All posts by Giles Gwinnett

CSE Issuer Stories, Magazine

Québec Nickel: High grade at the core of a business plan to supply vital metals to the clean energy sector

Experienced executive David Patterson wanted to be ahead of the nickel curve when he formed a new Québec-focused company in September 2020, foreseeing growing demand for metal in the clean energy sector.

Patterson moved quickly, approaching Glenn Mullan, Chief Executive Officer of Val-d’Or Mining, ultimately leading to then-private Québec Nickel buying what is now the company’s 15,000-plus hectare Ducros nickel, copper and PGE project from Val-d’Or Mining for 3,589,341 special warrants.

In July 2021, Québec Nickel (CSE:QNI) listed its shares on the Canadian Securities Exchange, and in November of the same year raised approximately $7.5 million. 

At Ducros, the company is embarking on an extensive exploration program pursuing high-grade mineralization. Currently underway are airborne and ground surveys as well as an aggressive 20,000 metre, multi-phase drill program encompassing the 2022 exploration season. 

Canadian Securities Exchange Magazine caught up with Patterson, Québec Nickel’s Chief Executive Officer, recently to learn more about the company’s plans.

Québec Nickel is exploring for high-grade nickel in the Abitibi, yet the area is better known for its many gold and VMS deposits, with only low-grade nickel occurrences. Talk to us more about your vision.

We believe that our Ducros property has all the necessary features to produce a high-grade nickel deposit. On our property we see geologic structures in an area with high volumes of mafic and ultramafic rocks. This unique combination of geological setting and geology give the Ducros the potential to host an economic nickel ore body. 

In a broader sense, what’s the difference between higher and lower grades in nickel?

All things being equal, a high-grade deposit will have a smaller ecological footprint and can better withstand volatile metal prices. A low-grade deposit may be economic at the current metal price, but could not sustain an operation if prices drop significantly.

How is your current drilling and exploration program going? What have you discovered so far, and what do you hope to achieve?

The COVID variant Omicron slowed our exploration activity at the start of 2022. However, in early February we were able to begin both our airborne VTEM survey as well as Phase I drilling on the Ducros. Our most recent press release has a detailed description of the rock types we have encountered. We will need to wait for assays for the current holes, and we anticipate having them in the next month or so.

Can you tell me more about the Ducros project and why you are excited by it?

We believe we have a large project area that has seen very limited exploration activity. Previous work by other independent operators on small portions of the property has provided our technical team with evidence that the area has a significant volume of mafic and ultramafic rocks. This is a similar geological setting for most of the magmatic sulphide nickel discoveries in the last 100 years.  

In addition, limited drill programs conducted in 1987 and 2008 show that there are nickel occurrences in these rock types. Our 2020-2021 exploration program of geological mapping, geochemical sampling and geophysical surveys has given us confidence that we are in the right geological setting. Our 43-101 Technical Report from 2021 discloses channel and grab samples from the Fortin showing outcrops that contain over 2% copper and 0.5% nickel with elevated platinum and palladium values.

Can you say more about your executive team, their background, and what you bring to the company as CEO? 

On our board of directors, we have people with tremendous nickel exploration experience as well as expertise in finance and accounting.

Our technical team has considerable experience in nickel exploration, with both brownfield and greenfield discoveries that have gone into production.  

As for me, I have helped finance large nickel exploration projects in Canada over the last 25 years. I believe the team that we have brought to Québec Nickel can find an economic ore body and has the experience to be able to develop the project through to production. 

How would you sum up the company’s opportunity to a potential investor?

I believe that we are in the early stages of a metal super cycle, that we have chosen the right metal given this super cycle and we have the right people to guide the successful development of the company.

This story was featured in the Canadian Securities Exchange magazine.

Learn more about Québec Nickel at https://quebecnickel.com/.

CSE Issuer Stories, Magazine

Nepra Foods: Innovation and exclusive technology underpin a business strategy achieving rapid sales growth

Nepra Foods (CSE:NPRA) went public in September 2021 in an oversubscribed $7.5 million IPO that underlined the interest in plant-based meat, a market which, according to Bloomberg Intelligence, could top US$162 billion in size by 2030. The company has its roots in the gluten-free ingredients sector and is led by food industry veteran David Wood, whose grandfather started a butchers’ supply business in the 1930s.

Wood and partner Chadwick White, a master baker and now Chief Innovation Officer and Co-Founder of Nepra, were involved in the success of Udi’s Gluten Free Foods and Gluten Free Baking Solutions.

Nepra was born from a desire to create a consumer brand business using the company’s own innovative formulations. Today, it is a vertically integrated group, producing and selling multiple products across four segments: proteins, dairy alternatives, baked snacks, and spreads and ingredients. Sales in the nine months to September 30, 2021, totaled C$4.26 million, up from $1.75 million in the year-earlier period. Canadian Securities Exchange Magazine spoke to Wood, the company’s Chief Executive Officer, to find out what he anticipates the next phase of the Nepra story will look like.

Why do you think there is such a big move toward healthy foods and plant-based meat alternatives?

I think people have different reasons. Obviously, the environment is one big one. A lot of people want to do whatever they can and raising animals in the way we do is not the best for the environment. I also think the pandemic has brought on people’s concern about their personal health and they realize that what they eat is instrumental to how they feel. When people go plant-based, most of them don’t go fully vegetarian or vegan. They just eat more plants and less meat, and I think when they do they find out that they feel better. Their immune system response is better and their digestive systems work a bit better. And then there’s the animal cruelty side that a lot of people are concerned about, and just how we treat animals in general.

Tell us more about your proprietary THP (textured hemp protein). What is it? How did you get into it? Why is it such a game-changer?

When you make a meat alternative, you’re taking the protein from the plant and you have to texturize it to give it a similar texture to an animal product. Mostly it’s done with soy. But now they are texturizing all sorts of things – pea and chickpea and fava bean. But we are texturizing hemp, and as far as we know we’re the only ones currently doing that and we’re having really good luck. 

The biggest advantage is the flavour. Soy has an off flavour so you’ve got to cover that up when you make products out of it, and you end up using a lot of salt and other ingredients. Hemp has a very mild flavour. When we texturize it, the base product actually has a turkey flavour so it’s much easier to formulate meat analogues out of. Soy has some negative health aspects to it, too.

The reason we got into hemp is that our historical business is ingredients in the gluten-free space, so when you take gluten out of a product you have to replace it with something. And that’s how we came across working with hemp and found out that it’s very functional. Not only does it have good flavour, it’s functional when you bake with it or make food products out of it. It has a similar structural quality to eggs. You can take hemp protein and whip it into a meringue, so this really gives us an advantage on the food development side to come up with new products. As we started playing with it more, we found that not only could we use it for baking, but we could also make a lot of other products out of it.

Meat analogues are only one category. New products we’re coming out with include spaghetti and meatballs, a frozen food line and a pasta line. The spaghetti is actually made out of hemp as well because it’s high in protein, high in fibre and very healthy. So, as people eat more plant-based diets, they’ve got to come up with good protein sources. And they don’t necessarily want to eat things that look like meat. We’ve got formulations like pasta that is a good source of protein, or we also came out with snack items like pretzels.

You raised $7.5 million in your IPO. How are you going to use these funds to grow the business?

The company was founded in 2016 and our core business is ingredients. We import and distribute ingredients to all kinds of manufacturers across North America. We’re growing that business and because supply chains are a problem, especially when you’re bringing products in from overseas, we’ve used some of that capital to increase inventory, just so we can weather some of the shipping delays.

We’re also building out our facility in Colorado to produce more of the textured hemp protein and more of our high-protein flour. We’re currently selling hemp flour that is used in baking and that’s about a 55% protein content. And we’re putting in a pilot production line so we can produce the ProPasta meals here in our facility in Colorado to a point. When we really get into big distribution, then we’ll go to a co-manufacturer that has larger lines that can build the ProPasta meals. We’ve also hired a lot of staff. We’ve had to bring on quality control people and commercialization people. So that’s been some of the spend as well.

What other news should investors expect in the short to medium term?

We’ve announced the launch of our ProPasta line. Our big retail push is going to be in March, when there’s a big trade show in the US that is the place to bring your products to market and get in front of all the retailers.

Then we’ve got some new meat alternative products we’re working on. We’re finishing the purchase of the equipment for that. We will have some products coming out probably toward the middle of next year. 

The other thing we’re working on is the egg replacement capability that hemp has. In the food industry, when big food companies use eggs, they usually don’t use liquid eggs, they use egg powder and normally egg white powder. But because it’s an allergen and because it’s an animal product, a lot of food manufacturers want to get rid of it. We’ve developed an egg white powder replacement using hemp that will sell commercially. We use it in our own products, but we’ll also sell it. That’s going to be a game-changer because it will be a unique product. There are very few plant proteins that can mimic eggs so this is going to be a big item for us on the B2B side.

What would you say to investors looking at this space? What makes Nepra Foods stand out?

You look for innovation, you look for companies that are meeting the needs of consumers, and consumers are looking for nutrition and taste and texture. A lot of the plant protein companies are using old ingredients – soy or gluten. It’s not very innovative. I think a lot of companies, too, if you look at small public companies, don’t have revenue, or have very low revenue. We are not a new company. We’ve been around for years and we’ve got existing revenue and we’ve got multiple revenue streams because we sell ingredients B2B. And then we also have our own consumer side. I think it really gives us a leg up for success in the future. 

This story was featured in the Canadian Securities Exchange magazine.

Learn more about Nepra Foods at https://neprafoods.com/.

CSE Issuer Stories, Magazine

Bright Minds Biosciences: A vision for “next generation” psychedelic medicines to treat neurological conditions

With the COVID-19 pandemic upending life in every corner of the world and putting unwelcome pressure on people vulnerable to depression, suicide and addiction, there has never been a better time to consider new treatments for mental health challenges. One field gaining particularly rapid traction is psychedelics.

Of course, substances such as LSD and magic mushrooms have been around for years. They are known for their “mind-altering” qualities, both positive and negative, but in many ways the chemical properties of these compounds and their potential to benefit the brain are only just beginning to be understood.

Bright Minds Biosciences (CSE:DRUG) is a biotech company at the vanguard of this movement. Bright Minds is developing the “next generation” of non-addictive psychedelic medicines to treat depression and other neurological conditions and aims to offer an alternative to today’s standard treatments such as selective serotonin reuptake inhibitors (SSRIs), of which the widely known Prozac and Citalopram are but two examples.

“There haven’t really been any new ideas in the last 30 years or so,” says Bright Minds Chief Executive Officer Ian McDonald, who added that while revolutionary when they emerged in the 1990s, SSRIs have not always been best for patient outcomes, as side effects can include weight gain and sexual dysfunction.

SSRIs, he noted, might not work at all, or can even be problematic, for patients suffering from the most severe forms of depression, or people struggling with post-traumatic stress disorder (PTSD).

McDonald is convinced that psychedelics is the most promising field for making progress over the next 20 or 30 years in psychiatric medicine, and that related treatments will help the people most deeply affected by such disorders.

With this in mind, Bright Minds has a portfolio of three patented mechanisms based on serotonin (5-HT) receptors that are being assessed for indications ranging from depression to chronic pain. And with $30 million raised to date, the company is fully funded for Phase 1 trials for two of its drugs, which are due to begin next year.

McDonald is a former investment banker who started getting interested in psychedelics in 2014. He read all he could on the subject and concluded that while the efficacy of such drugs was not in question, they lacked the characteristics needed for the medical establishment and Big Pharma to embrace them.

Bright Minds aims to refine what could be seen as “coarse” substances and repurpose them. To do so, McDonald has assembled a top-notch team of scientists and researchers with extensive backgrounds in pharma and drug development.

Bright Minds Co-Founder Dr. Gideon Shapiro, for example, has over 100 patents to his name and is a leading commercial scientist creating novel psychedelics. He served as head of the Alzheimer chemistry group at Sandoz, the company first responsible for discovering LSD and marketing psilocybin, while Bright Minds’ Chief Scientific Officer and organic chemist Dr. Alan Kozikowski is world-renowned for his work with psychoactive substances.

“We’re not trying to reinvent the wheel,” says McDonald. “We’re taking compounds that already work and making them better. We’re sanding down the rough edges and polishing them up. I’d say it’s a much less risky approach than a lot of other biotechs who are doing a completely novel mechanism and where there are questions on efficacy.”

It is also worth highlighting that Bright Minds already has “composition of matter” patents covering all of its new chemical entity (NCE) portfolio, giving it a full monopoly over its drugs for 20 years. This approach is more akin to Big Pharma companies, which patent the molecules they invent.

Older drugs such as LSD and MDMA cannot be patented, and some companies simply pursue weaker patent strategies, according to McDonald. For example, they attempt to patent a method of production or the source of a compound. But these can easily be worked around by skilled chemists and may only offer an exclusivity period for five years, after which they become so-called generic drugs.

A drug maker’s profitability is at stake here. McDonald points out that potential revenue for a patented drug for depression, for example, could be between US$10,000 and $30,000 per patient per year compared to around $400 per year for a generic drug.

Indeed, the global market potentially open to Bright Minds is enormous. Antidepressants alone are expected to be worth $16 billion a year by 2025. And McDonald says this figure was based on generic depression drugs. For a patented one, based on the number of patients multiplied by $20,000 a year, the figure reaches an eye-watering $600 billion.

People who do well taking SSRIs will likely stick with them, McDonald concedes, but for that third of the patient population who do not, there is a potential market for alternatives of $200 billion.

The Bright Minds portfolio is already garnering attention. The company is partnering with the US government’s National Institutes of Health to test its drugs for epilepsy and chronic pain, not least to offer an alternative to opioid drugs in the latter case. McDonald says early findings have been encouraging.

In August of this year, the company reported positive pre-clinical data for its BMB-101 candidate (invented by Dr. Kozikowski) in treating the rare form of childhood epilepsy called Dravet Syndrome. This non-psychedelic drug is also being indicated as an antipsychotic for Alzheimer’s and to treat addiction disorders.

BMB-101 will be heading into Phase 1 trials early in 2022, with two Phase 2 studies potentially following in the second half. The company also aims to run a Phase 2 trial for its psychedelic candidate (5-HT2A) for depression and PTSD in 2022, says McDonald.

“We are entering a very catalyst-rich period. We have a number of clinical trials in 2022 coming up within the next year,” he adds.

Bright Minds appears to be a front-runner in this exciting new medical space and McDonald has the resources and team to see his plan through.

“We are really the leaders in this next generation of psychedelics, looking a step further I think than the other companies, and we have the team to do it – they’ve done it before, and we’re all very excited to get these drugs in the clinic and closer to patients.”

This story was featured in the Canadian Securities Exchange magazine.

Learn more about Bright Minds Biosciences at https://brightmindsbio.com

CSE Issuer Stories, Magazine

Mistango River Resources: Strategic patience positions this Kirkland Lake explorer for its biggest year yet

Gold mining is a cyclical business, and right now the cycle is exactly where the industry wants it, with precious metals prices strong and investors eager to participate in the good times by backing well-run companies with capital. Macroeconomic factors, driven recently by the COVID-19 pandemic, are owed much of the credit, but the sector’s strong performance has actually been due for some time.

Few people understand these trends better than Stephen Stewart, an experienced resource industry executive and Chairman of junior explorer Mistango River Resources (CSE:MIS).

Stewart and his team have followed a pragmatic strategy that now sees Mistango drilling in Kirkland Lake, one of Canada’s most famous and productive gold camps.

Gold went through over half a decade of stagnation, trading in a fairly narrow range before breaking out to the upside in 2020, despite what some would argue was the macro background to move higher all along. What many industry executives saw as a crisis, however, Stewart recognized as opportunity.

Rather than ploughing cash into exploration during a downturn, Mistango took its time assembling a portfolio of high-quality assets then waited until investor interest returned and funds could be raised at an acceptable cost. With some $7 million in the treasury, now it’s time to put the growth part of the plan into action.

“No question about it, timing is everything, especially where I sit,” explains Stewart in a recent interview with Public Entrepreneur.

“We are now in what I would call our third phase. The first phase is buying cheap and the second phase is raising money at a good cost of capital. Now we are in the process of deploying that capital as intelligently and as efficiently as we possibly can so that we can either discover a new ore body or expand on a known one.”

Mistango’s first drill target is in Ontario’s famous Abitibi Greenstone Belt. The company is midway through a planned 10,000-metre drill program at its 4,300-hectare Kirkland West project, right next door to the Macassa Mine run by industry titan Kirkland Lake Gold. Macassa, by the way, is not only large, but also one of the highest-grade gold mines in the world.

“We are beside the third-largest gold ore body ever discovered, that has gone from east to west, and we’re the next property west,” says Stewart. “The anticipation is, and certainly my hope is, that we can extend that mineralization onto our property.”

Macassa, like Mistango’s project, sits on the major Cadillac-Larder Lake Break fault system, which is responsible for much of the 25 million ounces of gold produced at Kirkland Lake in the past 100 years or so.

Stewart reckons the current buzz around the Kirkland Lake area and the Canadian gold mining industry in general is justified as juniors get drills turning again, and impressive new discoveries, such as those in the equally famous Red Lake district, prove once again that Canada is one of the best gold mining jurisdictions in the world.

“Kirkland Lake has been mined for a hundred years. It’s going to be mined for a hundred more. There are more ore bodies that have not yet been discovered in that camp. There’s no question about it,” explains Stewart.

Mistango’s first phase of drilling targets three zones at Kirkland West, the first of which was the former Baldwin Mine, which is thought to sit on extensions of the main fault and where historical output showed grades of 15 grams per ton.

The Baldwin work is now complete and the rigs have crossed the river to test the main Cadillac-Larder Lake fault proper.

The company also plans to soon begin drilling its second asset, the advanced stage Omega Mine, which lies around 30 kilometres east of Kirkland West and has an NI 43-101 resource of around 585,000 indicated and inferred gold ounces.

In the middle of the last century, a mine at Omega churned out about a quarter of a million ounces. Notably, Omega also lies near some big names, including Agnico Eagle’s Upper Beaver deposit and the former Kerr Addison Mine, at one time Canada’s largest gold mine.

Omega is also just a few kilometres west of Orefinders Resources’ McGarry project, which hosts an indicated resource of 123,000 ounces of gold at 8.57 grams per ton.

Stewart points out that taken together, Orefinders and Mistango comprise one of the largest landholders on the Kirkland Lake/Cadillac-Larder Lake fault system.

Mistango is one of the companies in the Ore Group, which Stewart also chairs. Other companies in the group include QC Copper and Gold, American Eagle Gold and Orefinders.

So, how did Mistango manage to get its hands on such a prime piece of land? 

It’s fair to say that it took persistence. Ore Group, via Orefinders, put in an offer to buy Mistango a couple of years ago but was turned down by management. It later became a significant shareholder, initiated a proxy battle, and ultimately took control.

Next began the process of turning the company around, recapitalizing it and starting to put money into the ground, says Stewart.

“We consider that [Kirkland Lake] the Ore Group’s backyard. It’s a seven-hour drive from Toronto and we just know the area and we love it and so it was an opportunity to expand our position,” he says.

Mistango River has some impressive backers, notably resource icon Eric Sprott, who holds 20% of Mistango’s shares. Sprott was Chairman at Kirkland Lake Gold during much of its heyday when the stock went up over 20 times in value.

“When he saw our land package, he instantly chose to invest,” says Stewart.  

“He understands the possibility of the gold coming onto our property. He knows how pregnant those fault systems are with gold and took an educated guess on our company.”  

On the ground, Mistango also benefits from the insights of Vice President of Exploration Keith Benn, who has a PhD in structural geology and extensive experience with the Abitibi.

Director Charles Beaudry also has over 30 years of experience in exploration, project generation and business development.

Numerous corporate success stories involve years of patience and hard work before the tide turns and management finally has the opportunity to prove that its instincts were right. With a strong team, a healthy treasury and ongoing exploration of high-quality projects in one of the world’s best gold addresses, that moment looks to have arrived for Mistango River Resources.

This story was featured in the Public Entrepreneur magazine.

Learn more about Mistango River Resources
at https://mistango.com/

CSE Issuer Stories, Magazine

Jushi Holdings: Timing is everything, and this expert cannabis team knows just when to pounce

Jim Cacioppo and his team at Jushi Holdings (CSE:JUSH) definitely know the meaning of patience, as they exercised plenty of it before setting up a new company to enter the legal cannabis industry. They watched as executives of all shapes and sizes rushed in during the early days of regulatory change, some quickly enjoying success, and others ending up on the ropes after making an endless trail of mistakes. The future Jushi management circle gathered know-how and bided their time.

That discipline is paying off hugely now.

Jushi is a multistate cannabis and hemp operator, and while the company may only have been founded in 2018, it is already gaining solid traction in its target markets and is exceedingly well positioned for long-term growth.

Cannabis is a complex industry in which most companies contend with a wide variety of regulatory environments. That’s especially true in the United States, given the patchwork of state-by-state regulations across the country. 

But to the Jushi team, the size of the pie available for successful operators to share in the United States makes the regulatory navigation worth it. “Everything else pales in comparison to the size of the US,” says Cacioppo, Jushi’s ambitious Chief Executive Officer, who is convinced the company’s strategy will make it one of the top global cannabis players within just a few years.

Cacioppo was a successful early investor in the cannabis space and became an expert in identifying distressed assets through his work in private equity. He saw what he calls a “gaping” opportunity to create a great company that had the right mix of management, financial resources and skills.

Cacioppo teamed up with fellow financial and cannabis industry hands Erich Mauff, Jon Barack and Denis Arsenault to prove his point. The combination of their personal networks, business experience and some early cash from their own pockets got Jushi off to a good start. It is now a vertically integrated cannabis juggernaut, operating in several US states, with cultivation, processing and retail assets under its corporate umbrella.

“Most people who win licences don’t have money, don’t have sophistication, don’t have the resources or the skills to operate these kinds of ventures,” explains Cacioppo, who says the sector is still littered with distressed players, even after the cull of recent years. “They just won licences, so they’re undercapitalized from day one.

“You could see the trends in our favour: the scale, the lack of good management teams and the opportunity to purchase companies rather inexpensively,” continues Cacioppo about the industry’s early days.

Jushi cleverly set about buying assets and licences where there were barriers to entry. It targeted growing, populated areas, with limited-licence medical markets and/or where legalized adult use had yet to arrive.

The team added to its depth in June 2019 with the acquisition of The Clinic, a Colorado business that brought new and proprietary information on cannabis cultivation, extraction and brand development. 

The group now has over 70 product formulations under its Lab brand, as well as a new line of hemp-based CBD products called Nira. Its 11 cannabis dispensaries all feature Jushi’s BEYOND / HELLO brand above the door.

Jushi has three core markets: Virginia, with a limited medical licence; Pennsylvania, Jushi’s largest market and home to a well-established medical cannabis environment; plus Illinois and its strong adult-use market. Illinois and Pennsylvania are expected to account for 77% of group revenue in 2021.

In three other markets, Jushi has established operations and is looking to scale up. These are Ohio (developing a medical program), Nevada (large adult-use market) and California. The last of these, of course, is the biggest cannabis market in the US and also home to a long list of very distressed assets.

In Illinois, Jushi aims to double the number of retail outlets it operates to four by early Q1 2021. Experts say the state’s adult-use market is growing rapidly and could reach US$3 billion in value.

In Pennsylvania, which could account for up to US$110 million in revenue in 2021, the aim is to grow its dispensary count to 15, from eight at present, with the already increased capacity at its 90,000-square-foot facility for cultivation and processing.

Virginia, where Jushi is one of only two public companies licensed to operate, will be the jurisdiction of highest growth in percentage terms, as Jushi currently does not have any stores there but is planning to build six.

“We have three great states that give us growth in-house for several years, so we don’t need to do any acquisitions, and we have the capital to build up the businesses,” says Cacioppo. The company closed a $30 million financing in the latter part of October, adding to a cash balance that was already around the $50 million mark.

COVID-19 has brought challenges, of course, including the adoption of strict social distancing rules.

On the other hand, the cannabis sector was declared an essential service, and Cacioppo believes there have been other positives, such as increasing demand, an influx of new consumers, and a newfound respect and validation for the cannabis industry.

A quick look at Jushi’s financials shows how well things are working.

Preliminary third-quarter results announced in early October contained expectations for revenue of $24 million, which would be 61% above the prior quarter, while fourth-quarter revenue is anticipated at the high end of the previously announced range of $25 million to $30 million. Jushi also expects to report positive adjusted EBITDA in the fourth quarter.

Forecast revenue for 2021 has been revised upward to between $205 million and $255 million, from $200 million to $250 million, while adjusted EBITDA is expected to be between $40 million and $50 million.

Beacon Securities recently initiated coverage of Jushi with a buy rating, describing the company as a “hidden gem.” 

Its analysts noted that both New Jersey and Arizona were set to vote on adult-use legalization measures, with the New Jersey vote in particular holding the potential to have a domino effect on other markets, including New York, Pennsylvania and Connecticut.

“Illinois has seen legal-market cannabis sales quadruple to a $1.2 billion annualized run rate after its adult-use market opened in January. Pennsylvania may be one of the ‘dominos’ that falls if neighboring New Jersey approves adult-use legalization next month,” notes Beacon.

With Jushi shares having traded as high as 300% above their March 2020 lows, the patient work of Cacioppo and his Jushi teammates is clearly being recognized. And with more positive regulatory change on the horizon in the United States, Jushi seems to be in that sweet spot with the right strategy at the right time.

This story was featured in the Public Entrepreneur magazine.

Learn more about Jushi Holdings Inc.
at https://jushico.com/

CSE Issuer Stories, Magazine

Draganfly: This drone pioneer aims to become the world’s go-to provider for “unique” data

While it was only in the past several years that drones gained broad recognition as valuable commercial tools, these amazing machines have actually been at work improving our lives for decades. Draganfly (CSE:DFLY) has been serving companies and governments looking for high-quality drones and related services for over 22 years, selling to markets as large and important as public safety, agriculture and industrial inspection.

That list is just a start says Draganfly Chief Executive Officer Cameron Chell. Public Entrepreneur caught up with Chell recently to discuss Draganfly’s development to date and where the company is heading in the medium and long terms. According to Chell, the sky’s the limit when it comes to the value Draganfly can bring to society – and Draganfly shareholders – given time. And that includes playing a role in helping the world manage the ongoing COVID-19 crisis.

Drones have been available for commercial applications for a generation, but interest and real-world use have really gained momentum in the past few years. Why?

I think what’s driving the momentum is the actual practical use of drones. It’s sensor functionality, battery life, cost and actual regulation and awareness of drones, and people getting more comfortable with the functions they create. Basically, I think it’s the convergence of all the technologies coming together, and certainly the COVID-19 pandemic has highlighted the fact that this is a tool that can be used in a contactless way, as a resource multiplier, or to carry out functions that humans don’t necessarily have to do now and risk close contact.

There are many competitors in the industry. How does Draganfly’s experience over more than two decades give you an edge?

We are the oldest commercial manufacturer of drones in the world. The first drone ever credited with saving a human life sits in the Smithsonian today, and it was a Draganfly drone fitted with a thermal camera. What separates us is our technology and our software.

You mentioned COVID-19. Draganfly recently initiated “pandemic drone” test flights. Tell us more.

On the pandemic side, the software we use can do two things: it can measure social distancing and mask-wearing, so it can measure how well people are carrying out what officials are putting in place. And the second thing it can do is measure vital signs.

The real advantage of our technology is that we can, for the first time ever, really, start to provide real-time data on the effectiveness of things like mask-wearing and social distancing, and we can start to get real-time data on community health, as opposed to waiting to see how full hospitals become, or relying on models of where the pandemic might go.

In this case, we can have cameras measure social distancing and vital signs to determine infection rates within a crowd on the beach at a particular time of day, or what the infectious or respiratory potential is of a crowd in a football stadium. It doesn’t make a diagnosis, it doesn’t identify people, but it does come back and provide real-time data on where we think we’re at in terms of the infectious cycle at that moment. We provide both an aerial and fixed-base camera platform for different use cases.

What has been the response from local governments and others to the test flights?

From a technology standpoint and from a public official standpoint, the response has been overwhelmingly positive. They understand that this isn’t a scenario where people are being identified and profiled, but rather it’s providing real-time data. For the first time they may not only get a sense of potentially what the health consequences are to first responders or the public in general, but they can also start to monitor whether potential hotspots are emerging and whether policies are working to help start opening up economies again.

Who are some of the customers for Draganfly drones?

Draganfly has sold over 9,000 drones, primarily for public safety, but also to agriculture, construction and mining. It is all the industries you would expect, but our primary customers have been public safety, law enforcement and border patrol.

We’re seeing demand grow from that sector, but interestingly also for consumer safety and workplace safety. Imagine places such as theme parks, convention centres, factory floors or retail outlets, where you’ve got consumers coming in and management wants to ensure a couple of things. One is that their workforce is safe and not bringing in potentially infectious diseases, and then there is consumer safety and advocacy, where you might have a convention centre or a theme park that’s putting this type of system in place to benefit consumer confidence. An interesting concept that we see starting to develop is that the same way you and I get a weather report right now, we’re going to see the emergence of health reports.

Where do you see the drone industry in three to five years? And what does this mean for you as a company?

We are a North American manufacturer, so there’s lots of data security concern as it relates to foreign manufacturers. We really see ourselves growing in the domestic space or, quite frankly, amongst NATO or Five Eyes countries, to be able to provide drones and secure data delivery.

How do you make money in the drone business? Is it volume, or government and agency customers that generate recurring revenue, or the consumer market?

For sure, it isn’t from consumers. We think foreign manufacturers will continue to dominate that space.

For us, we will continue to do contract engineering for military applications. That’s just a staple of ours that provides a good base of income. Ultimately, our recurring income will be driven by data analytics and management. Today we build specific drones, devices, software and services for industry verticals in which we can provide hardware, software, services and data management that give our customers a competitive advantage in their industry.

We do sell drones to end users, and it is a growing market. However, we see demand being very strong in turnkey and subscription-based services. Companies aren’t necessarily looking for a drone and a pilot. There’s an element of that, but the bigger growth area is going to be more around turnkey service. I’m an insurance company and I want rooftop inspections for 5,000 homes a month, say, and I just want the data. And where Draganfly differentiates itself is that we’re really good at incorporating sensors and providing data you typically can’t get from other drone providers.

You are also helping to find landmines. Tell us more about this work.

This is a great example of a large untapped market that requires specialized equipment and software, not to mention data analytics and management. We’re working with a partner called Windfall Geotek, which has a ton of experience in this space, but they need a specialized drone with specialized sensors in order to provide their AI with the data that is beyond just magnometer data. We expect to roll that out in force over the next eight months.

What’s really exciting about this is not just being able to uncover mines without having people and dogs at risk, but also the amount of data that we collect – the patterns of mines, the number of mines missed in the past, the areas and the regions. Building a database of this type of stuff really helps the AI to be able to uncover more mines.

Your acquisition of Dronelogics Systems earlier this year marked a big change. What does this deal mean for Draganfly?

Dronelogics is a 10-year-old company with a fantastic reputation and incredible management. They do great integration work with multiple drone systems.

We intend to make more acquisitions, and the two principals at Dronelogics are key for us to build on top of our acquisitions and do proper integration. The other advantage of the acquisition is that they sell a lot of other manufacturers’ products, but as we get moved into that mix, we become vertically integrated a bit whereby they can provide either Draganfly products and/or our contract engineering services.

You’ve built up a strong team. Tell us about the group.

Andy Card is former White House Chief of Staff under George W. Bush. He was also Secretary of Transportation. His endorsement of our company is important. He only sits on two boards: us and BNSF, which is the massive railroad system. To have his ear, his insight and global perspective has been fantastic. He works with us on public relations, but also in terms of being able to provide business development insight into both the government and industrial worlds.

We’ve also got John Mitnick. He’s the former General Counsel of Raytheon and former General Counsel of Homeland Security. John’s role is insight and advisory, but also penetrating us into the government’s position of not moving forward with foreign drones and looking to North American manufacturers.

Julie Myers is on our advisory board. She’s former Assistant Secretary of Homeland Security. We also have Dr. Jack Chow, who was the first Assistant Director-General of the WHO on HIV/AIDS, Tuberculosis and Malaria, who is a big drone advocate and has been for 10 years.

Is there any other core message the market needs to know about Draganfly?

Draganfly is a data company that makes drones, devices and software, and provides services to create and provide better data. The strategic differentiator for Draganfly is that we provide data to our customers that basically nobody else can. An example would be the landmine data, or health measurement data. You might think of us today as a drone manufacturer, but three years from now, or five years from now, I believe Draganfly will be a prominent business brand you will associate with data analytics and management. That’s where you go to get your data, or that’s where industry goes to get its data. Data is valuable, but unique data is priceless, and the name of the game for Draganfly is to create unique data.

This story was featured in the Public Entrepreneur magazine.

Learn more about Draganfly
at https://draganfly.com/.

CSE Issuer Stories, Magazine

Generation Mining: Investors rush to rare palladium pure play as metal price soars

Palladium is not a metal that the average person on the street is likely to know much about, but with the race on to create a cleaner, greener world, that could soon change.

Over 90 percent of this so-called ‘white metal’ is used to make catalytic converters for cars with internal combustion engines, and it’s also used plentifully in hybrid vehicles. As regulations tighten across the auto industry to reduce emissions, more palladium is needed than ever before.

This dynamic is behind the meteoric price rise for the metal in the last couple of years, going from around $800 USD per ounce to $2,300 USD. A potential supply deficit in the years ahead is adding fuel to the increase.

Based on one study’s findings, the globe’s 10 million ounce-a-year palladium market is set to experience a deficit of 1.9 million ounces in 2020, as mining production has been steadily falling since 2004 and there is a dearth of new mines coming onstream.

Generation Mining Ltd. (CSE:GENM) is looking to take advantage of that backdrop with some big ambitions in the PGM (platinum group metals) space. With its shares having more than doubled in value since the beginning of 2020, recognition of the strengthening palladium price is broadening just at the right time.

The company’s flagship asset is the Marathon Palladium Project, which is in partnership with Sibanye-Stillwater, a major player located a few miles from the town of the same name in Ontario.

Marathon is the largest undeveloped palladium project in North America. It has already had 1,000 holes drilled into it, and has been the subject of two feasibility studies at lower palladium prices. Generation Mining is the operator.

“It’s had great work done on it,” explains Kerry Knoll, Generation Mining’s Executive Chairman.

“It was not a mine when people tried to develop it before, when palladium was at $500 an ounce, and it wouldn’t be a mine today at $500 an ounce. But at $1,000 and higher, it is a mine,” he says.

Several companies have been involved with the project since the mid-1980s, including Marathon PGM Corporation, Stillwater Mining, and Mitsubishi.

The numbers for Marathon – 7.1 million palladium-equivalent ounces in the main deposit – are compelling.

Generation Mining’s preliminary economic assessment, published in January of this year, was based on a palladium price of $1,275 an ounce, which gave the deposit a pre-tax net present value of $1.19 billion CAD at a 5 percent discount rate. One can only imagine the economics today, given the price of palladium is well above $2,000 per ounce.

Going into production could make Generation Mining, as Knoll puts it, “lots of money,” but he points out that the mine would still be profitable even at $1,000 an ounce.

Knoll also notes that Marathon, which has a mine life of 14 years, represents something of a rarity for investors, as it is a pure-play palladium project (even though it also contains metals such as platinum and copper).

In addition, palladium projects tend to be held by private companies or are just one part of a huge mining company’s overall portfolio, so getting exposure is tricky for investors.

When asked how the Marathon deposit compares to others around the world, Knoll says, “There’s a couple of very large ones in South Africa. Ivanhoe has one, a company called Platinum Group Metals has one. They’re much larger than ours, but they’re also slower to develop because they’re underground mining. Ours is an open pit, surface mine, and we can get into production a lot quicker because of that. And it’s also a lot cheaper.”

Generation Mining aims to bring the project and its 194,000 palladium-equivalent-ounces per year to commercial production. According to the PEA, initial capital costs are pegged at $431 million, which Knoll reckons is eminently achievable, via a number of options.

“Financing mines today has never been more flexible,” he explains.

“There are streaming royalty companies to which we could sell, perhaps, the gold, or a part of the gold and a part of the platinum stream, upfront for cash. And it looks like we might be able to raise up to $100 million doing that on pretty reasonable terms.” Knoll also cites the equity and debt routes and points out that Generation Mining’s partner Sibanye must provide 20 percent of the money or get diluted down.

The project, neatly situated in a region where mining is part of the tapestry of life, boasts excellent local infrastructure, including Trans-Canada Highway access, a main rail line, power, and an airport.

“One of Canada’s largest gold mines, Hemlo, is located just down the road from us and it’s still in production, although it’s been winding down and the locals are looking forward to the jobs that we would bring to the area,” says Knoll.

Generation Mining is just the latest company that mining industry veteran Knoll has been involved with. He and Chief Executive Officer Jamie Levy were behind the sale of Pine Point Mining and its zinc project in the Northwest Territories to Osisko Metals for $35 million in 2018.

He explains how Osisko Metals didn’t want to buy all of the exploration assets, so Generation Mining was spun out into a separate company, which then struck an option deal the same year to buy a 51 percent stake in Sibanye-Stillwater’s Marathon deposit.

Generation Mining can earn up to an 80 percent interest by spending $10 million over four years, at which point Sibanye can re-acquire 31 percent to bring its stake up to 51 percent, though Knoll reckons this is unlikely because Sibanye will need to spend over $100 million to do that.

Sibanye is a pretty decent partner to have, of course, since it is the second-largest palladium company and largest platinum company in the world, so its knowledge of the commodity and the industry is extensive.

Knoll says Sibanye can be particularly helpful once the project is in production. Sibanye would be able to assist Generation Mining with the marketing and sale of its concentrates to smelters (a co-marketing arrangement is in place with Sibanye), which can be an onerous process for smaller companies.

In January, Generation Mining announced an $8 million financing to advance the Marathon project. Resource sector legend Eric Sprott invested $5 million of the total, joining other big names on the shareholder register, including Lukas Lundin and Osisko Mining.

There should be plenty of news flow in coming months as the company hires its engineering team and selects the group to carry out a feasibility study. It also plans to restart the permitting process.

With the green energy story getting louder by the day and lesser known metals increasing in global importance, Generation Mining’s Marathon project is taking a well-deserved place in the spotlight.

This story was featured in the Public Entrepreneur magazine.

Learn more about Generation Mining at https://www.genmining.com/.

CSE Issuer Stories, Magazine

Versus Systems: Clever technology increases advertising engagement to extraordinary levels

Versus Systems (CSE:VS) is disrupting the conventional advertising landscape with an innovative choice/reward model. The company’s main focus is the esports sector, where game developers use its WINFINITE platform to create competitions that provide players the chance to win a variety of attractive prizes.

The platform can be accessed via mobile, console, PC games and streaming media, and thanks to that reach some half a million prizes have been awarded already. WINFINITE is used for games in the US and Canada right now, with a UK launch slated for December. Plans call for making it available in continental Europe in the first half of 2020, and in China around mid-year.

In August of 2019, Versus struck a licensing deal with hardware giant HP that will see its technology used in a variety of HP products and services. Public Entrepreneur caught up with Versus Chief Executive Officer Matthew Pierce last month to learn more about the company and its considerable potential.

How is the advertising landscape changing and how does Versus fit into that?

I think media is changing but that advertising is changing more slowly. People in general don’t care for old systems of advertising, or paid ads. We measure videos not by whether they were watched but by how many seconds they were watched before someone hits X to escape. People don’t care for banner ads or interstitials or pre-roll or any of those kinds of things.

And as content, as media, as games, as shows and all those things become more interactive, and more choice-based and more tailored to the viewer or the player, so too does the advertising. The advertising needs to be just as thoughtful. And for us, the marriage of choice and reward, which is to say that when you get to choose what you want to play for or you get to choose what you’re trying to win, it introduces the idea of earning it, so it no longer feels like an ad, but rather a prize. It feels like something you’ve earned and that makes all the difference.

Can you explain how WINFINITE works and how you came up with the idea?

In any Versus-enabled content, whether it’s a show, a fitness app or a video game, when you enter into the experience, when you’re about to load up the game or when you’re about to watch your show, there’s a menu that asks what you want to play for. You can choose anything from downloadable content in a video game to trips, to apparel, to food, to electronics. There’s a huge number of things that we’ve given away, from tickets to BlizzCon to hats and shirts.

Users see a win condition that says, “If you do this then you will get this, or if you do that then you will be entered into a sweepstakes to get that.” People try to win the race or crush the right amount of candy and then you get sent a message saying that you either won it or you didn’t. If you didn’t, you try again or try to win something else. It doesn’t interrupt the show or the game. It’s there to enhance the experience.

The company came out of an incubator whose limited partners included a large software development firm, a large law firm, and people with strong media backgrounds. The idea was to create something that’s in a really thorny regulatory space that is also difficult to achieve technically.

People love winning things and people love earning things. How can we make that real? We’ve been filing IP on it for years now. We’ve been granted patents covering how to do it and how to do it at scale.

Is it fair to say you’re focused mainly on the gaming space?

We very much like the gaming side of things. We also like things that look like games. Games are already made such that there’s what we call a “win condition,” and the win condition is very clear inside of a game – save this town, crush this candy, find the loot. That’s a really rich environment for us. But I also keep bringing up fitness because fitness looks a lot like a game as you try to run a certain distance or achieve specific goals.

What sort of feedback do you get from players?

Ninety seven percent of players interviewed that have used the platform say it makes the game more fun. And that is not true of most advertising, right? We did a huge survey with UCLA last year to talk about user behaviour and how people interact with media and it confirmed that people don’t care for ads. But 97% of people who play for rewards say rewards make the game more engaging. Once introduced to prizes, people play more and there’s not an ad unit anywhere that makes people consume the content more frequently.

How do you make money from this?

The business model works in classic advertising fashion, which is that the brands that want to reach these players pay to place their products inside of the content, the difference being that our engagement rates are minutes rather than seconds, and the transaction rates are measured in whole percents, rather than hundredths of a percent.

We are much, much, much more effective with respect to getting people to do something. Do they go into the store, or do they go to the website? It’s much more effective when you introduce these ideas of choice and reward. The brands pay for that because it’s just a more effective ad unit.

We split the revenue with the content owner, so in the case of HP we’re in all the HP Omen computers and we split the revenue with HP. When we are in a game we split the revenue with the game developer and the publisher. So, we make our revenue on a transactions basis. Every time someone makes an attempt to win a prize, the company who put up that prize pays for that engagement.

You’ve struck a number of partnership agreements. Is there one deal you are particularly proud of?

The HP deal is massive. HP is a US$50billion company and we have a multi-year deal. They are well known for being safe and secure, and conservative and thoughtful and the idea that they would partner with us, I think, suggests that we’ve worked very hard to be a credible, trustworthy, thoughtful, capable company. HP sells tens of millions of computers a year and they’re one of the most highly respected hardware manufacturers on earth. They have access to not just gamers, but to anything you can do on a computer that you want to encourage or incentivize. We can put rewards around things other than games. The platform also works extremely well for fitness apps and certain business applications.

What would you say to potential investors about the group’s future targets?

Now’s a great time. You start talking about tens of millions of machines from the HP deal and then you also start talking about the opportunities that we’ve got when we grow into some of these other markets, particularly in Asia. You have access to a lot of people playing a lot of games or a lot of people engaging with these apps. And they want to win. It’s perfect for us.

This story was featured in the Public Entrepreneur magazine.

Learn more about Versus Systems at https://www.versussystems.com/.

CSE Issuer Stories, Magazine

RIWI Corp: Getting one’s hands on insight nobody else has requires creative thinking…and 1.5 billion responses

RIWI Corp. (CSE:RIW) runs a business for the curious, the analytical, for governments of the world, and for financial services firms looking to develop an edge. It is a business that is never the same two days in a row and thus endlessly fascinating, with the potential to drive policy, influence strategy, and bring improvements to the world at large.

In short, the company performs global trend tracking and predictive analytics that provide previously unavailable insight into how people think and behave. Relying on the Internet, it conducts surveys and can also run ad tests assessing the efficacy of corporate marketing initiatives. The company has thus far analyzed over 1.5 billion responses in putting together reports for its clients.

RIWI’s client roster includes companies in the private sector, predominantly finance, as well as groups active in humanitarian aid such as the World Bank and the Bill and Melinda Gates Foundation. Security is another area of great importance to the company.

Public Entrepreneur caught up with Founder and Chief Executive Officer Neil Seeman recently for a discussion of RIWI’s role in today’s rapidly evolving digital landscape and a look into corners of the technology world we never even knew existed.

How has technology and the market you serve changed over the last decade or so?

The market for global data collection has really exploded in the last 10 years and we’re just at the cusp of it. I feel that we’re sort of in Web 3.0 right now. I was lucky enough to have been an investor in Web 1.0 (the early days of the commercial Web) and then Web 2.0 (the social Web). Now today with Web 3.0, where RIWI sits is the world of incalculable amounts of data, and more importantly, data for actionable insights.

It’s less about Big Data these days than it is about Smart Data and that’s where we focus. And the second titanic change, which is just occurring, and where RIWI sits at a leadership position, is the importance of being an ethical data broker and only collecting data free of personal identifiers. This is becoming a game-changing issue in the world of data collection. It’s a highly competitive marketplace but the total addressable market is pretty extraordinary.

Your technology uses machine learning. Can you explain in simple terms how you collect data?

RIWI invented a global platform such that anyone with access to a Web-enabled device can stumble into a RIWI survey or ad test as they navigate the Internet and enter an abandoned domain that doesn’t exist at that moment in time – they encounter a RIWI survey or ad test on a non-trademarked domain. We invented that and expanded our intellectual property and we continually learn which constellation of domains is able to capture a perfect mirror of the Web-using audience in any region of the world. This changes in real time and we understand why and how that happens. We have a decade of historic data so we understand the changing Internet infrastructure in every country and that is a form of intelligence that can be very valuable to understanding how we can solve client needs.

How does your technology differ from that of other companies? How do you position yourself against your peers?

It’s differentiated in a number of ways. The first is global access. We have single-button technology such that you can access eight or 180 countries, or 229 territories and countries using RIWI. Otherwise, you would have to go to online panel suppliers or different market research providers in the countries.

Secondly, we reach opaque or otherwise impossible markets. We are the only continuous data provider in terms of sentiment data and ad testing data in all cities and regions across China, for example.

Thirdly, we are random in our reach. We patented and then built out a global platform and cloud-based architecture called Random Domain Intercept Technology such that the recipients who are intercepted are random and RIWI is privacy-compliant such that we are not collecting any personally identifiable data, and this fourth aspect of RIWI is highly differentiated from other digital data collection tools.

Fifth, and most importantly, we’re being recognized for broadening the voices of people who participate in surveys and ad tests. In other forms, traditional or even modern forms of sentiment collection, whether it’s social media analytics or public opinion panel-based polling or natural language algorithms using artificial intelligence, you’re getting a very, very narrow slice of public opinion, whereas with us, the majority, and in some cases the vast majority, of the people whose opinions and behavioural reactions we collect have not answered a survey or ad test of any kind in the preceding month, nor are they regular posters online.

Who are your customers and how many do you have? Can you give me an example of where your data has been particularly impactful for a client?

We currently have several dozen major enterprise clients across our business lines. They range in size. We try to build recurring revenue-based clients such that they are either quarterly subscriptions or annual subscriptions that can be renewed, sometimes on a rapid-response basis. Within each of these, some are such that they have multiple sectors or country groupings.

In terms of impactful work, we have worked for G7 agencies on strictly confidential matters, but on the unclassified side we’ve done, for example, very impactful work for the Canadian government where we’ve measured the sentiment toward women and girls and how they are treated under ISIS in 18 Middle East countries. We’ve enabled some fascinating data that have helped educate people in all regions of the world about the brutality of how women and girls are treated under ISIS.

We’ve also done a lot of work on marginalized groups, populations that don’t participate in surveys and this is not only important in the humanitarian aid sector, it’s important, for example, to the finance sector, which is trying very much to understand the future consumer of technology adoption. We’re also the largest data collector in the world for changing attitudes toward LGBTQ communities, and for undocumented citizens and people in rural communities, even in America, whose voices are often left out of important debates. We like to say we give “voice to the voiceless” in any region of the world.

It’s impactful to me when we may only solve 2% to 5% of a company’s data challenges but we are embedded with them such that they thereafter understand the universe of their other data collection needs.

The possibilities for your data seem limitless. How big can you see this getting?

Our goal is to be the Booz Allen of global data collection. We want to be everywhere in terms of our continuous data collection, in fragile and conflict states, in opaque markets, and we want to deliver data that provides actionable insights in real time. We do that with real-time dashboards that are constantly being updated such that with the touch of a button, a decision-maker can understand the truth of what’s going on, whether it’s predictions about stock market turmoil, trade wars, or gang violence.

You’re clearly growing and have been turning in quite good performance numbers of late. What is your business model? Is it the case that when revenue grows so does profitability? Are your costs mostly fixed?

One of the beautiful things the math analysts like to observe about our company from a shareholder perspective is that as our revenues grow and as our profit grows, our costs associated with sales decline or stay relatively flat. This was always embedded in the vision of the company, such that we’re not, for one, selling people, we’re selling data and dashboards and analytics, but secondly, we’re a machine-learning platform such that the technology itself is embedded, or twinned, with shareholder value creation, because the machine-learning technology continually expands in its capacity for data collection and continually decreases the costs associated with data collection. Further, our offerings are “plug-and-play” for our clients – the same issues that confront our client Bank of America Merrill Lynch also confront Asia- or Europe-based hedge funds looking for a privacy-compliant information edge.

How do you go about landing new clients?

Two ways – there’s no secret sauce here. It’s about boots on the ground and hardcore sales, using a highly disciplined sales process. I’m an accidental entrepreneur because this grew out of a small research unit I had at a college associated with the University of Toronto, and we’ve changed the mindset by going from a creative think tank environment to a heavily sales-focused enterprise with sales-focused disciplines and systems and processes.

Secondly, the uniqueness of our platform and the uniqueness of our data – especially it being privacy compliant – and the nature of our clients means that we get a lot of attention, whether it’s media attention or public presentation opportunities, or thought leadership opportunities. Our Head of Research was selected to present this Fall at TEDxToronto. Our data collection tools to generate alpha for the finance community won us a global “Battle of the Quants” award that created buzz this year.

And we also win attention from new audiences because we are in this great situation where we can generate internal data in unusual parts of the world in rapid fashion, so we offer insights that we know will be valuable and get the attention of prospective clients whose eyes light up when they see it.

This story was featured in the Public Entrepreneur magazine.

Learn more about RIWI Corp. at https://riwi.com/.

CSE Issuer Stories, Magazine

Cresco’s acquisition of Origin House accelerates its advance toward 100% market penetration

Cresco Labs (CSE:CL) is one of the leading cannabis growers and retailers in the US, marketing several well-known brands across multiple states. The Chicago-headquartered company’s 2018 results showed increasing production and distribution, along with a near 300% increase in revenue compared to the previous year.

In April, Cresco announced plans to acquire California-focused Origin House for CDN$1.1 billion in what would be one of the largest public company acquisitions ever in the US cannabis space.  It would come on the heels of last year’s acquisition of Florida-focused Vidacann by Cresco for $120 million.

Proactive caught up with Chief Executive Officer Charles Bachtell recently to get his thoughts on the Origin House transaction and what lies ahead for Cresco and the cannabis sector in general.

Cresco has really gone from strength to strength over the past year. Let’s begin by having you tell us about your corporate strategy and what some of your advantages are compared to industry peers.

Cresco is one of the larger multistate operators in the US. We participate in all main verticals of the supply and value chain – from cultivation and extraction to the creation of branded products, carrying on into distribution of those branded products to stores we don’t own and then also bricks-and-mortar retail. Including pending acquisitions, we’re in 11 states and those states are arguably the most strategic footprint.

Some of our peers have more states in their portfolio but our 11 states – seven of the 10 most populated states in the US and four that aren’t in the top 10 – they all have very key strategic rationale behind them, like Nevada with Las Vegas and Massachusetts with adult use. We focus on the regulated market.  We have compliance backgrounds. The founders of this company come from the banking industry and a lot of the lessons we learned on the operations side, the legal side and the compliance side of banking have helped us create an operation in cannabis that is very focused on regulation and doing cannabis the right way.

Those are some very strong pillars. It seems that many companies in this industry are pursuing similar goals, but it’s the ones executing consistently on their growth plans that separate themselves.

The strategy behind our growth has not been just about trying to make as big a footprint as possible.  It was making sure that we were thoughtful in the states we launched in. We pride ourselves on execution and if you’re looking for maybe points of distinction between us and our peers, because to a certain extent you could say we look alike – we’re all trying to create multistate national platforms, we all want to create brands, and now we all have access to capital – I think this is what has always resonated with the investor community.

It comes down to three things with Cresco. The strength of management has always been commented on by investors. It is a unique background to have, specifically mortgage banking experience and what it was like to go through the economic downturn and not only survive, but we thrived in our prior lives when regulation came to mortgage banking.

Then we’ve built out the team with some phenomenal professionals with a ton of experience in big international CPG (consumer packaged goods), so the strength of management has always stood out. The level of execution – our ability to win these very competitive, merit-based application processes is second to none.  And then the ability to execute on M&A. We call it the ‘gets’ – we get access to the markets, we get operational, we get products to market and then we get disproportionate market share.

In Pennsylvania, for example, we all received licenses on the same day. We were able to go through all the things to operationalize and bring product to market 45 days faster than the second group that came to market, and 70 days faster than the third.

We execute at a different level and then we focus on market penetration and market share, which are fundamental ways of evaluating your success. But a lot of our peers were focused on the landgrab aspect and maybe a little less on operations.  But we’re operations guys.

We like the story of highest market share in Illinois, highest market share in Pennsylvania, largest distribution footprint in California. That’s how we judge ourselves and we like telling that story.

The third point of distinction is our focus on the creation of branded products more so than how many bricks-and-mortar retail stores we own. We like vertical integration. We think it’s important in some markets, but our goal is not to own more bricks-and-mortar retail than anyone else. Our goal is to make sure our products are on the shelves of every dispensary in a state and that’s a little different from our peers.

Tell me more about the acquisition of Origin House. How did you go about that and what was the rationale for the deal?

It came on the heels of another big announcement we made, which was the Florida acquisition. In order to create a national brand, you have to have that strategic geographic footprint.  You only want to be in the states that really matter. So, Florida, being the third most populated state in the US, of course really mattered. We were able to check that box and it really is the last of the tier-one states we needed. So, you create the geographic footprint that matters but then you have to get a meaningful position in those markets.

Our story is 100% market penetration – getting on the shelves in every dispensary and then having the most market share of any group. And so that’s where Origin House fits into the narrative. We were already in California – we already had operations. We closed that transaction last year and we were starting to produce, but how do we create a meaningful position in the most important, largest cannabis market in the world? That’s where Origin House really spoke to us as a transaction. They’re the largest distribution company in the largest cannabis market in the world. That in and of itself is a reason to do the deal.

The best part about the Origin House acquisition has actually been everything that came after it. They really do distribution because they’re fundamentally focused on finding and identifying brands that matter. They wanted to be in the branding space too so that was very aligned with us.

And now that we’re a publicly traded company, granted this has always been our mindset anyway, who we can and who we can’t do business with, we have to ensure that our standards are met when it comes to corporate governance and adherence with strict compliance with state regulations. With Origin House, you had a company that was publicly traded for over two years now and compared to its peers out there they’ve been held to a higher level, a higher standard of compliance and corporate governance.

Then you start looking at the human capital side of the space.  They’ve got a very astute corporate development department over there. Over 20 lawyers and analysts that have been working on cannabis M&A deals for the last couple of years. That was great and then the icing on the cake is their founder and CEO Marc Lustig. His capital markets experience is unique for cannabis. His understanding of the way that capital markets and Canadian capital markets work. The relationships he has, the reputation he has. You start layering all of those assets on top of each other and you can see why it was a very enticing transaction for us to want to complete.

Merger activity has really picked up in the US cannabis space. Why is this and do you see the trend continuing?

This goes back to the experience we had in mortgage banking. I think any time you have emerging industry meets high regulation you’re going to have consolidation. It’s going to get to a point where people are going to struggle to reach where they thought they would be able to get. Maybe it’s less realistic – whether timing, whether infrastructure, whatever it is, access to capital that’s going to limit them, that’s going to create great opportunities for consolidation by the companies that have built out the infrastructure, that have the experience, that have been able to get out in front. I think that’s what you’re seeing and are going to continue to see in the cannabis space.

Consolidation is a part of this next phase of growth in the industry for a lot of reasons. When you can find some of that bandwidth, when you can find that experience, when you don’t have to create it all from scratch, that becomes a faster, less risky way to expand than building from scratch every time.

How do you see the US federal landscape for cannabis in terms of legislation changing?

I think everybody is more bullish on this than we would have been a year ago.  You’re seeing the SAFE Act with a lot of support. You’re seeing the STATES Act with a lot of support. The feedback and the chatter out of DC seems very positive on both of those fronts. People are handicapping SAFE to potentially be a 2019 passage, but they are also looking at the STATES Act as likely getting figured out before the 2020 election cycle. It’s moving in the right direction, I’ll tell you that.

What are your plans for the rest of 2019 and beyond?

We feel like we’ve created that geographic footprint of substance and now it’s making sure we go as deep in those programs as we can. That we do accomplish that market penetration and market share that has become our calling card. I think you’ll see us focus on implementation and integration with Origin House and with Florida. And we’re opportunistic, so if there’s another state that comes up that fits into our thesis and growth strategy, we’ll evaluate it. But I think for the next quarter or two, any M&A would be focused on deals that help us go deeper in states that we’re already in. Acquiring another operator in a state that we’re already in to increase our position in that state is the likely future of M&A for us.

This story was originally published at www.proactiveinvestors.com on June 20, 2019 and featured in the Public Entrepreneur magazine.

Learn more about Cresco Labs at https://www.crescolabs.com/.