Connect with us

Sponsored

An unparalleled opportunity to capitalize on Canada’s marijuana legalization

Given their strategic investments, attractive balance sheet and no debt, FSD Pharma (OTCMKTS: FSDDF) (CNSX: HUGE) is a prime candidate for one of the biggest buyouts in the sector.

Published

on

An unparalleled opportunity to capitalize on Canada’s marijuana legalization

October 17th is the Deadline for Canadian legalization of marijuana. It has raised many questions, including how large the market for cannabis in Canada will be and whether there will be enough product on store shelves. Estimates are from $4 billion to $10 billion in the first few years of implementation.

FSD Pharma (OTCMKTS: FSDDF) (CNSX: HUGEthrough its wholly-owned subsidiary FV Pharma, is a licensed producer of marijuana under the Access to Cannabis for Medical Purposes Regulations. Headquartered at the 70-acre former Kraft Heinz Co. (NASDAQ: KHC) plant in Cobourg, Ontario, FV Pharma’s mission is to transform the facility into the largest hydroponic indoor cannabis facility in the world.

Additionally, they have intelligently secured strategic, highly liquid investments in 6 companies with Incredible Potential ROI, access to their products, customers, and/or profits. With their incredible balance sheet showing No Debt, $31M in Cash, and $51M in assets, this places them in an ideal situation for a major acquisition from the beverage or tobacco industry. FSD Pharma is also actively pursuing opportunities to uplist to NASDAQ.

FSD Pharma (OTCMKTS: FSDDF) (CNSX: HUGE) might be your last chance to get in early in the Canadian Cannabis Sector boom.

Capturing market share early

Some analysts think the legalization in Canada may pressure the United States to accelerate legalization in some capacity, as states continue to take matters into their own hands by legalizing locally. US-based companies are forced to sit back and watch Canadian companies like FSD Pharma take market share of international export opportunity.

With deals such as Constellation Brands’ recent increased $4 billion stake in Canopy Growth Corp. and reports of Coca-Cola’s interest in CBD, multinational companies are stepping in and all eyeing Canada, with companies projecting a market of nearly $13 billion in the U.S. in 2019.

Given their strategic investments, attractive balance sheet and no debt, this makes FSD Pharma a prime candidate for one of the biggest buyouts in the sector.

One longtime cannabis executive, Chuck Rifici, says that one of his concerns in regard to legalization in Canada is the product, as provinces are implementing the rollout, and it is unclear how much cannabis will be needed to meet demand.

With almost 4 Million square feet of possible expansion, FSD Pharma is poised and ready to capitalize on this huge opportunity.

With almost 4 Million square feet of possible expansion, FSD Pharma is poised and ready to capitalize on this huge opportunity. (Source)

Earlier this week, FSD announced that the Company has received its first delivery of manufacturing equipment at its Cobourg plant from Canntab Therapeutics Limited, a leader in the rapidly growing cannabis pill market. The manufacturing equipment consists of a fully GMP High output Tablet press capable of pressing more than 1,500,000 tablets per day, as well as blending machinery, large-scale process and drying equipment and packaging equipment.

Mr. Jeffrey Renwick, Chief Executive Officer of Canntab, said:  

“With this first delivery of manufacturing equipment at the Cobourg plant, we can begin the process of setting up our manufacturing space in collaboration with FSD Pharma. We expect manufacturing of our suite of novel cannabis oral dose delivery platforms, including gel capsules and tablets to begin in earnest.”

Also, Zeeshan Saeed, EVP, Director, and Co-Founder of FSD Pharma, said:

“We are thrilled that Canntab is moving so quickly to set up its manufacturing facility at our Company. We too are moving quickly to build out our own 220,000 square feet of additional manufacturing capacity in Cobourg in collaboration with Auxly. This is truly an exciting time at FSD Pharma.”

The facility

The Cobourg facility has 40 acres of land ready for development, and expansion capability of nearly 4 Million Square Feet. The building is ready for rapid growth with rail lines that feed directly into the facility, and 26 loading docks. Because they utilize indoor hydroponic production they ensure product consistency 365 days per year, allowing control of product quality, costs of production and cultivation.

Read CNBC’s article about FSD and their facility.

Phased expansion plans at the Cobourg Facility

  • 40 acres of its current 70 acres of land at its Cobourg facility is primed for development
  • In phase 1 of its growth plans with 25,000 square feet dedicated to growing high-quality pharmaceutical-grade cannabis flower at the Cobourg facility.
  • Announced $55 million in funding to expand phase 1 to an additional 220,000 square feet of production. The build-out is expected to be completed by December 2018.
  • Phase 1 – 220,000 square foot build-out: includes a research and development lab focused on advancements in LED lighting, nutrient testing, breeding and genetics research with dedicated space for large-scale extraction capabilities.
  • Phase 2- expansion of up to 820,000 square feet.
  • Expansion capability of up to 3,896,000 square feet.

Cannabis production at the Cobourg Facility

  • First harvest in July 2018 with another harvest planned in August 2018. Monthly harvesting from September 2018. At full capacity, the Cobourg facility will be able to produce 400 million grams of dried cannabis flower per year.
  • Indoor hydroponic production ensures product consistency 365 days per year.
  • Operations under one roof create economies of scale and cost efficiencies, allowing control of product quality and costs of production and cultivation.
  • On-site: electrical substation, natural gas lines, multiple water intakes, and rail lines that feed directly into the facility with 26 loading docks.

Milestones

October 17, 2018. October 17th is the Deadline for Canadian legalization of marijuana. It has raised many questions, including how large the market for cannabis in Canada will be and whether there will be enough product on store shelves. Estimates are from $4 billion to $10 billion in the first few years of implementation. There are implications not only across the country but for its neighbor the U.S., where the drug remains illegal at the federal level. Some analysts think the move may pressure the United States to accelerate legalization in some capacity, as states continue to take matters into their own hands by legalizing locally.

August 31, 2018. FSD Pharma reported its second-quarter 2018 results, indicating that the Company had $31.7 million in cash and equivalents and no debt. FSD Pharma plans to have one of the largest indoor grow facility, in Cobourg, Ontario, with a total grow capacity in excess of three million square feet upon completion. Annual output from the facility is expected to be about 400 million grams, of which 200 million grams would be attributed to FSD Pharma.

September 27, 2018. Ontario government introduces legislation that would open up recreational cannabis retail to the private sector. FV Pharma expressed their intention to target all legal aspects of the cannabis industry, including cultivation, processing, manufacturing, extracts, research and development by operating one of the largest production facilities in North America, with plans to hire 1,500 employees over the next several years.

SEE ALSO  How fintech is making payments easier for businesses

The Company purchased the former Kraft plant in Cobourg in 2016 and expects to utilize the entire 3.8 million square foot facility for the production of various strains of cannabis, including many ancillary products. The company anticipates reaching full production capacity by 2021, with retail being a key element of the company’s growth.

September 13, 2018. FSD Pharma announced a strategic partnership with JJAMACANN Inc. to pursue opportunities in the Jamaican cannabis market. FSD has signed a Letter of Intent (LOI) with JJAMACANN Inc. to form a joint venture operating as FSD Jamaica, effective September 10, 2018.

As part of the LOI, FSD Jamaica will establish an experimental centre for the development of cannabis and cannabinoid genetics suitable to cultivate in Jamaica with the intent to create a genetics and seed bank of innovative cannabis and hemp products for the Jamaican market and the Canadian market. FSD Jamaica will partner with a local player named Nature’s Purest Limited (NPL), a Jamaican corporation with a cultivation license and existing operations in Jamaica. FSD Jamaica plans to commence sales by 2019.

September 18, 2018.  FSD Pharma’s wholly-owned subsidiary, FV Pharma, signed a definitive agreement with Canntab Therapeutics Limited (CSE:PILL). As per the agreement, FV Pharma will assist Canntab in obtaining a license to process and sell cannabis products and will provide Canntab with up to 10,000 square feet of space at its facility in Cobourg, Ontario. At this facility, Canntab will set up its operations and produce a suite of novel cannabis oral dose delivery platforms, such as gel capsules and tablets, and other types of cannabis-based products, such as sleep aids and pain relievers.

According to the terms of the collaboration, Canntab will provide FSD Pharma with 50% of the profits that Canntab receives on any retail sales of Canntab Products through channels that are established by FSD Pharma and FSD Pharma will be entitled to retain 50% of the profits on FSD Pharma’s sales of the Canntab products. In addition, Canntab will pay FSD Pharma a royalty of 3.5% of Canntab’s sale price for all Canntab products that are manufactured and sold from the Canntab premises. 

See FSD covered by CNBC Squawk Box

Canntab may also purchase the oil that it requires for the Canntab products from FSD Pharma. (Source)

Strategic investments and partnerships

Joint venture with Auxly Cannabis Group Inc. (TSX.V:XLY)

  • XLY will 100% finance and construct the buildout of the former Kraft Facility with 55 million approved in Phase 1 development budget.
  • FV Pharma will operate and recover all costs plus 10% and receive 50.1% of all production. The expected allocation will result in 200M Grams of Cannabis per annum for FV Pharma’s Benefit (subject to full-capacity being achieved).
  • Blueprint rendering for first 220,000 sq. ft. now complete and expected to break ground in Q3 2018 with production by Jan 2019.
  • XLY to bring expertise in design, development, financing and operations.

Strategic investment in Cannara Biotech Inc.

  • FV Pharma is a large shareholder of Canarra and will occupy over 105,000 square feet of Cannara’s 625,000 square foot facility, which sits on 27 acres of land and is located within a one hour drive from Montreal.
  • Combined grow space of over 1.245 million square feet of indoor capacity.
  • Cannara is underway in the application process under the ACMPR and plans to be the largest indoor cultivation facility in Quebec.

Strategic investment in High Tide Ventures

  • A fully integrated retail distribution company
  • High Tide has 2 licence applications in the province of Saskatchewan, 8 applications in BC and at least 25 applications were filed in Ontario (Canada’s biggest province)
  • Owns 4 of Canada’s most prominent retail brands: RGR Canada Inc., Smokers Corner (largest chain of cannabis accessory stores in Canada), Canna Cabana, and subject to shareholder approval, will own Famous Brandz).

Strategic alliance with SciCann Therapeutics

  • Canadian-Israeli specialty pharmaceutical company dedicated to the development and commercialization of novel and disruptive pharmaceutical products.
  • Recently launched a comprehensive sponsored research program in Tel Aviv University focused on the cardiovascular disease field with cannabinoid-based treatments for the prevention and treatment of atherosclerosis, the underlying factor for most cases of stroke and cardiac stenosis events in the western world. The global Coronary Artery Disease therapeutics market is projected to surpass $15 billion in 2018.
  • SciCann Therapeutics Inc received positive results of a pre-clinical efficacy study with its proprietary, patent-pending “Steady Stomach” CBD combination product for Inflammatory Bowel Disease (IBD), as observed in a gold standard rodent model for Ulcerative Colitis.
  • FSD Pharma Inc.’s wholly-owned subsidiary, FV Pharma Inc., will invest up to $3M for a 15% equity stake in SciCann.
  • FV Pharma has an exclusive license in Canada for the production and distribution of a line of proprietary cannabinoid-based, patent pending and indication-specific products developed by SciCann.
  • Dr. Zohar Koren, co-founder and CEO is Head of Scientific Advisory Board

Collaboration/Profit-Sharing Agreement with Canntab Therapeutics Ltd.

  • A Canadian cannabis oral dosage formulation company based in Markham Ontario, engaged in the research and development of advanced pharmaceutical grade formulations of cannabinoids.
  • Has developed in-house technology to deliver standardized medical cannabis extract from selective strains in a variety of extended/sustained release pharmaceutical dosages for therapeutic use.
  • The first company solely dedicated to the research and development of oral dosage therapeutic formulations of cannabis.

SEE ALSO  Tips for millennials to buy a home without going broke

This article may include forward-looking statements. These forward-looking statements generally are identified by the words “believe,” “project,” “estimate,” “become,” “plan,” “will,” and similar expressions. These forward-looking statements involve known and unknown risks as well as uncertainties, including those discussed in the following cautionary statements and elsewhere in this article and on this site. Although the Company may believe that its expectations are based on reasonable assumptions, the actual results that the Company may achieve may differ materially from any forward-looking statements, which reflect the opinions of the management of the Company only as of the date hereof. Additionally, please make sure to read these important disclosures.

Michael Jermaine Cards has made a second home in Singapore for the past 15 years. As a business executive and a financial journalist, he has seen first hand the spectacular rise of Asia’s most prosperous country, especially in the IT sector. Today he still gets a front seat at the latest market developments, stock movements, and IT innovations. He keeps close to the Western fintech sphere through his contacts in his native New York. A family man with one son, he does business consulting in parallel to his writing.

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Most Popular