Midas Letter

Canopy Rivers Inc (CVE:RIV) VP Business Development Narbe Alexandrian shares details of the company’s recent investment in Headset Inc. Headset is a real-time data and analytics service and is the only company tracking trends in the cannabis space. Alexandrian is enthusiastic about the deal because Canopy Rivers anticipates data will be just as integral to the cannabis space as it has been in other industries. Alexandrian indicates that the company’s investment thesis hasn’t changed; furthermore, Canopy Rivers is still a life-cycle investor with the ability to invest between $500,000 and $40 million in emerging cannabis and ancillary companies. Canopy Rivers realizes technology is a horizontal layer underpinning the entire industry and its investment in Headset illustrates this forward-thinking approach to understand consumer trends in the cannabis space.

James West:   Hey, welcome back, and my guest right now is Narbe Alexandrian. He’s the Vice-President of Business Development. Narbe, welcome.

Narbe Alexandrian: Pleasure to be here.

James West:   Yeah. Tell me about your role at Canopy Rivers.

Narbe Alexandrian: So my role in Canopy Rivers is to lead the investment team. So we look for minority investments all across the world, within the cannabis value chain. So our whole process is understanding where the best-in-breed companies across that value chain and to synthetically create a vertically integrated cannabis company with the best companies you can find across different sectors such as technology, consumers, cosmetics, brands, cultivation, you name it.

James West:   Yeah, you bet. So today, you guys p

Aurora Cannabis Inc (TSE:ACB) (NYSE:ACB) (FRA:21P) CCO Cam Battley is delighted by the company’s projected revenue for Aurora’s fiscal Q2 2019. The company released a Guidance report, in which it projected revenue between $50 and $55 million for the period ending December 31, 2018. In addition, Aurora anticipates being EBITDA positive by the end of the second quarter of the current calendar year. Battley emphasizes that this report illustrates that Aurora is shifting from a period of substantial growth to one of execution and profitability. He anticipates several 2019 catalysts for Aurora, including the company’s increased focus on international markets like Germany and Latin America and Aurora’s launch of new product forms that will be legal in Canada in Q4 2019.

James West:   Welcome back, Cam, happy new year.

Cam Battley:  How are you doing?

James West:   I’m fantastic, how are you doing?

Cam Battley:  Excellent.

James West:   Looking good?

Cam Battley:  Oh, the suit? Well, I wanted to look pretty for you.

James West:   Oh, thank you! I feel so under-dressed.

Cam Battley:  N

Origin House (CNSX:OH) (OTCMKTS:ORHOF) (FRA:CY4) President and General Counsel Afzal Hasan shares details of a recent hostile takeover attempt and reveals how some Origin House shareholders have responded in defense of the company. 26 percent of Origin House shareholders signed an agreement reiterating their commitment to the direction of the company and belief in its vision. The company hopes the agreement will signal the strength of Origin House to other players in the space. Hasan addresses the difficulties cannabis companies face in California with regards to the lingering illicit market and the repercussions of price rationalization. Origin House’s distribution expertise provides protection from the inevitable lowering of cannabis prices, which have already impacted cannabis companies operating in states like Washington. Origin House is focused on driving incremental and organic growth, as well as expanding its California footprint in 2019.

James West:   Afzal is with me, Afzal Hassan is the President of Origin House, formerly known as CannaRoyalty. Azfal, welcome back.

Afzal Hasan:  Thank you.

James West:   Afzal, you guys put out a really interesting press release that I was really intrigued by, because you’ve done two things: you’ve come out and said t

Charlotte’s Web Holdings Inc (CNSX:CWEB) (OTCMKTS:CWBHF) is the category leader in hemp extracted health and wellness products in the United States. CEO Hess Moallem provides an overview of the company’s operations and 2019 goals. Moallem reveals that the company’s products are used to treat occasional stress, sleep, and inflammation issues and he believes this type of product use represents a huge opportunity for CBD extractors. Moallem notes that Charlotte’s Web is looking into possible international expansion and anticipates supply chain announcements for Western Europe in the coming year. Moallem welcomes the recent passage of the Farm Bill, noting that the new legislation opens additional markets for Charlotte’s Web and will allow the company to better manage its production costs.

James West:   It’s good to talk to you. You know this is a, I say Charlotte’s Web is one of the stocks that I hold that I have never sold a share of nor even really looked to yet. So happy to have you on the show. Why don’t you give our audience a background of what Charlotte’s Web is all about and a just for those who might not have heard of the company.

Hess Moallem: Sure. We’re a vertically integrated supplier-manufacturer, of CBD products and extract products that include CBD. We have been operating since 2014 when hemp became legal or differentiated from marijuana post-the 2014 Farm Bill. And we are currently the category leader and we’re very excited for the future. We listed on the CSE in August and the sky’s the limit at this point.

James West: You reported Q3 revenue of $17.7 million,

Dale & Lessman LLP Partner Chad Finkelstein dissects the Health Canada draft regulations for topicals, edibles and extracts. Finkelstein highlights that Health Canada has allocated a 90-day consultation period for the regulations, suggesting the terms will be finalized by the end of Q1 2019. He notes that the regulations limit products to a maximum of 10 mg of THC per serving and derivative products will face the same kind of restrictions on packaging and labeling that were introduced for other cannabis products in October 2018. Finkelstein breaks down the controversial stipulation that producers cannot “have edible products that are associated with an alcoholic beverage company” and indicates that it is not the category killer many have suggested.

Ed Milewski:  So Chad, you must be a busy guy.

Chad Finkelstein:  Too much, too fast. This industry is hard to keep up with the volume of changes and the pace of those changes, and today was no exception.

Ed Milewski:  So today a big document came out.

Chad Finkelstein:  A very big document came out. I mean yeah, the Cannabis Act came into force on October 17th of this year, and what we’ve known for most of 2018 was that at some point, edibles were going to be regulated. What the announcement had always been – and when I say edibles, I’m referring sort of all type of ingestibles, food and beverage products – we had known they were going to –

Ed Milewski:  They’re not legal now, right?

Chad Finkelstein:  They’re currently not legal.

Ed Milewski:  And that’s what they said, they said you can get marijuana, but for a year, –

Chad Finkelstein:  That’s right.

Ed Milewski:  So they’re monkeying around with all the different legal aspects that they have to figure out, right?

C:   Yeah, that’s right, that’s right. We had known that, you know, the plant, like the flower, seeds, oils, were all going to be legal as of October 17th, and that within a year of the legalization date we would see edibles be regulated.

So now, earlier than expected, Health Canada released their draft regulations just 90 minutes ago on the regulation of those edibles products and topicals and extracts. So while the industry is still, you know, poring over those details and trying to figure out what comes next, there’s going to be a three-month consultation period beginning now, of course it’s February something to get submissions in, I forget the correct date off the top of my head, with a view towards finalizing everything, I think, by the end of the first quarter. The exact legalization date is still not, I believe know, but with probably the Fall of 2019.

Ed Milewski:  Yeah, go ahead.

Ben Smith:    So you know, do you extrapolate Health Canada releasing this information, would you tend to extrapolate that and suggest that perhaps edibles will be legal by the, by October 2019? Do yo

MJardin Group Inc (CNSX:MJAR) (OTCMKTS:MJARF) is an experienced cannabis platform, operating in the legal market since 2009. Executive Chairman Rishi Gautam explains MJardin is in a transition phase, evolving from an agency model to a principal model company, as it takes on assets to own and operate. MJardin already has 40 facilities across North America and is looking to expand into Europe. The company went public late last year on the CSE and is well financed. MJardin has a $28 million USD run rate and raised $26 million CAD when it went public. MJardin has a funded capacity of 80,000 kilograms annually and plans to enter the Canadian retail space.

James West:   Hey, Rishi, how are you?

Ed Milewski:  Hi, Rishi.

Rishi Gautam: Good, how are you?

James West:   We’re great, thanks very much. I think this is our first time chatting, isn’t it, Rishi?

Rishi Gautam: Yes it is, yeah.

James West:   Ok, cool. Well, let’s start with, give me an overview, what is MJardin all about?

Rishi Gautam: Sure. Mjardin, we’re based here in the US in Denver, office in Toronto as well. We consider ourselves a multi-country operator. We’ve been operating cannabis assets in the legal cannabis market since 2009, when Colorado first turned legal. We have a portfolio today of just under 40

Analyst Dmitry Zaytsev shares his expectations for the cannabis space in 2019. Zaytsev cautions retail traders to have a trading plan and suggests current stock values are providing good entry points for a number of cannabis names. Zaytsev discusses using puts as an investing strategy in relation to current stock volatility. He thinks cannabis stock prices can stabilize in Q1 and Q2 of 2019, as quality takes centre stage. He believes Canopy Growth Corp (TSE:WEED) (NYSE:CGC) (FRA:11L1) still leads the pack and an entry point in the low 30s for Canopy is an attractive long term position for investors. Despite this optimism, he thinks analyst projects for 2019 revenues in the Canadian recreational space are extremely aggressive.

Ben Smith:    We want to welcome Dmitry Zaytsev to the program today. Dmitry, welcome.

Dmitry Zaytsev:    Happy to be here.

Ben Smith:    Okay, I guess we’re going to start out with talking about or trying to get your feelings about the macro environment for stocks in general, and also the cannabis market. Obviously, we’ve had a lot of, you know, capitulation lately. How do you see this playing out into the Q1 of 2019?

Dmitry Zaytsev:    Yeah, so I think the market generally has been marked by lower lows, supports breaking, and generally a really pessimistic environment; and this is, you know, we’ve chatted before with James and others on this program, but it’s really important to have a trading plan and to have a lot of cash going into these kinds of scenarios. Because look, there’s opportunities left and right, not just in the cannabis market, but globally speaking.

And so generally what you’ve seen is a lot of fear, a lot of liquidity being pulled out from the market, and the Fed not really being as cooperative as some people fear. I think this is, you know, is providing, and will provide a buying opportunity, and I think it’s time to start looking at names you’re interested in and start thinking about some long-term positions.

Ben Smith:    Okay. So I know in our writings and my appearances on the show, I’ve been really stressing that easing into positions in the cannabis space, for example, or growth stocks in general, is what you want to do. It doesn’t appear that we’re in a market environment that’s going to be very forgiving for bad entry points. Now, would you agree with that? And also, the over-leveraging aspect. Retail investors tend to over-leverage. Now, would you agree that easing into positions, getting good entry points and not

Grown Rogue International Inc (CNSX:GRIN) (OTCMKTS:NVSIF) CEO Obie Strickler shares details of the company’s expansion plans and 2019 outlook. Grown Rogue’s products are currently featured in 50 percent of dispensaries in Oregon and the company is aiming to increase that share to 70-80 percent in 2019. This year, Grown Rogue will continue its multi-state expansion, which includes growing its California footprint, where the company has already secured licenses. Grown Rogue’s goal is to take its successful Oregon platform, which has experienced 200 percent growth annually, and translate it to other markets. Grown Rogue is focused on the active enthusiast and its products are categorized into five different lines – Relax, Optimize, Groove, Uplift, and Energize – to ensure consistent and reliable consumer experience.

James West:   Hey, Obie, how are you? It’s happy New Year, I guess.

Obie Stickler: Yeah, happy New Year to you, too, James. How are you today?

James West:   Great, thanks. Since we last chatted, Obie, you announced the appointment today of Adam Wolf as the Chief Operating Officer. Tell me about the strategy with Adam and his background.

Obie Stickler: yeah, we’re really excited to bring a gentleman like Adam into the fold. You know, one of the big challenges, at least historically in cannabis, has been, you know, bringing in really strong talent. And as you see the industry continue to mature, folks like Adam are willing to, you know, join up with companies like Grown Rogue. We searched really, really hard to find the right executive to help us as we continue to scale into m

International Cannabrands Inc (CNSX:JUJU) (OTCMKTS:GEATF) (FRA:31G) CEO Steve Gormley provides an update on the company’s operations. Gormley suggests that as a brand aggregator, International Cannabrands isn’t focused on share price, but on profitability. The company’s acquisition of La Vida Verde, a cannabis branded product manufacturer based in California, and Riotous, a Seattle-based financing and distribution play, continue to generate profit for International Cannabrands. These deals also help International Cannabrands expand the footprint of its house brand, JUJU Royal. Gormley believes the company is currently undervalued and when a sector rebound happens, large companies are going to look at companies that have stable earnings, such as International Cannabrands, as potential partners.

James West:   Guess who just flew in? Steve Gormley of International Cannabrands is here again in the house – Steve, welcome back.

Steve Gormley: With my dear friend Ed and James. So happy to be up North again.

James West:   Are you?

Steve Gormley: Yeah.

James West:   It’s just a little bit colder up here than it is do

420Investor and New Cannabis Ventures Founder Alan Brochstein, CFA dissects Green Growth Brands Ltd’s (CNSX:GGB) (OTCMKTS:GGBXF) plans for a hostile takeover of Aphria Inc (TSE:APHA) (NYSE:APHA) (FRA:10E). Brochstein addresses speculation about the nature of the proposal, highlighting that the Schottenstein family think very highly of Aphria, but indicates he’s not aware of a direct relationship between the two companies. Brochstein believes Aphria shareholders will reject the offer, as right now the Green Growth Brands proposal undervalues Aphria’s assets; however, as GGB’s operations in Nevada and Massachusetts ramp up, the bid might look more appealing. Brochstein mentions forthcoming legislation in Colorado and Michigan that will allow public companies to own cannabis operators and sees this as a catalyst for consolidation in the United States. He anticipates increased consolidation between MSOs and Canadian LPs as Canadian companies offer US operators the opportunity to grow internationally.

James West:   Hey Alan, how are you doing today?

Alan Brochstein:   Hey, great. Happy New Year, James.

James West:     Happy New Year to you, as well! Alan, bit of the big news in the market right now is this Aphria-Green Growth Brands tie-up, and I just wanted to get your two cents on it in the context of it that there’s some suggestions that, you know, once again, there’s some questionable sort of things going on behind the scenes. People are suggesting that this is not in fact an arms-length hostile takeover but rather a pre-agreed sort of situation, as evidenced by some of the past relationships. What’s your take on all of this?

Alan Brochstein:   Definitely entertainment in a pretty quiet market; we can probably all agree on that, probably. So look, full disclosure: Green Growth brands is a client of mine in New Cannabis Ventures. With that said, I haven’t talked to them, I don’t really have any insight; I’ve been observing them really from the outside, and just based on the things that I’ve heard and read historically about the company, I don’t see any reasons for concern about their intent. And I think their intent is good.

With that said, I certainly don’t understand the logic of the way they presented the offer, so that part I will agree; and calling it a $7.00 bid. B