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Video StaffVideo StaffJuly 19, 2019

12min1370

This interview was recorded on June 25 at the MJ Link Micro Investor event in New York. 

GMR Editor Debra Borchardt:             Okay. Cannabis beverages are expected to be the next big thing in the industry. Joining me now is Province Brand’s CEO Dooma Wendschuh. We’ve heard so much about these beverages and your company is unique in that the beverages that you’re making are using literally every part of the hemp plant, correct?

Province Brands CEO Dooma Wendschuh:       We do make one beverage that uses every part of the hemp plant, but what makes it really cool, I think are most of the beverages we make are actually using every part of the marijuana plant, so they intoxicate using marijuana in place of alcohol. We have a diverse array of product offerings that we’re coming to market with. The one made from hemp, we keep the alcohol it and it intoxicants using the alcohol that comes from fermenting the hemp plant. The others are actually made from stock stems and roots of the marijuana plant, which is a waste material. It’s material that you can’t really throw in the garbage in Canada because it’s a controlled substance. You sure can’t incinerate it because you create marijuana smoke, you get the whole neighborhood high, nobody wants that.

And so there’s this industry of licensed disposal companies that will dispose of this material for a fee anywhere from $20,000 to $150,000 a month that the growers are paying to dispose of this waste. We collect it and actually use it as a starting material for brewing our beer. It’s part of what we call the circular economy. You’re called the Green Market Report. I assume green means marijuana, but there’s another meaning of green, which is protecting the environment and we’re actually keeping this material from the landfill, preventing all the carbon emissions associated with that and turn it into a premium beer that has a fantastic flavor and intoxicates using marijuana in place of alcohol.

Borchardt:             So when do you think these products especially are going to be available in Canada? Because we know that this type of product was not available in the beginning stages of the recreational legal market, and I’m hearing that it’s really going to be pushed even further back towards the end of this year. Is that correct?

Dooma Wendschuh:       Well, just in the second week of June, we received the regulations from Health Canada for marijuana edibles and beverages and those regulations state that on October 17th of 2019, anyone who wants to make an edible or a beverage, including us, of course, can to have that beverage sold throughout Canada. There’s about a 60-day approval process that they anticipate, could be a little longer for some people, won’t be shorter than that. So the earliest you’ll see a beverage for sale in Canada, marijuana beverage would be December 17th of 2019. So most of the companies are expecting early 2020 to really begin selling in earnest.

Borchardt:             We’re seeing a trend now of on the alcohol side, people wanting nonalcoholic drinks. This whole sober trend of wanting to be able to drink, but not getting drunk. Do you feel that your product kind of fits in there because people are not, other than the hemp beer, people are not really getting those alcoholic effects?

Dooma Wendschuh:       That is correct. And right now people are drinking less per capita in the developed world than ever before. And what we’re seeing is the millennials are drinking a lot less. Consumers want a healthier alternative, but the healthier alternatives to alcohol, they’re just not any fun, right? You can go buy a bottle of Seedlip, are you familiar with Seedlip?

It’s a non-alcoholic gin that’s just selling like gangbusters. I mean, it’s a huge, huge phenomenon, but it’s just flavored water and it’s a $60 bottle of flavored water, right? With our product, it’s a way that you can go to the barbecue, you can go to your friend’s house and have a beer and they can be drinking alcohol and you can still be intoxicated and have a fantastic time, but you don’t have to feel like you’re missing out and you don’t have to take an all those calories either, right?

A typical alcohol beer is very caloric. Ours are much, much lower, about 40 calories in a single bottle. You don’t have to take in gluten, right? When you drink alcohol and beer, it’s made some barley, there’s always gluten in it. In our product, there is no gluten and you can still be intoxicated. You can still have a wonderful night, enjoy time out with your friends, celebrate special occasions. And there is something about alcohol that you don’t normally get from marijuana, right? It’s not the same to be intoxicated using marijuana as it is to be intoxicated using alcohol. We are working on ways to make our beverage feel as much like that intoxication you get from alcohol as possible so you don’t have to feel like you’re missing out, right?

I understand there’s a sober culture. We’re not making products for sober people. We’re making products for people who want to enjoy special moments with friends, who want to have a psychoactive experience responsibly and don’t want to do it in a way that exposes them to eight different types of cancer and liver disease and heart failure and depression, obesity, all the myriad problems that are associated with our society’s use of alcohol.

Borchardt:             You mentioned roots and I’m hearing more and more about the benefits of the roots section of the plant, something that you kind of mentioned people have walked away from or just thrown away. What is it about the root that is so important?

Dooma Wendschuh:       There’s a lot of research on this showing recently that some of these phytocannabinoids that were thought not to be very abundant outside of the flower and are a bit more abundant in the roots of the plant. This is helpful for us because we are able to get our phytocannabinoids from the stock stems and roots of the plant, right? We don’t use the flower, we don’t really use the trim to make our own branded products. We’re using those parts of the plant and in this material, this is very little phytocannabinoids, but we use a lot of it to brew our beer. So the little amount adds up and we’re able to get six and a half milligrams of THC in each beer.

Borchardt:             Oh, that’s fantastic. So I’ve got to ask you, how does it taste?

Dooma Wendschuh:       The flavor of beer comes from primarily these esters that are produced when the yeast digests the sugar that is produced when you mash barley, right? Beer is typically made from barley. Sometimes they make it from rice, some people make it from sorghum, but it’s always some kind of starch, right? And you heat that starch, you create sugars when you heat it and the yeast digests those sugars and that is the number one flavor in a beer. And of course, we have that flavor because we’re turning the cannabis into sugar. And then the yeast is digesting the sugar that comes from the cannabis plant. The secondary flavor in the beer comes from the hops. Now I realize there’s a trend now to making beers without hops, but to me, those are really weird and they don’t taste like a beer at all. But assuming your beer has hops, that’s the second note that you pick up is this flavor of the hops.

And the third flavor is the flavor of the barley. And of course, we have the flavor. Our ingredients are cannabis, hops, water, and yeast, that’s it. We have the flavor that you get from the esters because the yeast will digest the sugars and create those same beautiful beer flavors. And we have the flavor from hops because we use premium hops in all of our beer. We don’t have the flavor of the barley, but what it’s replaced with is this equally complex flavor of the cannabis.

It just tastes amazing. Tastes sort of familiar, but also kind of new. People love it. It’s dry. It’s a lot less sweet than a typical beer because when you do that fermentation to make a beer, the yeast is not going to eat all the sugar that’s produced when you mash your barley.

So beer always has some residual sugar, but because of our process, we end up with so much less residual sugar than they would have in a typical beer. And that’s part of the reason why it’s much lower calories.

Borchardt:             And what’s your favorite?

Dooma Wendschuh:       Right now, my favorite is a product called Dagga and Imperial. And it’s actually made from cannabis stock stems and roots. And it’s … we’re calling it a Canadian cannabis lager, right? Because it’s sort of a lager style, even though it’s not really a pilsner, it’s something new. We’re creating in a new category and we can name it however we like.


Video StaffVideo StaffJuly 19, 2019

3min670

The big news this week was the announcement that Curaleaf was buying Grassroots in a deal valued at $875 million. Grassroots was one of the few remaining multi-states that was still private. This deal will give Curaleaf the midwest footprint that it lacked because of the company’s operations in Illinois and Pennsylvania. In May Curaleaf acquired Select, which will give the company its west coast market. Now with all three pieces of the puzzle-filled, Curaleaf is on course to challenge Acreage Holdings as the largest cannabis company in the country.

A few earnings were reported this week.

Organigram reported its third-quarter net revenue of $24.8 million but that fell sequentially by $2 million from the second-quarter net revenue of $26.9 million. The company blamed it on fewer reorders from British Columbia. The company also delivered a net loss of $10.2 million. The cost of cultivation increased sequentially as well as sending gross margins down. Organigram said it has gone back to its previous method of growing and is preparing for the edible and vape markets to launch in Canada later this year.

Valens GroWorks Corp. reported that its revenue increased to $8.8 million, a 296% increase over the first quarter of 2019. However, the net loss was a whopping $10.5 million.

Canopy Rivers Inc. reported its fourth quarter and year-end financial results for fiscal 2019. Operating income was C$6.08 million, down from C$19.5 million. Operating losses declined a great deal, but the company experienced a total comprehensive loss of $30.35 million for the year.

TILT Holdings Inc. said that it has signed a binding term sheet for a private placement of $125 million. The company said it would use part of that to retired a $20 million credit facility that had a fairly large interest rate of over 18%.

The Arcview Group announced that it has closed a $7.7 million Series A financing round. Leading the fundraise was Trivergance Investments in partnership with Cresco Capital Partners.

And finally, A decision by Israel’s Securities Authority last week opens the doors for cannabis companies from around the world to explore a public listing on the Tel Aviv Stock Exchange, even though recreational use is not legal in Israel.


Video StaffVideo StaffJuly 12, 2019

3min4050

Last week it was 4th of July, this week the industry celebrated Dab Day on July 7. Oil spelled looks like 710, see what they did there. Sales data shows that customers are happy to keep the party going.

CannTrust sent shockwaves through the industry after admitting the company grew plants in rooms that hadn’t received licenses. The licenses were pending and the company did eventually get the rooms approved, but the plants grown in those rooms were seized. Employees also lied to Health Canada officials. The company has since hired a compliance officer, but the stock took a beating on the news.

Rapper and husband to Beyonce, Jay-Z (Shawn Carter) signed a deal with California cannabis company Caliva. Jay-Z joins other rappers that have partnered up with cannabis companies. Carter announced online today that he will enter into a multi-year partnership with Caliva as Chief Brand Strategist. The statement said that he will play a crucial role in driving creative direction, outreach efforts, and strategy for the brand.

Green Growth Brands is buying Moxie Holdings in an all-stock deal valued at $280 million. Moxie is a California cannabis brand. Green Growth also announced that it is selling its CBD products in American Eagle stores.

Gotham Green ponied up another $30 million for MedMen bringing the company’s total commitment to the retailer to $280 million. So far $100 million of that has been funded.

KushCo announced quarterly net revenue of $41 million, but a net loss of $10.6 million. The company said it would focus on its big customers and customer financing opportunities in its future strategy. KushCo also filed to list at the NASDAQ citing Greenlane and Akerna’s successful bids to list at the exchange as a reason why they believe they will be successful.

In other earnings news, Radient Technologies reported an $18 million loss for its fiscal 2019 year. The company only made a little over $200,000 for the year.

Also this week, Bhang, known for its award-winning infused chocolates began trading on the CSE using the symbol BHNG.


Video StaffVideo StaffJune 28, 2019

4min1840

This week Governor Pritzker of Illinois signed HB 1438 legalizing adult use cannabis for people over the age of 21. This makes Illinois the 11th state to legalize recreational cannabis. It will also expunge the records of over 700,000 residents convicted of marijuana-related offenses.  The bill also includes a “social equity program,” which makes it easier for those with marijuana convictions to get business licenses. The program also allocates $12 million for startup businesses related to cannabis. 

The Flowr Corporation began a public offering of common shares for approximately C$125,000,000 this week sending the stock down in trading as shareholders showed their displeasure at the dilution. Flowr said that it intends to use the proceeds to fund part of its acquisition of Holigen Holdings.

Private cannabis company Surterra Wellness closed on a $100 million Series D funding round and the expansion of its Board of Directors.  Surterra plans to use the proceeds to fund strategic acquisitions and infrastructure capital expenditures. Participants in the round include existing and new investors, ultra-high net worth individuals and family investment offices, including former Patrón Spirits Company CEO, Ed Brown, who is also a new board member. Surterra also announced the acquisition of Molecular Infusions, a Boston-based biotechnology research and development company.

Green Growth continues its takeover of the mall as Abercrombie & Fitch said it would sell the Seventh Sense Botanical Therapy products in 160 stores. This follows a trial period that must’ve been successful if the company decided on a much bigger rollout. 

There were several small acquisitions this week. 

Driven Deliveries, Inc., (DRVD) completed the acquisition of Ganjarunner, Inc., a cannabis delivery company that provides high-quality lab-tested, pesticide-free medicinal and recreational products throughout California.

Nabis Holdings Inc. (CSE:NAB) (OTC: NABIF) completed the purchase of 2,260,500 common shares, representing a 49% interest, of Cannova Medical Ltd., a provider of innovative solutions for cannabis consumption, with the option to acquire the remaining 51% interest.

Vice Ventures said it had closed its first $25 million fund. Vice Ventures is an investment management company that focuses on developing early-stage companies in what it calls the “vice space.” the company was founded by Catharine Dockery who served as an early member of the digitally native vertical brands M&A team at Walmart (WMT), alongside Bonobos CEO Andy Dunn.

And finally, it is Pride month. We commend all those who have fought for the rights of the LGBTQ community. Love is love. Respect each other and embrace who you are because you are all beautiful people.


Video StaffVideo StaffJune 21, 2019

2min6800

New York State ended up not approving any adult use legalization. While some believed it might happen in the last minute, the bill was abandoned in favor of further decriminalization.

Akerna, the combination of MTech and MJ Freeway began trading this week on the Nasdaq using the symbol KERN. CEO Jessica Billingsley is the first woman to lead a Nasdaq traded cannabis company and this is the first compliance software company to get approved for listing at this exchange. The stock moved over 200% in its first day of trading.

Canopy Growth and Acreage Holdings shareholders approved of the company’s merger.  There had been some noise from a shareholder that it wouldn’t get approved at one point, prompting the company to state that there was no such problem and indeed there wasn’t. Full speed ahead for this mammoth merger.

MediPharm Labs said it plans to uplist at the Toronto Exchange and the company also closed on a $75 million bought deal.

Jushi Holdings acquired three unnamed dispensary permit holders for $63 million. Not dispensaries, just permit holders.

The Flowr Corporation signed for a $50 million credit facility.

Green Flower Media closed on a $20 million Series A Round.

CannTrust formed a joint venture with Elk Grove Farming Company to make its entry into the California and U.S. market

And Charlotte’s Web increased its hemp planting by 187% to meet demand. 


Video StaffVideo StaffJune 14, 2019

6min5100

Harborside Inc. (CSE: HBOR) Co-founder and Chairman Emeritus Steve DeAngelo sat down with the Green Market Report’s Editor-in-Chief Debra Borchardt to discuss Harborside becoming a publicly traded company.

GMR Debra Borchardt

The company just went public this week on the Canadian stock exchange and it must be just super exciting because you are a pioneer in the industry.

Steve DeAngelo, Co-Founder Harborside Inc.

Yeah, it’s incredibly exciting. Harborside was one of the first six licensed cannabis businesses in the United States, that’s back in 2006. Today we’re growing to be seven dispensary’s, 200,000 square feet of grow space, 250 employees, and we’ve launched two brands that we’re pushing out into the marketplace.

GMR

You have about a 3% market share in California. What are your plans to increase that?

Steve DeAngelo

So two ways basically. Number one, we’re going to continue to increase our retail footprint. And two, we have developed these two brands, the Key brand, and the Harborside brand and we offer vape pens, we offer flowers, we offer edibles, a line of products in both of those two brands. And so, we’re in a hundred dispensaries now. We’ll be in three or four hundred dispensaries within several months.

GMR

What makes Harborside so special because there are so many dispensaries competing for business right now. Why is a consumer going to go in your door versus another door?

Steve DeAngelo

Well, it’s a values-based proposition. Harborside has a well-earned reputation for not just being after our own financial gain but also representing values. And so, we’re very committed to the values of diversity and building a cannabis industry that is diverse. We were very committed to the values of fairness and economic justice and we’re very committed to the values of sustainability and you can see those values in everything we do

GMR

You really have a reputation as caring for the customer, caring for the patient, because that’s really was where you guys made your name was caring so much for the patients that were coming to you.

Steve DeAngelo

You know, Harborside was a medical cannabis dispensary for most of our life. And so, we had to be very, very careful to make sure that we gave not just customer service but also patient care. And that has developed an ethic in our culture of really engaging with everybody who comes through our door. We like to say that we want everybody to come out of Harborside feeling better than they came in.

GMR

So let’s talk about the elephant in the room, which is that 280E case. We know you guys have been fighting and really fighting it for the whole industry. If that judgment goes against you, what amount of money do you expect you would have to pay and is that money already set aside?

Steve DeAngelo

The maximum amount of money that we could be liable to the IRS has already been accounted for and is available as needed but this is a long ongoing struggle. We’ve been in this litigation for about 10 years now. It’s not going to end for at least several more years. We did have an adverse ruling on the underlying case at the trial court but we won on the penalties phase and we’re now appealing to the Ninth Circuit Court of Appeals, the most favorable court in the country on cannabis. There’s also legislation pending in the Congress, which is going to resolve the 280E situation. So, it’s far from over. Harborside will keep doing what we always do. We stand up for the industry, we stand up for what we think is right, and we’ll keep on doing that until we either win the case or have exhausted all legal avenues.

GMR

A lot of people may not know that you were part of the Yippies, that you have a storied history associated with this plant. Did you ever in your wildest imagination think that this was going to happen? Did you think it was going to happen sooner or what has been the biggest surprise to you with this?

Steve DeAngelo

There has never been any doubt in my mind that we would see a respected, honored place for cannabis in our society because of the inherent properties of the plant, its value and its safety just make it necessary over time. What has surprised me and still surprises me is how long that it’s taking us to get there.

GMR

You have been working on this for many years and I’m so thrilled that you took the time to talk to us at the Green Market Report.



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