Midas Letter

Former Mexican President and current Khiron Life Sciences Corp (CVE:KHRN) (OTCMKTS:KHRNF) (FRA:4KH) Director Vicente Fox believes the cannabis industry represents a paradigm shift for Mexican society. He stresses that Khiron’s medical focus provides moderation and stability and that the company’s success is measured in patient numbers. Fox was attracted to Khiron’s commitment to social responsibility and he highlights the company’s significant charitable donations as evidence of Khiron’s accountability. He believes this type of corporate governance is essential if the cannabis “gold rush” is going to continue. He also stresses the obligation the company has to its shareholders and emphasizes Khiron’s commitment to capturing the medical, recreational, and cosmeceutical markets in Mexico specifically and Latin America more broadly.

James West:    Can we start with what is your role with Khiron Life Sciences?

Vicente Fox:   Well, I’m very honored to be now on the board, Board of Directors and I’m very happy with that. This came about when they came to our event in Mexico, the first CannaMexico World Summit on cannabis. We met there and we found out that we’re twin souls. That we not only want this business sector to progress but that we want to be responsible, socially responsible with people. I think that this industry can bring peace and harmony to places like Mexico, to places like Central America, where we have such high levels of violence and that we need back our youth that is being killed in the streets of Mexico, that is being hired by the cartels and we need to rescue them. So, I think this is a paradigmatic change.

James West:    Okay. So, then your role with Khiron is to bring medical cannabis to Mexico?

Vicente Fox:   Latin America and to participate in discussions and advice for global strategy for Khiron. So, it’s everything is all together on this, on this board responsibilities that I have and yes, we are particularly interested in beginning to work in the Mexican market that already approved medical use but we are yet missing the regulation for that medical use. So, we are waiting urgently for this to happen because Khiron is ready to go aggressively in the Mexican market place of health.

Second, new authorities, new government have been taking a very open and positive position to go after the whole enchilada. So,

RavenQuest BioMed Inc (CNSX:RQB) (OTCMKTS:RVVQF) (FRA:1IT) CEO George Robinson is enthusiastic about the company’s recently signed supply agreement with Wayland Group (CNSX:WAYL) (FRA:75M) (OTCMKTS:MRRCF). The company will supply Wayland with product, securing a 2019 revenue stream for RavenQuest. Robinson shares details of the company’s innovative cultivation approach, which uses an orbital garden to grow cannabis. In this approach, plants rotate around a tube light, which generates max yields because of proximity to the light source. Using the orbital garden method provides attractive savings on energy, power, and water. RavenQuest’s 2019 focus is to build out both its cultivation model and its formulation model to ensure the company has significant product offerings once derivatives are legalized.

James West:   George! How are you doing? Welcome back.

George Robinson:   Awesome, I’m doing great. Thanks for having me back, James.

Emblem Corp (CVE:EMC) (OTCMKTS:EMMBF) (FRA:E0M) CEO Nick Dean shares details of the company’s launch of a new line of oil capsules and its plans for the coming year. Emblem currently has 6000 medical cannabis patients and saw an increase in patient numbers after recreational cannabis was legalized in Canada. Dean believes Emblem’s patient growth is due to the company’s success at meeting its commitment to its medical patients in the current supply crunch. The company’s fixed-price supply agreement with Aphria Inc (TSE:APHA) (NYSE:APHA) (FRA:10E) ensures Emblem has access to quality wholesale product and allows the company to project significant revenue for 2019. Dean has nothing but praise for the performance of Emblem’s signature brand Symbl and highlights the company’s key distribution agreements with Fire & Flower, Starbuds Canada, and Shoppers Drug Mart.

James West:   Welcome back, Nick.

Nick Dean:    Great to be here. I brought gifts this time – tis the season.

Departures Capital Inc Founder and CEO Aaron Missere shares his cannabis investing journey from his initial interest in the space to the launch of his investor-focused site, Departures Capital Inc. Missere built his reputation through YouTube and wrote a book about the top 10 cannabis stocks. Missere has always been a long-term investor in the cannabis industry and has made some great buys in the space, like Aurora Cannabis Inc (TSE:ACB) at $2. As 2019 approaches, he’s excited for the first reporting of recreational earnings and continues to watch MPX Bioceutical Corp (CNSX:MPX) (OTCMKTS:MPXEF) and Hemp Inc (OTCMKTS:HEMP), but wants to see more stability in the US space. In terms of Canadian names, Missere is interested in aeroponic grower James E Wagner Cultivation Corp (CVE:JWCA) (OTCMKTS:JWCAF). Departures Capital Inc produces a detailed weekly newsletter for investors; interested readers can visit the company website to sign up.

James West:   Hey, Aaron, welcome.

Aaron Missere: Thank you. Thank you for having me.

James West:   Aaron, tell me a bit about how you got involved in Departures Capital? What is it all about, what do you do?

Aaron Missere: So Departures Capital: it’s actually really funny. I was living in China for three years, and I was stick of travelling, so I wanted to start a YouTube investment channel. So you know, the first ever video I shot was on the 32nd floor of my apartment in downtown Guangzhou, just talking one minute about the stock market.

James West:   Guangzhou in China.

Aaron Missere: Yep.

James West:   Really.

Aaron Missere: You know where Guangzhou is?

James West:   In Chinese?

Aaron Missere: Guanghzhou.

James West:   Okay.

Aaron Missere: Do you speak Chinese?

James West:   No, although I’d like to. But okay, you started doing this in Guangzhou, and now you live in Waterloo?

Aaron Missere: Yeah, so I was always from Kitchener-Waterloo; my mom was born in Toronto, my dad was born in Kitchener-Waterloo.

Freelance business and economics writer Philip DeMont shares his thoughts on a recent Supreme Court of Canada ruling granting permission for the creation of a single securities regulator. The current system of provincial regulators has benefits for individual investors; however, it complicates the process for companies that want to list, as each province has specific regulations for its jurisdiction. A national system, likely following the regulations of the OSC, would streamline this process. Despite this ruling, DeMont notes that creating a national regulator will be difficult because of opposition from Alberta and Quebec. Crucially, political support for this issue appears to be quite low, despite its non-partisan status, making further progress unlikely. DeMont highlights the potential positive impact a single securities regulator would provide on issues such as climate change, diversity, and corporate transparency.

James West:   Hey, welcome back. My guest this segment is Philip DeMont; he’s a freelance business and economics writer. Phil, welcome to the show.

Philip DeMont: What’s the word, hummingbird?

James West:   [laughter] So Philip, I wanted to tackle an issue here that is of extreme interest to everybody in capital markets across the country, and that is, the Supreme Court has given the green light for a unified pan-Canadian securities regulator to govern the country’s financial industry.

People in some quarters are quaking in their boots; in other quarters, they’re cheering from the rafters. Which should we be, as retail investors?

Philip DeMont: Well, I mean to some degree, if there’s a retail investor, what you want to be is happy with a single regulator, if you get it; because it’s not obvious you’re going to get it. They’ve been trying since 1934, they’ve had references to the Supreme Court before which didn’t work out because fundamentally the constitution works against a single regulator in some sense.

So they came up with this cooperative idea, and people have to sign on. So you’ve got everybody signed on except Alberta and Quebec, and you’ve got politics in play; that’s why we didn’t get it before, that’s why we might not get it this time. For an investor, though, I have never been a big fan of provincial regulators – not because they’re well meaning people, but there tends to be a bias. Nova Scotia has a regulator, absolutely find people, but when you go down there as a company and you kind of say ‘well, we want to list in this certain way because we can’t list on the TSX’, okay, we might kind of accommodate you a little bit. Like, not necessarily throw the dog out, but it’s a bit like, okay, if you’re an investor down in Nova Scotia at one of those stocks, you’ve got to kind of go, okay, am I sophisticated enough to play? It’s a shell company doing this, and blah, blah, blah.

So the OSC, the TSX, you can kind of go, or even the Quebec Exchange by itself, you could kind of go, these guys play hardball, I can kind of be protected. Vancouver, when the VSE was up? Little more of a close to the, you know, you’re slicing the cheese pretty close.

James West:

Green Growth Brands Ltd (CNSX:GGB) is positioning itself to be a cannabis branding juggernaut. CEO Peter Horvath emphasizes that the company’s leadership team has significant retail experience, which includes building internationally recognized brands like Victoria Secret, American Eagle, and Bath & Body Works. Horvath believes GGB’s strength is in creating vertical brands that control the entire customer experience. He believes cannabis will follow the direction of other industries that already use a vertically branded customer experience. Green Growth Brands is continuing its Nevada expansion, where it has licenses for 7 stores and is growing its operation in Massachusetts, where it is licensed for 3 shops. Horvath believes Green Growth Brands will be able to show profits immediately, and anticipates $250 million in revenue next year from its Nevada operations alone.

James West:   Peter, welcome to the show.

Peter Horvath: Thanks, James. Glad to be here.

James West:   Peter, Green Growth brands is a widely anticipated brand focused cannabis company entering the space. Tell me about your history with brands and branding, and why everybody is so excited about Green Growth Brands.

Peter Horvath: Well, I think what’s exciting is, look, let’s keep in mind, this market is evolving, right? First five million consumers, I’ll bet 60 percent of them were buying the product illegally. The next 4 million coming down the pike in the next five years, they’re not going to be like that; they’re going to be everybody else.

So it’s not about cannabis brands, and it’s not about cannabis consumers; it’s about brands and consumers, and that’s where we have deep experience. That’s where we’ve been working.

James West:

Grown Rogue International Inc (CNSX:GRIN) (OTCMKTS:NVSIF) is a US-based, vertically-integrated cannabis company with 100,000 square feet of mixed indoor and outdoor production. CEO Obie Strickler identifies the company’s branding focus as the “active enthusiast” and notes that Grown Rogue prioritizes appealing to professional clientele. Grown Rogue has developed patent-pending nitrogen-sealing technology, designed for use with products like pre-rolls, to ensure freshness. The company offers simplified purchasing for the customer in the form of five distinct experience product lines, developed using crowd sourcing and sophisticated analytics. Strickler believes the Farm Bill will act as a catalyst in the US cannabis space because it allows companies to scale businesses in practical ways and will help normalize cannabis consumption.

James West:   Obie, how are you doing?

Obie Strickler:    I’m doing very well, James. Thanks for having me on the show this morning.

James West:   You bet. Obie, why don’t we start with an overview: what is it that Grown Rogue International does?

Obie Strickler:    Yeah. Grown Rogue International is a US-based cannabis company. We’re really focused on three primary mandates: the first is brand; we believe the future of this industry is really in the brands, the consumer packaged goods space, so we’re very focused on the long-term goals of establishing trust and transparency with the consumers.

Secondarily, because of the challenges in the supply chain, we’re very focused on vertical integration, at least in the near term, and there’s a lot of issues ar

420Investor and New Cannabis Ventures Founder Alan Brochstein, CFA discusses the passage of the Farm Bill in the US Senate. Brochstein believes that when the Farm Bill is signed into law it will remove a lot of uncertainty for investors, but will likely be too early to declare individual winners and losers in the cannabis space. While he believes passing the Farm Bill is a long-term step towards federal de-prohibition, Brochstein does not think it will act as a short term catalyst for legalization. He suggests the Farm Bill is an “easier sell” because of its agricultural focus; however, full legalization is significantly more complicated in terms of creating a regulatory framework that also addresses existing state laws. He notes that the market is missing the end of year rally investors have come to expect from the cannabis sector and suggests that solid fundamentals will rule the space in 2019.

James West:   Alan, how are you?

Ed Milewski:  Hey, Alan. Nice to see you, young fella.

Alan Brochstein:   Hey, it’s great to see you. Nothing against Ed, but it’s really nice to see you, James.

James West:   Thanks, thanks, you too. Well, so, let’s get started here, Alan. What’s the upshot on the Farm Bill, here? That seems to have to taken the market higher ever so briefly; it’s interesting to me how sort of short-lived that whole sector-wide catalyst seems to have unfolded.

Alan Brochstein:   Yeah, I think it’s kind of confusing. I’ve been following the hemp space, obviously, for a long time, and it’s always been great. So I know that as we move more towards black and white, people will appreciate that. I mean for now, we’ve had these companies, you know, having run-ins with the FDA, and that still may continue, by the way. But I think the removal of the uncertainty about are you able to do business or not, is a huge step forward.

But I think it’s really early to figure out who the winners and losers are going to be, and obviously from the big-picture perspective, legalizing cannabis’ cousin, I guess, is what people call it, is a good thing. Because I think people will see the path forward for THC-type products over time.

But in the interim, I think I’ve said this on your show before: I think it’s really a win for the LPs, James and Ed. These are the companies that I think are going to be very well-positioned in our market.

James West:   Okay, so then, why this – it’s more like a fart in the wind, to use want of a better term, in terms of, you know like we saw a lot of lift in the CBD-focused companies like Charlotte’s Web got a nice lift, but it didn’t last, it didn’t hold, and I would think that this would be something that catalyzes ongoing, you know, accumulation of CBD stocks that I thought the upward effect would have been more sustained.

Alan Brochstein:   Yeah, let’s put it in perspective. Charlotte’s Web and CB Sciences and Elixinol, these are the three public companies that I track most closely on this front; they’re in the middle of huge rallies. If you look at what’s going on in the Canadian market for US canna

The Chart Guys Founding Partner and Analyst Charting Man Dan McDermitt discusses the correlation between oil prices, the S&P500, and the cannabis space. Charting Man Dan emphasizes that from a technical perspective, oil and the S&P do the exact same thing. As a result, an oil bounce will provide a relief bounce to the S&P and the cannabis space, which is strongly correlated to the S&P. McDermitt cautions that the there’s continued weakness in the S&P, which has broken October lows and is now looking back at February lows for its next support level. He notes that the names that are holding up will perform better when the bulls finally show up. Charting Man Dan touches on the Tilray Inc (NASDAQ:TLRY) distribution deal with Novartis AG (NYSE:NVS).  He looks at a chart for Cronos Group Inc (NASDAQ:CRON), points out that the company’s stock is establishing support around the $11 mark, and he anticipates a lower high forming.

James West:   Hey, Dan, welcome back.

Charting Man Dan:  Thanks for having me. Quite the intro, very nice.

James West:   That’s the first time I’ve seen that, too. It’s great. Anyways, Dan, it’s awesome to see you again this week, and here we are in another down week, another bunch of red days piling up here – what do you, let’s talk about the S&P 500. What’s the story there?

Charting Man Dan:  So we’re continuing to see weakness in the S&P 500, and we just broke the lows that we’ve seen at this point. We had October lows that were watching, those have broken, so now we’re looking back at February, and those in the market back in February can remember that was a time of significant fear. We had a big old dump, we ended up recovering from it, but we’re now looking back down at those support levels.

So we continue to see weakness. At this point I’m watching how oil is going to be coming into play with the market as a whole, and we’re patiently waiting for signals that the trend has shifted. But until that happens, we’re still looking for more red.

James West:   Sure. How important would you say the speech of Chinese Premier Jinping is going to be?

Charting Man Dan:  It’s definitely going to interact or have an impact in the short term – that’s the narrative that the market is attaching itself to right now. Of course, the Fed and the rates are going to be on the topic of discussion, but it’s China. It’s China and the US, and the trade deals, and that’s what’s the driving force, and the headlines and the Tweets, that’s w

Charting Man Dan McDermitt discusses how weakness in the S&P500 is still causing weakness in the cannabis sector. He suggests that daily trend changes need to show a shift in momentum to catalyze a reversal from a technical perspective. McDermitt addresses why the Altria Group Inc (NYSE:MO) deal with Cronos Group Inc (TSE:CRON) (NASDAQ:CRON) (FRA:7CI) did not act as a sector catalyst to the same degree as the Constellation Brands, Inc (NYSE:STZ) agreement with Canopy Growth Corp (TSE:WEED). He notes that while the Constellation deal raised all boats, the market has begun to price in these moves and argues that Aurora Cannabis Inc (TSE:ACB) has risen 7 percent since the Altria news because the market is pricing in a similar deal for that company. Charting Man Dan runs through how several cannabis companies have recovered since the Aphria Inc (TSE:APHA) report last week and highlights how the Farm Bill is acting as a short term catalyst for American cannabis stocks.

James West:   Welcome back. My guest in this segment, as he is every Tuesday, Dan McDermitt, Charting Man Dan with the thechartguys.com. Dan, welcome back to the show.

Dan McDermitt: Thanks for having me, James. Great to be here.

James West:   So let’s start a bit about what’s moving the markets around today from a technical perspective. Certainly there’s been nothing but weakness in the cannabis sector generally, but that’s a reflection, I think, of markets, the broad market globally. Is that what you would sort of see from where you sit?

Dan McDermitt: Definitely. It’s always the S&P 500 recently that we are watching as Step #1 to get a gauge of what the market is doing, and it’s still weak. Every little bounce is just a lower high, we still have uncertainty with Trump and China, and again, it’s always a joke where, you know, you have the Canadian sector as its own little universe, but the Canadians in our chat room sort of unfortunately now have to pay attention to Trump and, you know, all of these tweets that he’s sending out.

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