| Vertical Aeroponic Cannabis Cultivation Facility On September 3, 2019, SugarBud received cultivation, processing and medical sales licenses from Health Canada in respect to "Phase 1A" of the Company's fully constructed, state-of-the-art 29,800 square-foot vertical cannabis cultivation facility in Stavely, Alberta. The licensed "Phase 1A" area of the Stavely facility includes two dedicated flower rooms and all the necessary auxiliary rooms to support an estimated annual cultivation design capacity of approximately 3,300,000 - 3,890,000 grams per year at full scale production. SugarBud will immediately commence cultivation and expects to complete its initial two harvests in December 2019, after which SugarBud intends to submit an application to Health Canada to amend the Licenses to permit cultivation in the remaining six flower rooms in Phase 1 of the facility. Phase 1 of the Facility is comprised of 29,800 total square feet of floorplate, including eight approx. 2,150 square foot cannabis flowering rooms totaling approx. 17,800 square feet of floorplate. The ceilings of the flowering rooms are 28' tall, allowing for up to four layers of flowering canopy in each grow room. SugarBud estimates that under a full development scenario with four layers of flowering canopy, Phase 1 of the Facility will have approx. 24,576 square feet of flowering canopy. At a metric of 85-100 grams per plant per crop, and 4.75 crops per year, this equates to up to an estimated approx. 9,924 - 11,673 kgs per year of dried cannabis flower production per year. SugarBud's vertical grow method with four layers of flowering canopy is anticipated to result in a 184PER CENT flowering canopy to flowering floor plate ratio. This high utilization of square footage maximizes revenue per square foot of floor plate and minimizes capital costs per square foot of flowering canopy. Timing of Phase 2 expansion will be determined based on factors such as prevailing market conditions an availability of capital to fund the project. However, at full scale the facility is expected to occupy approximately 98,000 square-feet of floor space encompassing core production activities such as cultivation, extraction, processing, genetic breeding, research and development, product development, packaging and distribution. Upon completion of Phase 2, SugarBud estimates that the Stavely facility will have a total cultivation design capacity of approximately 33,075,000 - 38,912,000 grams of premium cannabis annually. In order to maximize control of the growing environment within the flowering rooms, and ultimately enhance Cannabinoids, trichome production, terpene profiles and yield, the Company will utilize an aeroponics growing system. It is anticipated that the aeroponics system will also reduce water usage, increase nutrient uptake, accelerate the vegetation and flowering cycles and optimize the number of crops harvested per year. The Phase 1 grow flowering rooms will each have their own sealed atmosphere. These characteristics will allow the Company to precisely control temperature and humidity, and reduce the potential for large scale pest and pathogen infestations. | Vertically Integrated Retail Distribution Strategy | | SugarBud's retail strategy is focused on the identification, development and operation of premier retail cannabis locations in Canada. SugarBud believes that the vertical integration of its retail operations will allow it to maintain margins and the highest level of control over SugarBud's brand equity and strategy. SugarBud expects to execute its Retail Strategy by: - Developing a compelling brand which clearly conveys SugarBud's values;
- Accessing SugarBud's hand-crafted, select-batch, ultra-premium products (upon the receipt of SugarBud's cultivation and sales licenses);
- Using its extensive knowledge of the Alberta controlled substances retail market and network of beverage manufacturing and distribution contacts;
- Taking a data-driven approach to decisions related to consumer purchasing habits;
- Leveraging existing relationships with landlords, municipalities and regulators; and
- Applying SugarBud's significant retail operational expertise including store sizing, site development, inventory management, staffing, training and branding.
SugarBud's initial Retail Strategy is to identify and secure ten retail cannabis locations over the next 12 months through a combination of grass-roots growth and the acquisition of existing locations and development permits. | |