Midas Letter

Echelon Wealth Partners Equity Analyst Russell Stanley joins James West to chat about the Canopy Growth-Constellation deal and the mainstreaming of the cannabis industry globally. Stanley acknowledges that the Constellation deal, in combination with the partnership between Molson and Hydropothecary, “confirms the big beverage players have an interest in cannabis, and those without a dance partner are going to have to find one soon.” Stanley suggests Aurora Cannabis Inc (TSE:ACB), CannTrust Holdings Inc (TSE:TRST), Hydropothecary Corp (TSE:HEXO), and OrganiGram Holdings Inc (CVE:OGI) are potential candidates for the next big deal between cannabis and brewing industries because these companies have large-scale, fully-financed production platforms and sales agreements with multiple provinces. Stanley regards US valuation multiples as too low compared to Canadian multiples, and believes cannabis investors are going to take advantage of lower American valuations.

James West:   Hey, welcome back to Midas Letter Live. My guest in this segment is Russell Stanley; he’s the equity analyst with Echelon Wealth Partners. Russell, welcome to the show.

Russell Stanley:   Thank you for having me.

James West:   Russell, the main flavour of the day in our universe is cannabis, cannabis, cannabis, cannabis. What have you got to say for yourself about cannabis?

Russell Stanley:   I could say a lot.

James West:   I bet!

Russell Stanley:   Every day is a new adventure. As I’ve said to a number of people, there’s no groundhog days in cannabis; every day is something new.

James West:   Yeah, no kidding. Let’s start with the elephant that still persists in the room, is the $5 billion – I call it a takeover, people like to correct me – but with four seats out of seven on the Board, it’s a takeover in my book, especially with the 50 percent that they’re going to end up owning, Constellation I mean, in reference to Canopy Growth, if they were to exercise their full warrant. The whole sector has been taken higher by this event, so is it safe to categorize this as, essentially, a mainstreaming of the cannabis industry globally?

Russell Stanley:   I think it is. I think, you know, what we saw is the start, and what started as a product development joint venture, if you will, back last October, has become with Constellation’s investment a recognition that this is a global business. And the opportunity goes beyond just one product, and goes beyond just Canada or the United States; this has become a global p

FluroTech (CVE:TEST) COO Rex H. Kary explains the company’s target markets and main products ahead of its October product launch date. FluroTech’s primary target market is growers; its products reduce growers’ average testing wait time from 10 days to 15 minutes. FluroTech’s device allows growers to test for THC/CBD potency and for contaminants such as heavy metal and pesticides. FluroTech is using this existing technology to develop a roadside test for law enforcement agencies, which Kary estimates is a $150 million market in Canada. FluroTech’s biomarker allows producers to put unique signatures on plants at the cellular level, enabling producers to track their plants through all levels of production and acting as an anti-counterfeiting measure to aide law enforcement agencies.

James West:   Hey, welcome back to Midas Letter Live. My guest this segment is Rex Kary; he’s the Chief Operating Officer of FluroTech, which does cannabis testing, and they are publicly traded on the TSX Venture under the symbol TEST. Rex, welcome.

Rex Kary: Thank you. Thank you for having me this morning.

James West:   You bet. Why don’t we start with an overview exactly how your business runs, and what it is you do.

Rex Kary: FluroTech is a startup. What we do is, we test cannabis with a device; that technology came from the University of Calgary. It developed into a device that will test plants; we can test for THC/

Triumph Gold Corp (CVE:TIG) (OTCMKTS:TIGCF) (FRA:8N61) CEO John Anderson shares how the company’s restructuring in 2015 has positioned it to provide shareholder value as gold rebounds. Anderson acknowledges that Goldcorp’s 20 percent purchase of Triumph Gold in 2017 provided the company with the financial resources to drill 13,000 metres last year. Anderson provides an update on Triumph Gold’s 2018 drilling projects; the company is still waiting for the results from two-thirds of the more than 70 holes drilled this year. In addition to Triumph Gold’s exploratory drilling, the company has a large-scale project with placer operations, high-grade scarrings, and epithermal veins of gold, which it is ready to extract once gold and copper prices rebound.

James West:    My good friend John Anderson, who is Executive Chairman of Triumph Gold Corporation, trading on the TSX Venture under the symbol TIG, has graced us with his presence on short notice. So, John, thanks for coming.

John Anderson: Great, thanks for having me, James. Nice to see you again.

Emblem Corp (CVE:EMC) (OTCMKTS:EMMBF) (FRA:E0M) CEO Nick Dean shares details about his company’s strategic partnership with GreenSpace Brands (CVE:JTR) (FRA:4G7) to launch a line of CBD health and wellness products. This includes plans for a line of CBD-infused, hemp-based gel caps and cannabis CBD-based gel caps, as well as lotions, edibles, and beverages. Emblem’s partnership with GreenSpace is an industry first because it combines a traditional LP and a traditional consumer packaged goods company. Dean outlines Emblem’s play to acquire all outstanding shares of Natura Naturals as part of its cultivation strategy. Emblem’s recent deal with Akros Pharma gives Emblem an established sales and distribution channel in the Germany market that will operate under the brand name Emblem Germany.

James West:   Hey, welcome back to Midas Letter Live. My guest in this segment is Nick Dean, and he’s the CEO of Emblem Corp., trading on the TSX Venture under the symbol EMC. Nick, welcome back.

Nick Dean:    Thank you James, nice to see you.

Sable Resources Ltd (CVE:SAE) (OTCMKTS:SBLRF) (FRA:5XL) CEO Tom Obradovich joins James West and Ed Milewski in the Midas Letter studio to talk about Sable’s recent strike at its Margarita project in Mexico that includes 902 grams per tonne silver equivalent over 4.1 metres. Obradovich explains that Sable’s Margarita project has strike length throughout the property and that the base metal contribution strengthens the overall value of the strike. The trio discuss the decline in the base metal market and Obradovich suggests it’s not a long term issue. Obradovich explains that Sable prioritizes exploration, aiming to be the company “that brings everybody back to the mining market after a major discovery.” Abradovich outlines Sable’s plans for projects in Argentina and British Columbia.

James West:   Hey, how’s it going? Welcome back to Midas Letter Live! My guest this segment is somebody you probably might or might not know, if you’ve been in the mining space for a little while: Tom Obradovich is the President and CEO of Sable Resources, trades on the TSX Venture under the symbol SAE. Tom, welcome to the show.

Tom Obradovich:    Thank you very much.

CannaInvestor Magazine Editor-in-Chief Louis Kyron joins James West in the Midas Letter studio to talk about the Canadian Medical Association’s recent declaration that it expects “the existing medical use framework to be dismantled, phased out, once legalization stats on October 17.” The pair address the impact on patients transitioning from medical teams, licensed producers, and special strains, to relying on retailers for information and guidance. Kyron discusses the growing body of research supporting cannabis as an alternative treatment to opiates. They examine cannabis taxation and what that means for the black market. The segment concludes with a discussion of cannabis brewing companies to watch.

James West:   Hey, welcome back to Midas Letter Live. My guest in this segment is Louis Kyron; he is the Editor-in-Chief of CannaInvestor Magazine, which you can find online at cannainvestormag.ca. Louis, thanks for joining me today.

Louis Kyron:  Thank you, James. Pleasure to be here.

James West:   Yeah, so Louis, there’s some issues with the whole idea of the entire Federal medical regime that you seem to believe represent some level of risk to patients and/or, I guess, by extension, investors. Can you give me a bit of an explanation of what you’re sort of fishing for there?

Louis Kyron:  Certainly, James. There’s a whole bunch of, obviously, smaller challenges that we read about, whether it’s the taxes being on medical cannabis, lack of benefits coverage, the black market threat, availability, and we can go on and on. I would say recently, the Canadian Medical Association has come out and declared – it’s on their website as well – that they expect the existing medical use framework to be dismantled, phased out, once legalization starts on October 17th.

I just don’t see, from a patient point of view, how patients are expected to transition from their medical team and licensed producers to get special strains, especially high CBD, for example, to a dispensary network, you know, relying on retailers, if you will, for that same information.

From an investor perspective of course, is we’ve all been led to believe the markup, the margins, to be more on the medical side, and there’s a bit more branding there as well. I mean, strains and so forth. And what would happen to those strains and all of that if it’s strictly recreational?

So I see a number of concerns, and you know, tho

CannTrust Holdings Inc (TSE:TRST) (OTCMKTS:OCTFF) (FRAC95) COO Brad Rogers stops by to discuss incredible Q2 earnings and reaching a 45,000 patient base. CannTrust is the second-most funded to capacity producer going into recreational markets on October 17 with 50,000 kilograms. Rogers explains that CannTrust has raised $100 million to finish an additional 600,000 square foot facility in the Niagara region. CannTrust has developed a zero-profile THC beverage, a potential “phenomenal base material for any other beverage in the market.”  Rogers mentions CannTrust will accelerate its partnership with Apotex as part its international development plan.

James West:   Welcome back to Midas Letter Live, everybody! Guess who’s here? Brad Rogers, Chief Operating Officer and President of CannTrust Holdings Inc., TSX TRST. I will point out, before we cut to Brad, one of the few up-performers on the market today. Brad, welcome back.

Brad Rogers:  Thank you, thank you for having me. Great day to have me back.

Golden Ridge Resources (CVE:GLDN) (FRA:44G) CEO Mike Blady discusses the company’s new discovery hole with 1.94 grams per tonne silver, 0.35 grams per tonne gold, and 0.31 grams per tonne copper at its Williams Zone project in British Columbia. Blady explains Golden Ridge’s targets in the area, including a new target zone, the Boiling Zone, a 500 metre diameter area of 5 grams of gold in soil or higher. Blady outlines that Golden Ridge’s drilling plan for the area is approximately 75-80 percent complete. Golden Ridge’s stock is trending upward as a result of the discovery announcement after a slow summer period. Blady expects more drill results to be released in two weeks, pending a successful QAQC.

James West:   Hey, welcome back to Midas Letter Live. My guest in this segment here is none other than Mike Blady, CEO of Golden Ridge Resources, who announced yesterday an incredible – we’re going to call that a discovery hole, Mike, if we can.

Mike Blady:   Yes, you may.

GreenSpace Brands Inc (CVE:JTR) (FRA:4G7) CEO Matt von Teichman discusses the company’s recent deal with Emblem (CVE:EMC) (OTCMKTS:EMMBF) (FRA:E0M) to partner on branded CBD products. The partnership gives GreenSpace a US platform to complement its existing relationships with every major grocery store, pharmacy, and natural health food store in Canada.  The pair discuss CBD’s legalization on October 17 and advances in CBD research. As research continues to highlight the benefits of CBD, Teichman predicts production of CBD products to be extensive.

James West:   Hey, welcome back to Midas Letter Live. My guest in this segment is Matt Von Teichman; he’s the CEO of GreenSpace Brands Inc., trading on the TSX Venture under the symbol JTR. Matt, welcome to our little show.

Matt von Teichman: Thank you, James.

Cannabis Compliance Vice-President Deepak Anand and Director of Strategic Sales Michael Elkin discuss regulatory compliance from cultivation to sale. Cannabis Compliance specializes in cannabis compliance laws both in Canada and internationally. The company represents applicants looking to obtain growing licenses from Health Canada in addition to working with approximately half of the existing 115 LPs in the country looking to expand. They discuss how Canada’s significant supply of cannabis is uniquely suited to meet the growing needs of the international market, especially in Germany, a country unlikely to develop domestic cultivation. Domestically, Cannabis Compliance assists existing illegal dispensaries on the road to legitimization.

James West:   Hey. Welcome back to Midas Letter Live. Bit out of the ordinary today- we’ve got two gentlemen here from Cannabis Compliance, Michael Elkin is the Director of Strategic Sales, and Deepak Anand is the Vice-President. Gentlemen, welcome to the show.

Michael Elkin: Thanks for having us, James.

James West:   Why don’t we start with an overview with you, Deepak: what is it that Cannabis Compliance does, and who are their customers?

Deepak Anand: So we’re a regulatory compliance firm, and we work with licensed producers and applicants that are traditionally gone after cultivation because it’s been a fully vertically integrated model in Canada, it’s been seed to sale, and we’ve worked with hundreds of applicants and licensed producers. We’re now busy on the retail side; we’re assisting sort of companies that are in various provinces that allow private retail to be set up there.

James West:   So then, am I to interpret that, as you guys are experts in the law of cannabis compliance, like in the law and complying with the law for growers, and now retail?

Michael Elkin: Absolutely, and it really spans on a global footprint. The way that I kind of describe it is, you have all these governments around the world that are legalizing some type of framework around the actual plant, so we basically do is work with companies and entrepreneurs, basically have them touch the plant in any form that they want to. So whether it’s cultivation, production, manufacturing, transportation, in Canada or in Germany, CCI basically specializes in that expertise.

Deepak Anand: And what we’re finding, as we do a lot of work around the world, we’re finding various Federal governments come to us and say “How did you do it in Canada?” You know, I’ve had the opportunity of working very closely with our fed