Midas Letter

Analyst Dimitry Zaytsev shares his thoughts on the security options provide investors in a highly volatile market like cannabis. Zaytsev believes there’s very little institutional participation behind the space’s current rally and believes company’s like Tilray are being buoyed by retail momentum players. Zaytsev questions current valuations and sees a lot of execution risk in the Ontario cannabis market because of black market enterprises and the “head start” such operations have over LPs for recreational dollars. Zaytsev anticipates a sell-off soon with subsequent new lower highs and explains what it means for the industry. Zaytsev addresses the mining industry, highlighting junior miners as a potentially lucrative, low-risk investment option.

James West:   Welcome back to Midas Letter Live. My guest this segment is Dmitry Zaytsev. He is an analyst, and he is joining us today to talk technical. Dmitry, welcome to the show.

Dmitry Zaytsev:    Glad to be here, James.

James West:   Dmitry, the reason we started talking in the first place because you had some interesting comments about the technical indicators as it pertains to the cannabis industry in particular, and given the extreme exuberance in the marketplace, which is unexplainable by anything fundamental except that excessive exuberance, there must be some technical indications. So why don’t we start with a bit about who you are and how you came to be an analyst?

Dmitry Zaytsev:    Yeah. So a little bit about myself: I recently graduated, and I’ve had a bunch of different experiences I was very fortunate to have at various boutique investment banks and other shops. I worked at Kinross, the gold mining company. I’ve also had an opportunity to work at Stoic Advisory, and they’re an M&A shop that focuses specifically on the cannabis space. And I’ve personally been investing in the cannabis space since 2016, 2015, around that time, and so I’ve been very interested by the opportunities there.

And I mean, we can talk about technicals, but I’m also very interested in terms of the fundamentals of all these companies, and I’ve been following those very closely, as well as, you know, the equity, derivatives, options, all those kind of things.

James West:   Okay, interesting. So if you started investing in cannabis in 2015, you must be almost ready to retire.

Dmitry Zaytsev:    Yeah, I wish I had a little bit more money when I was a student, that would have been way better! But no, I mean, I’ve done well for myself. A lot of my friends have done very well for themselves, and it’s been a great opportunity riding these waves.

Cronos Group Inc (NASDAQ:CRON) (TSE:CRON) (FRA:7CI) CEO Mike Gorenstein states Cronos “try to take the high road, which is why we got into cannabis in the first place” after the release of the controversial Citron Research report. The CEO counters critics describing the company’s recent newsflow, specifically with their deal with Ginkgo Bioworks, the market leader in terms of DNA printing, to produce cultured CBDs. Gorenstein envisions culture CBDs as the direction the cannabis industry is going, instead of CBDs produced from plants. Cronos has also announced operations in Latin America through an affiliate, Agroidea SAS, Colombia’s leading agricultural services provider. Gorenstein believes Agroidea SAS is the perfect fit to be Cronos’ flower-based global exporter because of climate, labour costs, and expertise. Gorenstein shares his thoughts on the increase in institutional investors in the cannabis space and what this means for Cronos going forward.

James West:   Hey, welcome back. My guest in this segment is Mike Gorenstein, CEO of Cronos Group, trading on NASDAQ and the TSX under the symbol CRON. Mike, welcome back.

Mike Gorenstein:   Thanks, thanks for having me.

Cannex Capital Holdings Inc (CNSX:CNNX)(OTCMKTS:CNXXF) CEO Anthony Dutton shares news of the company’s strong financials. Dutton explains that the company’s deal to purchase Jetty Extracts is still on track and that Cannex hopes to close on that acquisition by the end of September. Dutton believes that successful US operations require a multi-state platform and the Jetty deal gives Cannex a presence in California in addition to its existing Washington State holdings. Cannex is adjusting to the evolving cannabis market, increasing its extraction and production of derivative products such as edibles, to anticipate where demand in the cannabis space is moving. Dutton believes investment in the US cannabis market is becoming less risky with legalization happening at the state level.

James West:   Welcome back to Midas Letter Live. My next guest is Anthony Dutton, CEO of Cannex Capital Group, trading on the CSE under symbol CNNX. Anthony, welcome back.

Anthony Dutton:    Thank you very much. How are you?

James West:   I’m doing well, thanks. You guys put out some financial

Alan Brochstein, Founder of 420Investor, talks with James West about properly valuing cannabis stocks and how US-listed companies like Cronos Group Inc (NASDAQ:CRON) (TSE:CRON) (FRA:7CI), Canopy Growth Corp  (NYSE:CGC) (TSE:WEED) (FRA11L1), and Tilray Inc (NASDAQ:TLRY) (FRA:2HQ), are benefiting from the recent influx of money into the cannabis space. The pair also discuss how the Constellation deal caught the attention of mainstream business media in the United States, which has legitimized the sector for US investors. Brochstein suggests CannTrust Holdings Inc (TSE:TRST) (OTCMKTS:CNTTF) (FRA:C95) and OrganiGram Holdings Inc (CVE:OGI) (OTCMKTS:OGRMF) (

Khiron Life Sciences Corp (CVE:KHRN) (OTCMKTS:KHRNF) Medical Director Dr. Maria Arboleda shares the company’s three-pronged approach to the medical cannabis space in Colombia specifically and, more broadly, Latin American. Dr. Arboleda discusses Khiron’s role in training doctors in Latin America on the value of medical cannabis. Khiron is also developing specialized cannabis clinics based on the Canadian model but adapted to the specific needs and cultural beliefs of Colombians. Khiron plans to develop Colombian-based cannabis research to meet the information and research requirements of Invima, a national drug and food monitoring agency. This approach positions Khiron competitively in the region’s medical cannabis space, which it estimates at 48 million patients in Colombia and 620 million patients in Latin America.

James West:   You’re Dr. Maria Arboleda, you’re the Medical Director of Khiron?

Maria Arboleda:    Right.

James West:   And so tell me about your role; what is that going to, what is your role going to be?

Maria Arboleda:    I can tell you a little bit about my background, and then I can explain what my role is?

James West:   Sure, perfect.

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Green Tank Technologies designs, develops, and manufactures high-quality premium vaporization hardware. CFO Jeremy Stepak anticipates that Phase II of Canada’s legalization timeline, when concentrates and vapes are expected to be legalized, will be a huge catalyst for Green Tank. However, Green Tank’s existing client base in the US recreational market protects the company against any delays in the Canadian legalization roll out. Stepak describes how the vape market has grown in the past two years and that Green Tank aims to provide a premium vape experience to ensure the company’s profitability. Green Tank vapes utilize True-Taste Ceramic Core Technology, which gently warms the oil until it vaporizes without damaging the terpene THC profile.

James West:   Hey, welcome back to Midas Letter live. My guest in this segment is Jeremy Stepak, is that correct?

Jeremy Stepak: That’s right.

James West:   He’s the CFO of Green Tank Technologies. Jeremy, welcome to the show.

Jeremy Stepak: Thanks for having me.

James West:   And tell me: what does Green Tank Technologies do?

Jeremy Stepak: Yeah, so Green Tank at its core is a, we design, develop and manufacture high-quality premium vaporization hardware for the cannabis space.

James West:   Did you bring any samples?

Jeremy Stepak: No.

James West:   Damn.

Jeremy Stepak: But I knew that was going to come up, and we talked about it. No, not on this segment, no.

James West:   Oh, I guess we’re just a little shy of October 17th, so it’s probably a good idea that you didn’t. Plus, I tend to become much less conversational after I imbibe.

Jeremy Stepak: Well, I can’t speak to that; it depends on whatever you’re using. But we don’t touch the plant, we just make the hardware.

James West:   So you did a $4.3 million seed round back in March, and you have a sister company called WeCannect, spelled very cleverly. And so what is the nature of – oh, Casa Verde, that’s Snoop Dogg’s operation. I was up with Snoop Dogg in Smith’s Falls this past weekend, that’s great. And wow, okay, so you’ve got a real business developing here, I can tell just by the little Coles Notes here. So tell me, what are the big catalysts that are going to happen in 12, 24 months that launch your company into the stratosphere and take your investors with you?

Jeremy Stepak: That’s an ambitious – no, it’s a good little story we’ve built up. We’ve been really proud of the com

Tahoe Hydroponics Company is a Nevada-based cannabis producer in the process of being acquired by Golden Leaf Holdings (CNSX:GLH) (OTCMKTS:GLDFF) (FRA:9GL). Tahoe Hydro Co-founder and CEO Ray Schiavone notes that the company has a significant presence in cannabis stores in Nevada and is expanding its operations to California, with a combined 120,000 square feet of grow space in both states. Tahoe Hydro’s deal with Golden Leaf enables the Nevada company to expand its offerings from dried flower and pre-rolls to extracts. Schiavone explains how new testing regulations in California have impacted the state’s cannabis producers. Tahoe Hydro is already compliant with stricter testing regulations in Nevada, giving the company a marked advantage when its California facilities begin production.

James West:   Hey, welcome back to Midas Letter Live. My guest in this segment is Ray Schiavone. He’s the CEO and co-founder of Tahoe Hydroponics Company. Ray, welcome.

Ray Schiavone: Thank you, James. Pleasure to be here.

James West:   Ray, you are in the process of being acquired by Golden Leaf Holdings in a transaction worth $52.4 million CDN, is this correct?

Ray Schiavone: Correct.

James West:   Awesome. Okay, so tell me about your operation.

Ray Schiavone: So my partner and I, we’ve been in the cannabis space for a while in Nevada; it’s been about four years now. We distribute to basically almost all the stores in Nevada. There’s I think approximately 60 stores in the State of Nevada; we’re in the majority of all of them. We also have a facility in Sacramento, so we’re expanding in California, and then another 60,000 square feet in Nevada as well. We’ll have about 120,000 feet total between both markets.

James West:   Okay, great. And are you selling dried flower, are you sellin

SpeakEasy Cannabis Club (CNSX:EASY) (OTCMKTS:SPBBF) (FRA:39H) is a collective of premium growers with a planned 2.6 million square feet of outdoor production in British Columbia. President Brian Peery explains SpeakEasy’s growers have over 120 years of farming experience, which enables the company to produce both CBD and high-quality flowers in its outdoor space. Using the West Coast market as a model, SpeakEasy believes it is integral to be in the top 10 percent of the cannabis space to be successful and as a result plans to be a leader in the premium market. SpeakEasy has agreed to a MOU with Herbamedica to export cannabis to Germany and an LOI with Valens GroWorks (CNSX:VGW) (OTCMKTS:MYMSF) (FRA:7LV). Peery sees these deals as the framework for the company’s plan for Global distribution.

James West:   Hey, welcome back. My guest in this segment is Brian Peery; he’s the President of SpeakEasy Cannabis Club Limited, trading on the CSE under the symbol EASY. Hey, Brian, how’s it going?

Brian Peery: Good morning, thanks for having me.

Sproutly Canada Inc (CNSX:SPR) (OTCMKTS:SRUTF) (FRA:38G) Chief Science Officer Dr. Arup Sen sees the company’s recent purchase of Infusion Biosciences as vital for Sproutly’s long-term cannabis beverage strategy. Sproutly now holds the rights to an innovative process for producing naturally water-soluble cannabinoids and terpenes directly from the plant instead of water miscible products from oil, the standard practice in the cannabis industry. Sproutly’s water soluble cannabinoids, Infuz20, can be added to any beverage, and its oil, Bio-Natural, can be added to any edible where oils are used. Sproutly intends to both market its own products and to work with others to leverage its technology into competitors’ product portfolios.

James West:   Hey, welcome back to Midas Letter Live. My guest this segment is Dr. Sen from Sproutly. Dr. Sen, thanks for joining me today.

Dr. Arup Sen: You’re welcome, thank you for the time.

Khiron Life Sciences (CVE:KHRN) (OTCMKTS:KHRNF) VP of Compliance and former U.S. Drug Enforcement Administration (DEA), Chief of Pharmaceutical Investigations Matt Murphy shares why the company’s compliance philosophy has advantageous benefit for international expansion. Murphy explains that Khiron applies the DEA regulations that US pharmaceutical companies are mandated to comply with to regulate the company’s cannabis production in Colombia. Murphy believes that Khiron’s compliance with the strictest regulations gives it an edge as it expands its international operations. Crucially, when cannabis is de-scheduled in the US, Khiron will already be compliant with the likely cannabis regulatory standards. Murphy predicts that the pharmaceutical industry will intervene in the cannabis market in ways similar to the liquor industry’s engagement, once cannabis is legalized federally in the US.

James West:   Hey, welcome back. My guest in this segment is Matt Murphy; he’s the VP of Compliance for Khiron Life Sciences Corp., trading on the TSX Venture under the symbol KHRN. Matt, welcome back to the show.

Matt Murphy:  Thanks, Jim. Pleasure to be here.

James West:   Matt, give us an update: what’s happening down there in Colombia?

Ma