Dual-Market U.S. Cannabis Strategy

U.S.-based GSRX Industries Inc. (OTCQB: GSRX, Forum) is a vertically-integrated cannabis company pursuing a unique growth strategy. The Company’s base of operations is in Puerto Rico, currently an under-serviced market and one of the first Caribbean jurisdictions to legalize the medicinal use of cannabis.

With four Puerto Rico cannabis dispensaries already in operation and seven others at various levels of development, GSRX has established an early-mover advantage in this market – as Puerto Rico also moves to legalize adult-use cannabis. Management believes full legalization could come as early as April 2019.

Along with the island’s population of 3.6 million residents, Puerto Rico is also a tourist hub, recording roughly 10 million visits in 2016.

Then there is California. Next to Canada, California is one of the largest cannabis markets in the world today. GSRX has already established operations in this market, including one operational dispensary, a manufacturing and processing facility nearing completion, and a line of cannabis products, including the Company’s innovative and proprietary product DragonGlass ™.

The business plan going forward is to use cash flow from GSRX’s Puerto Rico cannabis operations to leverage expansion in the key California market and elsewhere. Stockhouse recently asked the Company’s CEO, Les Ball, to provide more information on the Puerto Rico cannabis market, as well as the Company’s California operations, and its future plans.

1. Please introduce GSRX Industries Inc. to newer investors.

GSRX Industries Inc. acquires, develops and operates retail cannabis dispensaries, and recently expanded its business to include extraction and the manufacture and distribution of cannabis and cannabinoid products. Most recently, the Company announced plans to enter the Hemp-derived CBD product market with a planned chain of Company-branded retail stores offering premium quality all-natural health and wellness products.

2. How and why did the Company identify Puerto Rico as its initial focal point for operations.

When the legalization of medicinal cannabis was announced to take effect in Puerto Rico on January 1, 2017, the Company seized the opportunity to be an early mover into the medicinal cannabis retail business there.

3. GSRX is now also active in developing cannabis operations in the key California cannabis market. What led you to the decision to enter this market?

Based on our initial success in Puerto Rico and the strong management team we had assembled, we knew we could expand our retail operations. With California legalizing adult recreational use at the beginning of this year and that market prediction that it would be one of the largest legal cannabis markets in the world, we set our sights on participating there. Earlier this year, we purchased our first dispensary located in Mendocino County. It is doing very well, and we are looking to expand our retail operations in California with additional dispensaries.

4. Let’s focus on Puerto Rico. This is an emerging cannabis market. What is the size of the current economic opportunity in this market?

While it is still too early to speculate on the overall market size there, we believe it to be tremendous, which is why we became an early presence. Puerto Rico’s medicinal cannabis business is already strong on its own, and the island’s reciprocating agreement with medical marijuana cardholders from other states means that visitors can easily purchase cannabis while there. An estimated 10 million tourists visited the island in 2016, and the 2018/2019 cruise season is expected to witness a record-breaking 1.7 million passengers.

5. There has been speculation that Puerto Rico may follow states like California and Colorado to legalize adult use cannabis. How would such a move affect your business there?

Nothing is certain until it is certain, of course, but given how successful the legalization of medicinal cannabis has been for the island’s economy, it seems very likely that the territory could follow in the footsteps of states like California and legalize adult use sooner rather thanlater. Should that be the case, GSRX will be in a prime position to lead the market there, with four established dispensaries and more opening in early 2019.

6. How are your operations structured in Puerto Rico, and what are your near-term plans here?

The Company currently operates four state-of-the-art dispensaries there. We have seven additional locations in various stages of development and expect to have a total of 8-10 dispensaries open by early 2019. We have strategic locations in the island’s busiest and most populated areas, and those we already have open are doing great business. In addition, we have received pre-qualification and preliminary approval for Manufacturing and Transportation licenses in Puerto Rico, allowing us to both build a cannabinoid-based production business as well as transport/deliver cannabis between authorized dispensaries and patients’ homes there. We are in the early stages of developing our manufacturing operations there, and anticipate it to be a tremendous contributor to our business there.

7. Now let’s talk about California. Please outline your current operations in this gigantic cannabis market.

California appears to be the holy grail for this industry, with sales vaulting from $444 million in medical in 2013, to a project total of $6.6 billion for combined medical and adult use for 2018. We view this as “America at the end of prohibition” – the sky’s the limit. In addition to our retail dispensary business in California, GSRX is the majority owner of Spirulinex, an extraction and manufacturing company based in San Francisco’s “Green Zone.” Spirulinex formulates products with proven benefits using its proprietary, all-natural, highly concentrated and activated encapsulation and suspension methodology. Using their patents-pending water-soluble process, Spirulinex is able to manufacture products that are all-natural, gluten free, vegan, alcohol free, fat free, and sugar free, without using synthetic lipids. The company is headed by Dr. Sara Rodriguez, a leading researcher whose experience in strain development and metabolic engineering for terpene production led to her development of Spirulinex’s unique production process.

8. Please tell investors about Dragon Glass.

Dragonglass™ is a sublingual/edible flake made using superfood, and is based on a proprietary, patent-pending method of producing edibles that are free of sugar, fat, alcohol, and synthetics. GSRX believes that Dragonglass is a unique product in a market flooded with sugar-based and high-calorie products, and demand for the product has remained high since its introduction in 2017. Dragonglass is manufactured by Spirulinex, LLC, a majority-owned subsidiary of GSRX.

9. Where do you see the best current opportunities for expansion in the California cannabis market?

In addition to manufacturing through Spirulinex, we are well-funded to acquire additional retail dispensaries to build our operations there. Where existing dispensaries are concerned, we feel that our professional, retail business-focused management allows us to acquire an existing business, such as the dispensary we acquired in Point Arena, and fine-tune the operation, and in turn increase sales through successful marketing, delivery services, etc.

10. Hemp is also big news these days in the cannabis industry – especially in the United States. Please expand on the Company’s new initiative in the rapidly rising hemp-CBD market?

Hemp-derived CBD is a growth market we have identified and are aggressively pursuing.

We recently announced that we are entering the Hemp-derived CBD retail business with a chain of GSRX-branded retail stores, Pure and Natural, offering premium quality all-natural health and wellness Hemp-derived CBD products. The Company has secured locations for its first Pure and Natural retail stores located in the Austin, Texas area, and in Plano, just outside Dallas. We hope to have doors open in early 2019.

According to Hemp Business Journal, 2017 sales for the U.S. hemp industry were $820 million overall, with sales of hemp-derived CBD products contributing $190 million to that total (Hemp Business Journal). In a study released earlier this month by MJBizDaily (MJBiz Daily Report), U.S. Hemp-driven CBD retail sales are projected to exceed $3 billion by 2022.

Pure and Natural stores will offer a broad selection of proprietary all-natural branded Pure and Natural products in major categories, including: oils; gummies; candies; edibles; sub-linguals; baked goods; topicals; pet care products; hair care; skin care; coffee and tea; vape products; bath and beauty products, and more.

11. What is management’s long-term vision for GSRX?

Having doubled revenues from the second to third quarter of this year, we believe we are on track to continue this trend and see rapidly growing revenues in fourth quarter, and are working to also increase our margins across all operations as well. Many companies in the cannabis sector have yet to post revenues, but we were clear from the start that we would hit the ground running with our medicinal dispensaries in Puerto Rico. We did that, and have created a solid revenue stream that allows us to grow the business with additional dispensaries, as well as manufacturing and CBD retail opportunities. We are well-funded, which allows us to take advantage of opportunities such as our acquisition of Spirulinex earlier this year.

With several more dispensaries set to open in Puerto Rico soon, as well as manufacturing operations at Spirulinex ramping up, we see continued growth in both our operations and financials. We are extremely bullish on the business, and we continue to commit tremendous resources to expanding our footprint within the industry. We see the widespread legalization of cannabis as being akin to the alcohol business at the end of prohibition. The sky’s the limit, and we are well-positioned to participate in a big way.

www.greenspiritrx.com