There is significant wealth to capitalize on in Canada’s cannabis market as it matures. Retail sales are estimated to reach
$6 billion by 2021 in Canada with 3.8 million consumers projected by then.
In the race to secure a piece of this uncharted territory, sometimes a “wait and see approach” can benefit a company more than being a first-mover.
One of the newest listings on the Canadian Securities Exchange is
City View Green Holdings Inc. (CSE:CVGR, Forum), a vertically integrated cannabis Company focused on seed to retail. To this end, City View Green is developing its branding, establishing key partnerships, securing key hires and finalizing the buildout of its 40,000 sq. ft. growing and processing facility in Brantford, Ontario. The property is located on 4.3 acres with room for an additional 125,000 square foot building offering a significant increase in cultivation and extraction space.
In anticipation of its approval from Health Canada, CVGR is finalizing its 6,500 sq. ft. growing space within this facility and outfitting its 5,000 sq. ft. extraction room. The Company has shifted its Health Canada application from exclusively cultivation to include extraction. Once it fully achieves its LP status, it would also have the ability to develop artisanal cannabis products through its various partnerships. It is also working toward a European Union Good Manufacturing Practice certification, which would allow pharmaceutical-grade products to come out of its pipeline.
Building relationships with other companies, CVGR recently completed its
exchange of shares with Ontario-based retailer
Budd Hutt Inc., totaling 19.9% of the value of both operations. Budd Hutt has the exclusive rights to acquire a retailer that has applied to operate cannabis stores in Alberta. More on this partnership later.
In an interview with Stockhouse, Company CEO Rob Fia took things back to its roots. When operators were in the process of initiating their cannabis businesses, he predicted that building a state-of-the art cannabis company from the ground up offered a better value proposition. He, along with the early team, began visiting potential facilities to see what they had to offer. Watching the cannabis wave happen, he assessed the early mistakes of other companies. Entering the market at this stage gives the Company the advantage to learn from those mistakes and model itself after more successful companies. Management believes its team will distinguish CVGR along with its global contact base and associated business opportunities.
Having spent more than 15 years as an investment banker, Mr. Fia knew how to take a methodical approach. The Company had a few early offers from other groups, which he saw as overpriced assets brought to the table, a lot of hype in the market’s early days. Back then, operators were focused on how much square footage and how many kilograms of flower they can grow in a year … but now to be truly successful in capturing investor attention, a company must be vertically integrated. This was where the question was posed, would they buy expensive assets, or try to create this endeavor on their own? The latter option presented the greatest potential and from there, City View Green Holdings was born.
City View Green Holdings’ four pillars:
- Growing
- Extraction
- Production
- Retail
The initial team was made up of accomplished professionals from the financial sector, with expertise and consultants from other areas brought in to flesh it out and give focus. The Brantford facility was chosen because it was an ideal shell with ample room to grow, be it for cannabis growing or extraction. The team was refined with a Master Grower, extraction expert, and currently interviewing for a top CEO. Together, they review assets that could create the most value for investors and began putting the Company together piece by piece.
Growing
City View Green’s Master Grower, Mario Meek, came to the Company from a publicly traded TSX Venture operator and helped found major medical licensed producer
Weed MD. As a premier grower, he brings a lot of THC and hemp strains as well as genetics that City View Green can use once it acquires its cannabis license. Another advantage that comes with his experience is his insight into the best technology; be it lighting, HVAC, vertical grow systems, etc. The Company is already seeing this in terms of its buildout, and it brings a lot of added value in terms of the design of its facility.
Extraction
To advance its extraction capabilities, City View Green recently announced that it will purchase the best method of selectively, and cost-effectively, extracting pure cannabis extracts containing THC, CBD and terpenes from the cannabis plant -
Supercritical Fluid Extraction Equipment. Through this distinct equipment, the Company expects high concentrates. Management spent a lot of time and effort reviewing eight high-grade machines from all over the world. They found this advanced system in Europe, which, as CEO Fia explained, operates as simply as pressing a button and it does the rest. From extracting oils to retrieving desired compounds as well as producing CBD and THC in separate cylinders with the added ability to produce terpenes. It is one of the highest quality systems in its field, especially in terms of output, ranging from 9,000 – 11,000 grams per day of oil production. Factoring in its facility buildout, there is room to add another machine with even more room left to expand.
City View Green is advancing into the extraction game in a big way, already working on a potential deal through U.S. partners.
Production
The Company is interviewing seasoned management talent from the alcohol beverage industry who have experience growing small vertically-integrated businesses within large corporations into multimillion-dollar operations.
The connection here is that once edible products are legal in Canada, City View Green will have a jump start on the market with the right formulation. There is a lot of growth in the infused beverage space. With the team and tech in place, the Company sees a lot of success with this and is connecting with a formulator to make this happen and is bolstered by its extraction expert Mike Hagopian. Hailing from the Seattle, WA cannabis market, he was COO at
Dose Oil, a licensed processor of cannabis extracts and was instrumental in helping that company grow. Their flower product was the big driver at first, then when Washington State turned into a major edibles market, Dose Oil followed the trend.
Also forthcoming is its line of white label and branded products, specifically those containing cannabidiol (CBD), a cannabinoid extracted from marijuana as well as hemp.
Retail
The final piece to City View Green’s strategy is retail. Budd Hutt is seeking retail cannabis licenses in Alberta, finalizing the Company’s seed-to-retail operation with a synergistic relationship at the consumer end. It gives City View an important channel for its products as Budd Hutt actively seeks retail opportunities provincially and nationally. The retailer recently
appointed Craig Belcher as CEO, which was a choice move as he brings significant regulatory experience in both the alcohol beverage and tobacco industries. With a strong foundation in sales and marketing, coupled with extensive experience across brand and retail environments. The key now is to execute and close opportunities to open up stores, starting in Alberta and looking for opportunities across Canada.
Looking ahead
CVG is working to grow its business by engaging operators in the Caribbean for a possible cultivation and CBD extraction deal, as well as the possibility of working with a group of pharmacies in Germany for an off-take agreement for CBD oils and extracts. A company in China has also expressed interest in its proprietary extraction technology.
The Company has also been approached by aboriginal groups interested in pursuing hemp opportunities. CEO Fia stated that the potential plan here would be to sign a deal and brand a product to export overseas. One group, based in British Columbia has an ideal area for growing with a great climate, excellent soil and the land has never been touched by pesticides, which is also a good branding angle.
With the Health Canada application pending, City View Green intends to have its facility built out within the next three months and get ready for inspection. This includes two operations: initial cultivation and extraction rooms with ample space to expand.
There is also a near-term plan to hire a new, permanent CEO who has consumer packaged goods experience to trade places with CEO Fia. CVGR management has short-listed experienced candidates who are veterans in the CPG field. The focus is to attract talent with best-in-class experience in the beverage market and proven track records of running profitable businesses in the beverage space, as well as a solid understanding of regulated markets and how to navigate government bodies. Even though there is still competition for executives transitioning from alcohol and beverage into the cannabis market, the Company’s leadership is assured it can attract top talent.
Opportunities are plentiful in the cannabis market for companies that know how to make the most of them. For City View Green Holdings Inc., much of this opportunity lies in exports.
With its cutting-edge extraction machine and interested groups approaching the Company for its services at home and abroad, it intends to lock-down these opportunities within the next six months. Investors will want to do their due diligence on this Company and keep an eye on it as it looks to grow its extraction strategy across various jurisdictions. Further news is expected to come at a rapid pace as it looks for in-licensing opportunities with top brands in the United States that can be brought into Canada and exported overseas, representing a great future for City View Green Holdings.
cityviewgreen.ca
FULL DISCLOSURE: This is a paid article produced by Stockhouse Publishing.