida, a line of full spectrum hemp CBD oil extracts and capsules.

Phivida Holdings, Inc. is listed on the Canadian Securities Exchange under the ticker symbol VIDA.

James West:   Jim, how are you?

Jim Bailey:   Excellent. Adjusting from the time zone of the west coast, but excellent. And warm weather; I left BC and it was 22 degrees when I left, so…

James West:        We

Helius Medical Technologies Inc (TSE:HSM) (NASDAQ:HSDT) (FRA:26H1) develops non-invasive platform technologies that support neurological wellness. CEO Phil Deschamps provides an introduction to the company and an overview of its breakthrough treatment for chronic symptoms of disease and brain trauma. Helius has developed a Portable Neuromodulation Stimulator (PoNS) device that stimulates the brain’s ability to heal from trauma, in conjunction with therapy, by enhancing neuroplasticity. Deschamps reveals this is the first treatment ever developed for this type of injury and Helius has advanced to the commercial stage of production. Deschamps points out that 1.5 million Canadians have chronic symptoms from traumatic brain injuries, which affect their quality of life and ability to work. Deschamps is hopeful that the PoNS device’s success rate will lead to work place insurers and workers compensation systems covering the cost of treatment.

Narrator: Helius Medical Technologies Inc. is a neurotech company focused on neurological wellness. The company’s focus is to develop, license and acquire unique and non-invasive platform technologies that amplify the brain’s ability to heal itself.

The company’s first product in development is the portable neuro-modulation simulator, used for the treatment of chronic balance deficit due to traumatic brain injury when used in conjunction with physical therapy.

The device is currently used in Canada and under review for clearance by the FDA and the EU Notified Body.

Helius Medical Technologies is listed on the NASDAQ under the ticker symbol HSDT, and on the TSX under the ticker symbol HSM.