CSE Issuer Stories

Revive Therapeutics: Developing Novel Treatments for TBI, Addiction, and COVID-19

Revive Therapeutics (CSE:RVV) is in the spotlight these days for good reason, thanks to a portfolio of prized intellectual property in the psychedelics field, as well as a COVID-19 drug candidate.

In March of last year, Revive acquired Psilocin Pharma for its psilocybin-based IP and treatments. Psilocin founder Derrick Welsh now spearheads Revive’s psychedelics division.

Revive further boosted its pipeline through an exclusive license with the Puerto Rico Science, Technology and Research Trust to advance medicinal mushroom Ganoderma lucidum compounds to help cancer patients.

On the COVID-19 front, Revive is evaluating rheumatoid arthritis drug Bucillamine as a potential treatment for inflammation caused by COVID-19. 

We recently caught up with Revive Chief Executive Officer Michael Frank to talk about the company’s strategy for building a valuable drug pipeline and patent portfolio.

Revive is working on solutions for quite a varied range of patient needs. Why is the company’s work a compelling story for investors?

Revive has a strong platform in two areas targeting rare disorders and infectious diseases. The FDA has approved a Phase 3 trial for Bucillamine aimed at COVID-19, which is a tremendous milestone for us. We’ve also got a strong portfolio around psychedelics, and we are working with a lot of US universities, so we have two best-of-breed platforms. We’re developing novel psilocybin and cannabidiol therapeutics and have a patent portfolio covering methods and compositions of drugs. 

The Psilocin Pharma acquisition has galvanized Revive’s move into psychedelics. What psilocybin treatments are you moving down the clinical path?

We acquired Psilocin from its founder over a year ago. We took our delivery systems in cannabis and transcended them to psychedelics. Psilocin Pharma has IP covering methods of production of psilocybin formulations, and we want to take it down the clinical path by developing products around breath strips, lozenges, and sprays.

We’re working with US universities on preclinical/clinical studies that aim to channel psilocybin in various formulations and delivery methods to treat mental health, substance use disorders, methamphetamine addiction, and neurological disorders. We’re partnering with the University of Wisconsin to conduct a Phase 1/2 clinical study to evaluate psilocybin in adults with methamphetamine use disorder and traumatic brain injury (TBI)/stroke.

We’re also working with the University of Health Sciences Antigua on our tannin chitosan drug delivery technology to deliver psychedelics in an oral thin film patch in human clinical studies to support regulatory approvals globally. We’ve developed a hydrogel that’s going to be used for dosing patients in Antigua. Revive will be one of the companies to have a psilocybin product that’s going to be taken by patients – in the next four to five months – to treat mental health and substance use disorders.

The University of Wisconsin has done the early stages of our formulation work and now have to move it along the clinical path with partners like LTS. The university has done a lot of work on opioid addiction and other areas, but these are Phase 1/2 clinical trials aimed at methamphetamine addiction and TBI/stroke. Enrollment will continue throughout Q1 2022, and we will have access to IP from the two studies. There’s early data that shows psilocybin could be effective for dealing with addiction as a whole.

What is driving Revive to look at psilocybin as a solution to managing TBI and stroke? 

We have data from our initial trial at the University of Health Sciences National Health Research Institutes. In the mouse model study, we saw favourable results in one group of mice, and the study signalled the neuro-reparative effect of psilocybin. 

The mice were assigned to four groups, which included the control group and the mice with TBI who were given psilocybin. Cognitive function was examined by the Morris water maze test. It found psilocybin, given after injury, improved cognitive function in TBI mice.  

Since the mice with concussions, who had high-dose psilocybin, did really well, we’re using the data to push forward with brain injury studies and an FDA clinical study at the University of Wisconsin-Madison with patient enrollment. It’s early stage, but we’re working with incredible universities to build the science. This is important work because millions of children with hockey, football, and other sports concussions end up with brain fog and a multitude of other symptoms. 

How are your psilocybin oral thin film strip development and psilocybin biosynthesis programs progressing?

The programs are progressing nicely. Our work with LTS Lohmann on oral thin film formulation is a unique opportunity – they are a one-stop shop for us. They are going to take the product, put it through testing, and by the end of it, we’re going to have data to support our claim for a pre-Investigational New Drug (IND) and IND.  

With the North Carolina State University collaboration, Revive is developing a biosynthetic version of psilocybin based on a natural biosynthesis enzymatic platform. It’s been developed by Dr. Gavin Williams at NC State for producing psilocybin efficiently using an engineered enzymatic pathway in E. coli.

Turning E. coli bacteria into a microbial factory for producing chemotherapy drugs has been successful. Vitamins also use E. coli or a yeast model. We’re looking to produce artificial biosynthetic psilocybin using the same E. coli pathway, but it won’t be exactly the same. We’re waiting on the Drug Enforcement Administration to permit us to go to the next step. 

Psilocybin is expensive; there’s limited supply, so companies will need synthetic options. At the end of our synthesis process, we are hoping to be able to provide the active pharmaceutical ingredients (APIs) for our own products. We’ll have a powertrain that can not only supply our own API, but build a great synthesis platform that will lend itself to mental health and addiction.

Let’s conclude with your work regarding Bucillamine as a treatment for lung inflammation in patients with mild-to-moderate COVID-19.

Our double-blind, placebo-controlled Phase 3 clinical trial for Bucillamine for COVID-19 is based on 1,000 patients and up to 50 sites in the US. We are adding viral load testing to support work done by the University of California, San Francisco for a minimum of 300 patients in this 1,000 person study. 

Bucillamine has a well-known safety profile – it’s been prescribed for rheumatoid arthritis in Japan and South Korea for 30 years. We’ve also successfully finished a Phase 2a FDA clinical trial of Bucillamine for gout back in 2015.

In late summer 2020, when we applied for a Phase 2 trial for COVID-19, we were fast-tracked by the FDA and asked to prepare an IND for a Phase 3 confirmatory trial for COVID-19 because of our gout study and the history and safety of Bucillamine.

Learn more about Revive Therapeutics at https://revivethera.com/

CSE Issuer Stories, Magazine

Canadian Securities Exchange Magazine: The Psychedelics Issue – Now Live!

Welcome to the latest issue of the Canadian Securities Exchange Magazine, your source for in-depth stories of entrepreneurs from a wealth of different industries.

Psychedelics has emerged as a rapidly-evolving industry in the last few years. In this issue of Canadian Securities Exchange Magazine, we’re thrilled to share stories of visionary entrepreneurs in this sector.

We shine a spotlight on five publicly-listed psychedelics companies on the CSE who are looking back to older medicines in order to move forward, and developing innovative treatments designed to achieve better health outcomes for people experiencing mental health conditions, chronic pain, addiction, and more.

The CSE-listed companies featured in this issue include:

Check out the Psychedelics Issue of Canadian Securities Exchange Magazine here:

CSE Issuer Stories, Magazine

4Front Ventures: A “House of Operators” focusing on the sweet spot in the cannabis value chain

There are many ways to achieve success in the cannabis industry, but the core of most business plans tends to reflect one of two extremes: complete vertical integration or a focus on just one field, be it cultivation, processing or retailing.

4Front Ventures (CSE:FFNT) is positioned firmly in the former camp and styles itself as a “House of  Operators.” The company operates in multiple states, cultivating and retailing mass-produced, low-cost, yet high-quality branded cannabis products.

4Front’s brand portfolio spans more than 21 names, including Marmas, Crystal Clear, Funky Monkey, Pebbles, and the Pure Ratios wellness collection. The brands feature prominently in third-party retail outlets as well as in 4Front’s own chain of Mission dispensaries in Illinois, Massachusetts and Michigan.

Additionally, the company plans to bring its brands to the world’s largest cannabis market later this year when it commences operations at what is expected to be one of the biggest manufacturing facilities in the United States, at 170,000 square feet in Commerce, California.

Public Entrepreneur sat down with 4Front Ventures Chief Investment Officer Andrew Thut recently to find out what makes the company tick.

The “House of Operators” concept sees your team operate multiple divisions across the cannabis value chain. Can you explain to us how this works?

At 4Front, we have licenses and operations in five states. Notably, our facilities in Washington state have a dominant position in that market – we have close to a 10% market share, and rank as the number two flower producer and number one edibles producer.

Our strategy is really quite straightforward. Longer term, you don’t want to be a cultivator, though it is necessary, particularly in these early stages of the market. We also don’t want to be a large retailer.

We think the value in the industry is going to be in manufacturing finished goods, meaning having branded products in the market that people really enjoy and that have dominant market share.

As a result, we’re replicating the low-cost finished goods production that we’ve fine-tuned in the Washington facilities, and we’re putting this into four other states: Massachusetts, Illinois, California and Michigan. We’re also hoping to get a license in New Jersey.

In a nutshell, if you can get a customer because of a great product at an excellent price, you tend to take outsized market share. And because we have low-cost production, we have the ability to offer customers great value and still make very good margins.

You are completing a new manufacturing facility in California and your production is increasing. Do you have plans to begin selling excess product into the wholesale market?

Absolutely. In California, we are ready to roll out what, to my knowledge, is the largest cannabis production facility in the world. It’s about 170,000 square feet and we’re going to make our entire product line of tinctures, edibles, gel caps, vape pens and infused pre-rolls there.

As mentioned, we have developed what we think is some of the industry’s lowest cost production in our Washington facilities. But because we’re going into California, which is the biggest cannabis market in the world, we’re able to invest a lot more on automation. We’re basically taking the low-cost methodologies developed in Washington and putting them on steroids for the California market.

This is really a large-scale consumer packaged goods facility, and we intend to have the capacity to do about half a billion dollars of revenue out of it. We plan to really attack the California market and put all of our products into it eventually, starting this summer.

Your retail model is customer-centric and highly scalable. How did you develop your model into what it is today?

We started officially in 2011 as a consultancy for the industry and developed one of the earliest training programs, not only for cultivation and production personnel but also for retail staff.

When we look at what differentiates us from a retail standpoint, it’s having a warm and welcoming environment for customers. We’re trying to normalize the cannabis experience but we’re also having really knowledgeable sales staff there.

And we also have what we think is a terrific breadth of product in the store, together with great availability of that product, meaning we’re not out of stock often because we are producing most of what we sell.

We also lead on price. In cannabis, you have what we call an 80/20 rule back from my finance days, where 80% of the product is consumed by 20% of the customers. And those customers that are big consumers of cannabis are very, very price sensitive, which means they’re looking for a quality product at a terrific price. That’s exactly what we are giving them.

4Front says it has some of the best minds in the industry, providing depth of knowledge and operational expertise. Are there other areas you could adapt this expertise to?

This is a very nascent industry and we think that we are in the second inning of what is roughly a $100 billion industry here in the US. 

We are so early that some of the big alcohol, tobacco and consumer packaged goods companies haven’t really been able to enter the space because they trade on US exchanges that will not allow them to enter a federally illegal business.

We have a lot of the boxes checked with the consumer products expertise that we bring, plus a finance team that has been in the game for over 20 years. So, we have the ability to navigate the capital markets and capitalize the projects that we need to fund.

All of this is in preparation for building out our beachhead well before some of the bigger brands come in. We feel that if we can prove that we have tried and true production methodologies that would be valuable to a larger player, with products and brands that would also be valuable and that have meaningful market share in the states in which we operate, then that would be attractive to other folks that come in.

We’re really focused on executing on that in a terrific industry where you’re learning new things every day, and we’re just plotting our own course as the industry unfolds. But it’s mostly about keeping your head down and making sure that you’re executing and creating products that customers love.

What can investors expect from 4Front in the medium term?

We have a great growth trajectory in front of us. We’re in five states currently and, hopefully, we’ll add New Jersey. We have a lot of confidence in our capabilities and our business. And when we go into a state where we can execute, and the numbers start to bear that out, we are seeing great revenue growth and profitability. When you’re taking market share, you want to take on more projects and have more assets that you can operate and sprinkle your know-how and pixie dust on.

4Front is very much in growth mode. We’ve been very clear to the market that we want to be bigger and have aspirations to be very solidly in that top 10. And we think that as this industry continues to unfold, we’re going to be part of that conversation.

I think investors should really figure out where they want to be in the value chain and look at who has executed.

We think the sweet spot is in consumer packaged goods, so that’s where we want to be. And we have a very clear runway to create a lot of value organically, just with the plan we have in front of us.

I would also say to stay tuned for a lot of M&A that’s going to come in the cannabis space in the coming year. People are looking to get bigger; people are looking to fill out geographies; they’re looking to fill out skill sets they don’t have. I think there is going to be a big wave of M&A in the industry over the next 12 to 18 months.

This story was featured in the Canadian Securities Exchange magazine.

Learn more about 4Front Ventures at https://4frontventures.com/

CSE Issuer Stories, Magazine

Red White & Bloom Brands: Strong brands and acquisitions underpin rapid growth strategy

Red White & Bloom Brands (CSE:RWB) is positioning itself to become one of the top three multi-state cannabis operators in the US legal cannabis and hemp sector.

On the cannabis front, Red White & Bloom is predominantly focusing investment on major markets, including Michigan, Illinois, Florida, California, Arizona and Massachusetts. For hemp-based CBD products, US and international markets both feature prominently. 

The company is also building on existing advantages through investments and pending acquisitions in Michigan and Massachusetts, plus a completed purchase in Illinois. It recently entered Florida and has been operating in California through its Platinum Vape brand for some time.

Public Entrepreneur sat down with Red White & Bloom Chief Executive Officer and Chairman Brad Rogers to find out more about his fast-growing company’s outlook and business plan.

Red White & Bloom has said its goals for the rest of 2021 are to build upon the Michigan footprint and focus on growing market share and expanding earnings. How will you achieve this? 

The plan is to grow the bottom line as vertically as we can, and obviously to cut costs where we need to. But what we’re also going to be doing is holding the price point with our brand strategy.

In Michigan, specifically, we have the biggest brand in the state, which is Platinum Vape. And we’re rolling out our High Times line there.

When you look at the potential of when commoditization happens – after October, November, December or so – what you’ll see will be prices coming down. But we’re holding our price because of our brand strategy and our distribution strategy, with respect to how we’re handling our product portfolio and product mixes into stores.

Beyond that, with operational efficiencies, as well as our best practices and buying power, we have a strategy to make sure that we’re well fortified when this stuff commoditizes, much like coffee. We’re going to be well positioned to be able to sustain pricing and increase margins as well. 

You are also looking for additional strategic relationships and to enter more US states with a “brands only” strategy that minimizes capital spending. How is this progressing?

This is going incredibly well. We’re getting a lot of interest for our brands across many states. Platinum Vape, for instance, is going into Oklahoma, and we’re also doing other brands there. High Times is now in demand too in other states, such as Nevada and the rest of California. It’s really expanding.

Red White & Bloom has closed a number of deals in a short period of time. What advantage do you have in deal-making over your competitors?

I think the real competitive advantage is the fact that this is not our first time. We’ve done this before. When you look at what I’ve done in the past, I’ve had two very successful exits on companies that I built. One of those was Mettrum, which was bought for half a billion. I took another fledgling company in the medical space in Canada from zero to about a billion and a half in market cap in about 12 months.

There’s strong belief in what we do and how we do it. What we’re also doing is fortifying our product strategy to bring in some of the players and get deals done. We make sure that they know that we know what we’re doing and that their products will have the best chance to be able to actually succeed in the market with the distribution channels we’re setting up across each state. 

And then, of course, what they get is the halo effect of all the other brands that we’re bringing in and the distribution channels that we already have. And they can build upon that as well. 

There is a lot of potential when bringing in new folks and getting new deals done that are aligned with Red White & Bloom’s strategy. 

What do you think you personally bring to the company as its CEO and chairman? 

Well, like I said, I’ve been through the wringer here before. I’ve seen the space grow from its infancy, all the way down to full commoditization in Canada, and how that affects the marketplace and the customers. And having seen this twice already, in building companies from that embryonic state to where they are now, it really gives us a good solid vision as to what’s happening. 

The Wayne Gretzky analogy I use is: “Go where the puck is going, not where the puck is.” That’s where we want to be. We want to be where the puck is going and build for that versus where the puck is right now. Because everyone’s there, everyone thinks that “If you build it, they will come,” but that’s not the case.

What’s happening is that this is going to be a commodity and your brand is going to be the only thing that you’re going to be relying on, so you need to have great product, great strategy and good distribution.

Another analogy is Starbucks. I don’t know who grows the beans, and I don’t care because it always tastes good. It’s never something you think about. Once you build a good brand, with quality, price and convenience attached to it, you’re going to be standing tall. 

And that’s what I bring to the table. I’m bringing vision and marketing and a lot of strategy with respect to where this market is going. I’ve been very successful twice at it and I think the US right now is a great place to use that experience. 

What should Red White & Bloom shareholders expect from the company for the rest of the current year and beyond? 

Well, we finally got past our pre-qualification in Michigan, which is a huge thing for our company. It means that we can actually now report revenues from Michigan on the assets that we’ve invested in. And that’s transformational for us in that our investors have not seen to date what those assets are doing because we couldn’t report them. 

Now we’re going to be able to report those earnings, as well as grow the Platinum Vape business we purchased a little while ago in San Diego. So you’ll see exponential growth in that company in Michigan and California. We’re also entering Arizona and we’ve got Florida coming as well. 

When you look at the assets in the new states that we have, and the revenue that is going to be starting in Arizona and in Florida, we’re going to be seeing some nice revenue streams, both from existing states and from new ones. We’re really excited about that. 

Overall, I think it’s about the strategy in terms of who we are, what we do, and how we do it. It all comes down to how you’re approaching the market and what you’re doing in that market. We can be asset light and brand rich, and that’s what we’re executing on right now. And it’s playing out well for us.

To create the winner that we’re going to be in the space, we’ve got some catching up to do. We’re about five years late to the market, but when you look at what we do and how we spend, we’re very judicious with our dollars and we’re making great strides with respect to how much ground we’ve covered in a very short period of time. We’re looking forward to catching up to the big boys and really being at that top echelon.

This story was featured in the Canadian Securities Exchange magazine.

Learn more about Red White & Bloom Brands at https://www.redwhitebloom.com/

CSE Issuer Stories, Magazine

Ayr Wellness: Success is the outcome when everyone buys into a great strategy

Jonathan Sandelman, Chief Executive Officer of Ayr Wellness (CSE:AYR.A), takes interviews in a decidedly different direction than most CEOs. Rather than highlighting his company’s assets and achievements, Sandelman prefers to talk about the thing that, in his mind, most determines commercial success: corporate culture.

Ayr has big goals, and with nearly US$1.5 billion in assets on its balance sheet is well on its way to achieving them. The company expands organically thanks to exceptional product quality, and also through acquisitions, which can be tricky at the best of times.

But at the end of the day, if everyone at Ayr embraces Sandelman’s philosophy, and everyone pulls in the same direction, that’s the edge needed to come out on top. It’s an old saying in the investment industry, where Sandelman rose to become President of Bank of America Securities, that if you can’t tell someone what your edge is in just a few seconds, you don’t have one. Sandelman knew what Ayr’s edge was the day he established the company.

We connected with Sandelman in early July to discuss Ayr’s growth to date and the foundations of his confidence about its future.

Ayr has a very clear vision of where it is going and how it intends to get there. Talk to us about Ayr’s mission as a company and the corporate culture you need to make it a reality.

Our goal and mission statement at Ayr is to be the largest scale producer of high-quality flower in the United States. We don’t mean to insinuate that there aren’t smaller, boutique growers that grow really high-quality flower. But in the large MSO arena, we think one of the things that differentiates our company is our cultivation of high-quality flower at large scale.

Now, why is that important? First of all, in business you need to do something that differentiates your brand. In business school, we were taught about the unique selling proposition – what differentiates your brand from all other brands?

When we think about the industry and when we listen to our competitors, they talk a lot about branding, being a CPG (consumer packaged goods) company, and they are very focused on their box. “How does my box look?”

At Ayr, we tell our teammates, those in the marketplace, and our investors that it’s not about the box, but what’s inside the box. We believe that any time you underestimate the consumer, who has choice, who has multiple alternatives to consider – and for sure this industry is going to get more competitive – when you underestimate the consumer, I don’t care what business you’re in, you’re making a mistake. Because they know.

When I started my career as an investor, I typically bought into companies I thought had the best product in that category.

A lot of people in business want to be like Nike and Apple. I don’t buy Nike because it’s in an orange box. I buy it because I’ve been a marathoner and what’s inside the box is what motivates me to buy their product. When I think about Apple, while I think they have beautiful white boxes, I buy it because it’s the best laptop or phone. If it was simply an orange box or white box without being the best product, I wouldn’t buy it.

In Pennsylvania, we had our first harvest, our first flower for wholesale and our store shelves. The market tried our product and it sold out in a week. The consumer knows. We aimed to produce the highest quality flower in a market lacking high-quality product and it sold out in a week.

And then we recently introduced our Seven Hills flower brand. Again, consumers recognized the quality of our product and it sold out in a week. That’s why our focus is on growing the best quality flower.

Acquisitions are an important part of Ayr’s growth strategy. How do you assess potential acquisitions, and how do you successfully integrate acquired businesses?

We identify early on which states we want to build our businesses in. Then we have our M&A and strategy teams go into those markets and try to find the best assets. I’ve said from day one that the way I want to build this business is to cluster and penetrate. I like contiguous states so that when the consumer travels into a nearby market, they may not know the brands, but then they see the Ayr brand and they know what that stands for. They are going to buy Ayr even when they have other choices.

Equally important, that seller, who will remain with the company in most cases, must believe in our ethos. They must believe in honesty, integrity and transparency, and have values consistent with ours.

With talent, you win. For me, the companies that have the best culture, the best vision and the best talent pool win. The perfect transaction is one where we get a great asset as well as more team members.

Ayr was incorporated in July 2017, yet you have hundreds of millions in revenue and some US$1.5 billion in assets. How did the company grow so quickly?

I’ve been an investor and an operator for more than 30 years, with a deep understanding of the capital markets. I told my investors that Ayr would be EBITDA positive and cash flow positive from day one. That’s the disciplined way to act.

We would be disciplined because we understood that the public markets are cyclical. We thought we could be more aggressive when a correction happened and assets got cheaper because we were EBITDA and cash flow positive.

That’s exactly what you saw us do. We bought our initial companies, we paused for 13 months, the correction happened, and then we got aggressive about certain companies. It’s my belief that this once-in-a-lifetime opportunity to buy assets at bargain prices will eventually go away. There will be some form of federal legalization, and then what I call the “wall of money” will come in. It will flood the market and these multiples we are buying at today will trade even higher.

We are still aggressive about buying because I don’t think this will last even another year or two. That is the thought process behind what the future will bring for Ayr.

Given your background in finance and understanding of the cannabis industry, what is your outlook for the next five years and how does that shape Ayr’s business strategy?

I expect federal legalization of this industry because it is irrational that it’s not already legal. When almost every state in the US has some type of cannabis program, does it really make sense not to be federally legal?

For those who are uncertain about cannabis, I would vote for the SAFE Banking Act because it puts controls around the industry and creates insight and transparency that doesn’t really exist on the federal level. If you bank this industry, you know all the cash flows, from where the money is coming and where the money is going.

If you think about where alcohol is trading in terms of multiples, there is a lot of upside in our industry’s multiples and in individual stock multiples.

Ayr news often highlights acquisitions or new retail locations. Talk about the team and the dedication it takes to operate successfully at the pace you set.

I’m a believer in a culture of excellence. I’ve always had this philosophy that talent is free. That whatever I pay, or our shareholders pay, the rewards they are able to produce are just spectacular. Even when we were just a two-state operator, we had some of the best EBITDA and cash flow in the industry.

I think about the vision, what talents are required, what are the job functions, and then I think about who that type of individual would be.

It’s culture. You can’t just be the smartest person in your lane, you also have to be an extremely respectful person. When we’re in a meeting and I’m pushing you, you always understand that I am not pushing you to herd you, but to get you to think at a pace, at a level that you haven’t been able to in the past.

When I hire people, I always tell them my goal is for them to say to me a year from now that they’ve become the best version of themselves. There is something about this culture and this team that inspires them to do their best work and be the best person they have ever been in business.

I think our culture is the secret asset on our balance sheet. If the 1,500th person has the same vision as the people at the top, and we have 1,500 pairs of oars all rowing in the same direction, toward the same vision, then we win.

You are talking to me for this interview, but I am getting too much credit. I am the one talking, but it’s because we have a great team. We have built the best operating system and tech stack so we integrate these companies seamlessly. The people are so talented, and the systems and controls are so good, that we make it look easy. But it’s not.

Ayr is its people, and its dedication to its teammates, to its community, to its shareholders. That’s the ethos of this company.

This story was featured in the Canadian Securities Exchange magazine.

Learn more about Ayr Wellness at http://www.ayrwellness.com

CSE Issuer Stories, Magazine

Gage Growth: The steady hand wins the race in this company’s playbook

When it comes to cannabis in the state of Michigan, Gage Growth (CSE:GAGE) is the name an increasing number of consumers are turning to. Still a young company, having been in operation for just over 18 months, Gage has nonetheless amassed one of the largest asset portfolios in the state. Experience at the leadership level is key to this success.

Gage’s Chief Executive Officer, Fabian Monaco, is a former lawyer and investment banker who was actively involved in the evolution of the cannabis industry. He was a key member of the team that transacted the first cannabis acquisition, Tweed (now known as Canopy Growth)’s purchase of Bedrocan, and also the first-ever cannabis IPO. Also on the team is cannabis impresario Bruce Linton, who serves as Chairman. Another big name is TerrAscend’s Executive Chairman Jason Wild, who has a large stake in the company.

What is it about Gage that attracts some of the most successful executives in the cannabis industry? For one, Gage is on track to be Michigan’s number one operator by the end of 2021, with 14 facilities either in operation or planned. Its first set of financial statements as a public company showed a big quarter-over-quarter jump in revenue, and a corresponding increase in its profit margin.

Clearly, the decision to start things off in Michigan was a good one.

“One of our founders is from Michigan and the other founder has a strong connection to Michigan through family,” says Monaco. “The biggest reason we chose the state, though, is that it had the second-largest medical cardholder system behind California for many years. Their caregiver program was introduced in 2008, and thanks to that, individuals have been going to dispensaries for over a decade.”

Monaco goes on to explain that close to 75% of the population in Michigan is of age to consume, and that after December 1, 2019, which was the first day of adult-use sales in the state, cannabis commerce skyrocketed. Michigan was outside the top 10 states by revenue at the time, but quickly vaulted to sixth, just behind Illinois. Today, it surpasses Illinois consistently and ranks third.

“It’s been playing out pretty much as we thought it would,” says Monaco.

In a market that size, there is bound to be healthy competition. But Gage has established some important points of differentiation and leverages them to the fullest.

“We really focus on every part of the value chain of the business, from seed to smoke,” says Monaco. “We’re constantly hunting, looking for new cultivars to bring to the table for patients and for consumers. A lot of producers out there – especially some of the publicly traded ones – don’t really grow a lot of varieties, and we pride ourselves on having 40, 50, sometimes even 60 different flavours within our retail locations for people to choose from.”

Monaco says that post-production processes are just as important, and that Gage hang-dries its product, trims it, and packages it. “We have this fun, bright, engaging packaging as well for our flower that people enjoy, and we manage most sales through our own retail channels.“

In addition to having identified a prime jurisdiction in which to operate, Gage also knows who it’s targeting to buy its products.

“In general, we’re going after the former medical user – a refined consumer, someone who has been consuming the product for many, many years,” Monaco explains. “We have a really wide variety of customers.”

The Gage business strategy calls for vertical integration and establishing operations strongly in a single state before taking its proven model and applying it in other states.

“We’re going to focus on one market for the better part of 2021, although we do anticipate doing something outside of Michigan near the end of the year,” Monaco says. “We’re trying to follow that Trulieve (Trulieve Cannabis; CSE:TRUL) model where you execute really well in one state and use that as a springboard to enter other states. Once we feel comfortable with where we’re at, especially as we approach the end of the year, you’ll see us branch out into other states.”

With expansion seemingly just around the corner, the question of where Gage will decide to go next is an obvious one. Monaco believes there is “phenomenal” opportunity throughout the United States and his team has already assessed several states this year. He says there is a lot to like. Plans call for focusing on some of the larger markets with Gage’s first few acquisitions. Massachusetts, Illinois, Ohio, Maryland, California and Pennsylvania are all in the running.

“You’ll probably see us make a move into one of the larger states pretty soon,” says Monaco.

Looking out over the next two or three years, Monaco says Gage is strongly positioned to take advantage of a wide range of opportunities that present themselves as the industry evolves.

“We have a solid cash balance to execute our plans in Michigan and didn’t really take on any harsh payment obligations, in terms of sale leasebacks or debt, over the past couple of years,” Monaco explains. “Now we have the opportunity to tap into some of the lower cost of capital opportunities that cannabis companies are seeing these days. Because our cultivation assets are unencumbered, and we own our retail locations, it really affords us the opportunity to go after some debt to fuel growth without having to dilute shareholders.”

From an earnings perspective, Monaco believes Gage can both increase revenue and expand margins rapidly, because Gage products so frequently sell out.

As for the higher goals, Gage is probably not all that far from achieving some of them already, though the walk before you run mindset remains firmly in place.

“Personally, I’d love to be number one in Michigan, our home base, and then a top player in two or three other states. I think it’s important to remain focused in Michigan before we branch out. We’ll look to be one of the top three in each respective state we go to within the next 24 to 36 months.”

This story was featured in the Canadian Securities Exchange magazine.

Learn more about Gage Growth at http://www.gageusa.com

CSE Issuer Stories, Magazine

Verano Holdings: A 14-state footprint and coveted brands set this Chicago-based cannabis company apart

Verano Holdings (CSE:VRNO) Chief Executive Officer George Archos has connected the dots of opportunity to create one of the biggest cannabis companies in the US. Based in Chicago, the vertically integrated, multi-state operator was valued at around $3 billion when it went public in February of this year. 

The 42-year-old serial entrepreneur, who also co-founded the Wildberry Pancakes & Café chain, was inspired to start Verano after seeing the potential of medical cannabis.

“I looked at the medical marijuana opportunity that came up in my home state of Illinois and saw it was a strong challenge. I also saw that it offered the benefit of helping people. I had an uncle that had multiple sclerosis and I think that he could have benefited from it when he was suffering,” says Archos.

“We applied for a license in 2014 and were selling product a year later. We started off small with less than 10 employees and we scaled over the years as the markets grew.”

From its roots in Chicago, Verano has evolved into a broad-based powerhouse with a 14-state footprint. It has cultivation, production and dispensary licenses across several states, lending it multiple revenue streams.

Verano has 28 retail locations under the Zen Leaf banner and 50 additional operating dispensaries, with plans to open around 10 more this year. It also has 340 active dispensary wholesale partnerships.

Verano was doing well before the pandemic and its strong growth shows no sign of slowing down. For the first quarter ended March 31, Verano revenue soared 117% to US$143.3 million compared to the first quarter a year earlier.

“Verano has massive upside over the next few years and for the long term as a cannabis green wave continues to sweep across the country,” says Archos. 

“We are seeing more daily-use consumers, besides more and more medical patients coming online every single day. Sales have been strong this year and we anticipate good sales in the back half of the year as well.”

The Verano boss chalks up being able to execute well on mergers and acquisitions to going public earlier this year. 

“Going public has given us access to capital, which has allowed us to transact on the M&A front. We have built on some very strong acquisitions to the Verano platform, which has given us access to markets like Florida, Arizona and Pennsylvania,” says Archos. 

“It’s really helped us deepen our footprint and bring some high-quality operators to the Verano family.”

In February, Verano closed a key merger with Florida-based Alternative Medical Enterprises that gave it access to 34 active retail locations in Florida, with more planned by the end of 2021, and one retail location in Phoenix. It also boosted the company’s cultivation facilities to 220,000 square feet in Florida and 30,000 square feet in Arizona, with expansion of an additional 60,000 square feet currently underway.

The company has also engaged in significant M&A activity in Florida, Arizona, Pennsylvania, Illinois and Ohio, increasing assets such as dispensary locations and grower/processor sites.

Verano has completed the acquisitions of Territory Dispensary, Emerald Dispensary and The Local Joint, giving the company the third-largest retail footprint in Arizona, with six active storefronts and two cultivation facilities. 

Verano has also expanded its dispensary footprint through M&A with TerraVida in the Philadelphia metropolitan area and acquired three dispensaries in the Pittsburgh metropolitan area through the Healing Center.  

“M&A has been a part of our story and we will continue down that path when we find assets and people that make sense for Verano. We like to transact so we do see more M&A in our future,” says Archos. 

“We are well funded for expansion of M&A activities so we’re in a very good position.”

Verano had $111.6 million in cash and equivalents as of March 31, and recently completed a $100 million upsizing of its credit facility to $130 million, for total liquidity of roughly $241.6 million.

“Given both its strong cash position, and strong free cash generation, the company is well positioned to fund both organic (supported by in excess of $100 million in CAPEX in 2021) and acquisition driven growth,” said ATB Capital Markets. 

Significantly, Verano’s cash flow from operations for the first quarter was $42 million, and free cash flow totaled $4 million.

Through its 10 cultivation and production facilities, Verano produces a suite of artisanal cannabis products sold under its portfolio of brands: Avexia, Verano, Encore and MÜV. These are positioned as premium brands, so the company enjoys premium pricing and higher margins.

“When Verano started off, we positioned ourselves as a premium producer, that’s just how we built our facilities,” says Archos.

“That’s how we marketed our products, and it goes into the hand trimming and level of detail that we put into every jar, and every product that we put onto the shelves.” 

By blending cannabinoids (THC and CBD), the firm’s Avexia Medical Cannabis brand has a portfolio of balms and lotions for pain relief, an Epsom salt soak, and a line of micro-dose tablets. Separately, the Verano brand has handy “swift lift” pre-rolls, refined vapes, and concentrates, while Encore Edibles produces handcrafted chocolates, mints, gummies, hard candies and caramels.

Meanwhile, MÜV has received multiple patents for its award-winning products that provide high-quality, reliable medical cannabis for patients.  

“We consistently add cultivation as markets scale, so we are constantly under construction in almost every market, adding flower capacity and manufacturing capacity because every market is growing,” says Archos.

“Verano sometimes is as much of a construction company as we are a cannabis company.”

Verano has opened three Zen Leaf dispensaries in New Jersey, where the expansion of its 120,000 square feet cultivation facility is underway in anticipation of the onset of adult-use sales in the state.

“Being profitable and cash flow positive was important to us, so we have been very good stewards of our capital,” Archos concludes. “We have deployed funds where we thought we could get the quickest return on investment.”

This story was featured in the Canadian Securities Exchange magazine.

Learn more about Verano Holdings at https://verano.com/

CSE Issuer Stories, Magazine

Canadian Securities Exchange Magazine: The Cannabis Issue – Now Live!

Welcome to the inaugural issue of the Canadian Securities Exchange Magazine (formerly Public Entrepreneur magazine), your source for in-depth stories of entrepreneurs from a wealth of different industries.

As the Exchange for Entrepreneurs, we thrive on change. It is fitting, then, that we unveil an important change of our own to carry us into the future: the update of this publication’s name to Canadian Securities Exchange Magazine.

This new name for our magazine is a reflection that our company identity, and the trailblazing entrepreneurs whose stories are featured within these pages, are synonymous with innovation, agility, and evolution. These traits are particularly evident within the cannabis industry.

In this issue of Canadian Securities Exchange Magazine, we shine a spotlight on five CSE-listed cannabis companies who have set themselves apart in the space and continue to make change with a combination of strong branding and meticulous strategy. Plus, we provide an exclusive behind the scenes look at the Cannabis Investor Series. Read on to learn more about the opportunities and challenges ahead for the industry as global acceptance of cannabis continues to rise.

The CSE-listed companies featured in this issue include:

Check out the Cannabis Issue of Canadian Securities Exchange Magazine here:

CSE Issuer Stories, Magazine

Temas Resources: Financial and environmental benefits are some of the good things that come from thinking outside the box

At first glance, Temas Resources (CSE:TMAS) is an explorer with two key mineral assets: a titanium project in Quebec and the intent to acquire a boron property in Serbia. As these commodities are used to make products such as paint, fertilizers and pharmaceuticals, Temas is positioned as a potential supplier to the specialty chemicals sector.

A deal was announced by the company in late January of this year that adds an exciting new strategic dimension. With its acquisition of a large stake in ORF Technologies, Temas will have access to patented, cost-efficient and eco-friendly processes for extracting, separating and recovering nickel, iron, gold and titanium dioxide.

Expanding the number of angles to the Temas story suits Chief Executive Officer Michael Dehn just fine. The new CEO has been involved in the titanium industry for years but honed his early skills in the gold sector in Red Lake with Rob McEwen and Goldcorp.

“I see us becoming a mining technology or mineral processing company,” Dehn tells Public Entrepreneur.

The key here is how all of the assets work together. The company’s flagship La Blache project is a 2,653-hectare property approximately 100 kilometres north of the community of Baie-Comeau, Quebec. It is home to the Farrell-Taylor magnetite-ilmenite lens, where consistent iron, titanium and vanadium grades are found across the entire length of the complex.

Preliminary metallurgical testing of oxide mineralization indicated 90% recovery of iron and 95% recovery of vanadium into a final high-purity product. A titanium dioxide product suitable for further processing to pigment-grade titanium dioxide was fully recovered in testing.

La Blache’s value lies not only in the ground but also in its proximity to key end users in North America. Temas is looking at processing in Ohio, which is close to at least five major US paint producers. What’s more, production at La Blache could be powered by tapping into the area’s electrical grid, making it a greener option than alternatives reliant on diesel.

There are other ways in which the project is green as well, as Dehn describes. “Your mine is wherever the rocks are. In our case, about 65% of the recovered rock goes into a finished product. We’re using around 65% of the rock to recover iron, vanadium and titanium.”

Shortly after Dehn joined Temas in November 2020, the company formed a strategic partnership with Erin Ventures to develop the Piskanja borate project in Serbia. Piskanja has an indicated mineral resource of 7.8 million tonnes averaging 31% boron oxide and an inferred resource of 3.4 million tonnes averaging 29% boron oxide. The project will be the only production of borates on the European continent, according to Temas.

Boron is primarily used in chemical compounds, with around half of all boron used as an additive in fibreglass for insulation and structural materials. The next leading use is in polymers and ceramics in high-strength, lightweight structural and refractory materials.

For Temas, adding Piskanja to its portfolio didn’t trigger much debate. “It’s such an obvious project,” says Dehn. “We have reasonable capital expectations to get to production in a country with very strong mining roots. The European Union and European Bank for Reconstruction and Development are trying to encourage Serbia to phase out coal mining, which means there is going to be a locally skilled workforce that will be looking for another opportunity.”

Under the terms of the agreement with Erin Ventures, Temas will commit to spending a total of €10.5 million toward the development of Piskanja within a three-year period. Erin will remain operator on the project until Temas has exercised the option to earn a 50% interest in its subsidiary, Balkan Gold, at which point Temas will become operator of Piskanja. The two companies expect to finalize the agreement by April of this year.

Between Piskanja and La Blache, Temas already has a couple of company-making projects. The acquisition of ORF Technologies was the missing component that can take things to the next level.

ORF’s technology is estimated to be 59.2% better on a production cost basis, leading to a process that is around 144% more cost-efficient than that used by the world’s largest titanium dioxide producer, The Chemours Company. ORF’s process is less energy-intensive than the industry standard and can create high-quality titanium dioxide from low-grade materials, which contain contaminants that competitors must discard, according to Dehn.

With the ORF approach, rock is dissolved in hydrochloric acid to selectively extract metals such as titanium, nickel or vanadium. The purity of the extracted elements is extremely high.

“We can go right from an ilmenite ore to a titanium dioxide without having to go through several intermediate steps, which is what the rest of the industry has to do,” Dehn explains. The same goes for commodities such as nickel, which now is in higher demand thanks to the red-hot electric vehicle market.

Temas plans to acquire a 50% interest in ORF. The company will fund certain ongoing expenses through secured loans, including acquisition and development of new technology, to be repaid from income generated by ORF before declaration of dividends to ORF shareholders.

Temas is in good financial shape to advance its 2021 agenda. Since November, the company has raised $5 million via Crescita Capital and an additional $3.6 million in flow-through funding.

It’s an undeniably exciting time for Temas, and right where you would expect to find a team that Dehn says is constantly thinking outside the box.

“We don’t want to do things the traditional way,” says Dehn. “Instead of blindly going forward with how things are always done, look for the opportunity that’s going to give you a quicker return on your investment but also leave a smaller environmental footprint.”

This story was featured in the Public Entrepreneur magazine.

Learn more about Temas Resources at http://www.temasresources.com/

CSE Issuer Stories, Magazine

Getchell Gold: High grades at Nevada projects have this team’s confidence running strong

When Getchell Gold (CSE:GTCH) optioned the Fondaway Canyon gold project in January of last year, President Mike Sieb had never felt more confident that he was making the right move.
To Sieb, a 30-year industry veteran known for a combination of technical ability and senior management experience, the Fondaway site checked all the boxes, particularly given the stellar data left behind by the previous owners.

Fondaway is a past gold producer with a legacy resource estimated at 1 million ounces. Located a mere two-hour drive from Reno, Nevada, it is easily accessible, which helps to keep costs reasonable. Nevada is also a mining-friendly state, so taking the project from exploration to a fully functioning mine would not generate a red-tape nightmare.

“The mineralization is very apparent on the surface,” Sieb explains to Public Entrepreneur. “That’s really the package that finally brings us to the table. You’re starting off with a healthy foundation to work from, and when we started to do even just a cursory review of the asset it was readily apparent that the historic resource was actually quite constrained.”

In fact, as Getchell’s team continues work on Fondaway, the opportunities to in-fill and expand the mineralization zones are becoming quite evident.

Early assay results from the company’s inaugural 1,995-metre diamond drill program in 2020 to test the geological model of the Colorado zone exceeded expectations and set in motion plans to ramp up drilling and develop a mine model.

“It’s not very often that every hole of an exploration drill program returns gold intersections as good as or better than anticipated,” Sieb says. “Our 2020 drill program substantially expanded the known mineralization and demonstrated that our broadest gold zones remain open with excellent potential for further extension.”
Sieb, who called the findings “an absolute rarity from my experience,” says all six drillholes show promise. One high-grade standout hole pierced the main Half Moon Shear Vein 54 metres below surface and registered 8.6 grams per ton gold over 9.8 metres. Another returned 21.9 metres grading 6.2 grams per ton.
“The success here is that what we represented in the model actually showed up in the real world. We know that we have what we modelled. We know what the historic work accomplished and what it represents. The model indicated that there is a substantial 100-metre-thick band of mineralization that you can envision,” Sieb says.
“The 2020 drill program was designed to prove that the very thick band of mineralization actually exists and that it has real potential continuity.”

Toronto-based Getchell obtained the Fondaway property from Canagold Resources as part of a four-year option agreement under which Getchell can acquire a 100% interest in the site at any time.
In return, Getchell pays Canagold $2 million in cash as well as $2 million in shares. And it must spend $1.45 million on exploration. Canagold also will retain a 2% net smelter return royalty should Getchell acquire its 100% stake in Fondaway.

The property was first staked in 1956, and after changing hands over the decades Canagold obtained it in 2017 and released a resource estimate showing 2.01 million indicated tons grading 6.18 grams per ton gold and inferred resources of 3.2 million tons grading 6.4 grams per ton. Past drilling was extensive, comprising 735 holes for a total of 56,682 metres.

In addition to Fondaway, Getchell is developing a second property in Nevada – a high-grade copper, gold and silver project called Star. The company also controls the Dixie Comstock gold project and the Hot Springs Peak gold project in the state, but the Star project stands out. The site is 60 kilometres north of Fondaway. Sieb calls it “excellent bonus potential” for investors.

“We have developed fairly compelling targets that will be drilled and tested this year at Star,” Sieb explains. “This project has some really good high-grade showings on surface and some compelling geophysical targets at depth and has never been drilled before.”
Meanwhile, the company has the finances to push forward with Fondaway in 2021. Getchell has $1.6 million in the bank and about $3 million of warrants that are in the money. Sieb also notes Getchell is fortunate that it can spread its earn-in payments on Fondaway over four years rather than having to make a hefty outlay upfront.
Looking ahead to the rest of 2021, Sieb says Getchell plans to undertake a drill program to extend known mineralization and follow up on the newly discovered zone. It also plans to drill an additional 4,000 metres this year and is advancing toward a revised resource estimate.

“The next step is readily apparent. It’s going to be a major drill campaign that is going to start to fill in the open spots with a focus on developing a mine model,” Sieb explains.

Sieb says he’s already visualizing the next drill program at Fondaway and that it is now in the planning process.

“I can easily see where those holes are going to be located to start to further expand as well as in-fill the mineralization,” he explains. “And we’re also going to do another model of the mineralization to get a better sense of what we really have.”

This story was featured in the Public Entrepreneur magazine.

Learn more about Getchell Gold at https://www.getchellgold.com/