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Adastra Labs Holdings Ltd. (
CSE.XTRX,
OTC: XTXXF,
Forum) is a leading manufacturer and supplier of innovative ethno-botanical and cannabis science products designed for the adult-use and medical markets and forward-looking therapeutic applications. This unique company is focused on cannabis extraction and associated analytical testing. Their mission is to develop and deploy large-scale cannabis and hemp extraction technologies and provide turnkey processing solutions to help licensed standard and micro-cultivators maximize the value of every harvest.
Stockhouse Media’s Dave Jackson caught up with company CEO Michael Forbes to get investors and shareholders up-to-date with all things Adastra.
TRANSCRIPT BELOW:
SH: To start off with, Michael, can you tell us a little bit about yourself and the history of the company?
MF: Sure. I've been in cannabis for now oh, going back to 2013 was when I first applied for an LP in Sooke, BC and I started out as a pharmacist. I went to UBC and got a specialty in drug manufacturing and formulations. I've done a lot of updates in my licensing. I've run five labs in my pharmacies over the last 18 years, 20 years now. I'm very good at making drugs for the public in a legal fashion. I'm also a cannabis retailer and now I'm in the cannabis extraction area. So I know the legal framework very well and I'm in the business myself and so making drugs is my specialty and I'm very passionate about plant medicine and getting that out to the public in a safe and effective way.
SH: Can you update our investor audience and your Adastra shareholders on any new company developments, especially in the wake of COVID-19?
MF: Yeah. So I've been with the Adastra now for six months and in that time we've reduced overhead by over a hundred thousand a month, restructured the company. We've got a lot of a forward momentum going where we're at. We are cashflow positive. Adastra owns the building and the land as well. So the actual business is debt-free. We do have a small mortgage on the land which is very valuable and we are trajecting towards a 5 million a month in sales by next year. So doing that, we're adding new revenue streams, including psychedelics, applied for dealers license. We've had lots of updates with health Canada.
Our facility is state-of-the-art top-notch, it's built for GMP. So I'm very confident that we will get that dealer's license in time and we're adding flour and more skews to our line. So we have some amazing partners that we've worked with to sourcing biomass. We've recently got even better rates with them, so we're going to be entering the market with flour and other extraction products shortly they're underway right now and we will be basically shoehorning or leveraging our 1500 plus retailers across the nation with the Phyto extractions acquisition. So Phyto extractions is already at a household name. So by adding other products to that household name will catapult our sales to very exciting levels.
SH: You’ve just provided a product growth update and announced insider open-market stock purchases. Can you expand on this initiative for our investor audience?
MF: Yeah, so our stock is very tightly held. So the investors that do own the stock they have a very tight grip on it and I've been trying to get the word out there about what kind of a buy this market or this stock is. I've actually been buying it myself along with my colleague COO Donald and so we're very bullish on this. So we've actually been buying it on the, on the open market. I think it's very a discounted price. I think a lot of cannabis is at a pretty low right now and I think when you look at how some of these companies are kind of crawling out of the swamp with some tremendous numbers and cash flow and it's going to be an exciting couple of years ahead, especially when the US legalizes.
SH: The company recently announced a supply & purchase agreement with Sitka Weed Works. This may be news to many investors. Can you unpack the benefits of it?
MF: Yeah, the market is shifting to more towards a more craft high terpene quality flour and so it has more of a full spectrum higher THC, hand grown. I wear multiple hats and so I have the benefit of seeing where the market's pivoting. So at Sitka, we sell out in minutes when we list our products and the provincial wholesalers call us call and ask for more and more of this product. So I'm acutely aware of what sells and doesn't sell on the market and I've been positioning, obviously it's a favorable deal for Adastra to have a premium flour supply to create new skews and use that brilliant facility and foothold in that many retailers across the country to give the consumers what they want. So it made a lot of sense buying or at least working with Sitka on their products to extract and make new products for the market.
SH: You’ve also reported the expansion of the aforementioned Phyto Extractions product line distribution into the Yukon. What’s this all about?
MF: Yeah. I want to leave no stone unturned and be in every retailer across the country And so we've been actively pursuing all territories and provinces and getting that Phyto name out there that is a household name to every corner of the nation is the goal. So it's exciting. It opens it up to a new market there and new sales and we've had record months, like every month is a new record in sales. So it's very exciting and it's through that expansion into Ontario and Yukon and the Eastern provinces. It's pretty exciting to see.
SH: Adastra has also recently entered into the market with the creation of THC-free 99-percent-pure CBD isolate. Can you walk us through this?
MF: Yeah, I believe that there is a well-known hole in the regulatory framework between having recreational cannabis and medical cannabis. As a pharmacist myself, I get a lot of questions at the pharmacy counter about does the CBD interact with my medications and those patients still go into see my bud tenders and the bud tenders in the recreational certs are not allowed to answer any medical questions whatsoever. So the patient is left to devise their research typically from Google or through the specialized medical clinics. So Adastra recently acquired perceived MD, which I was a founder of and I believe that early in 2023, my sources show that there will be the pharmacy boards will be opening up selling CBD and related products in pharmacies.
To me that is a massive market and so I am preparing Adastra to be able to make those products in house and to prepare for that regulatory change. I think it will be massive and so back to your question, the THC, you need to have doctors do not like prescribing anything that's psychoactive, it can potentiate schizophrenia and other mental health issues. So THCA gives you the benefit of the pain relief and effects but also protect the patient from having any type of high from the THCA. So from the THC. So we need to be able to have a good THCA solution for our medical patients, and that's what we've done. So we are actively preparing for that regulatory change.
SH: The Company looks set for strong growth into 2022…in fact you announced record sales in August 2021. How are you placed to expand operations to meet this demand?
MF: That's the beauty of it? So all the capital outlay has been done. We have an amazing facility, it's 13,000 square feet of GMP designed facility. It's all the machinery is top of the line. We have a third sister company that is wholly owned by the Adastra. It's called Chemia analytical lab. So all that infrastructure is there to be able to make more and more drugs for added revenue streams, including psychedelics. So I feel that we're, you know, that's a $20 million facility ahead of the game, so we don't have to spend any more money to get these added revenue streams going.
SH: For company shareholders and potential investors, what kind of future development and progress can we expect at the Langley BC operation?
MF: With these records sales, we just need to keep bolting on more staff and more shifts. So we've expanded to double shifts and then we're open up on weekends and now we're even looking at having to do a 24 hour shift. It's that exciting there. I think last month we shipped out of the facility over 61,000 products. So it's just where it's just pallets and pallets of products is coming out of there. So it's exciting to see it and we have the footprint to be able to fill into this. So it was built with the intent that we would be growing into it as the market allowed.
SH: What separates Adastra from the competition and makes your business model so unique?
MF: I cut my teeth on running private businesses. So I'm always the last guy to eat and so I'm a bootstrap cheap and cheerful type operator. I don't like to have a lot of ways to access that as you can see a shaved off a hundred thousand a month in expenses and so we are cashflow positive and we're lean and mean and our advantage is that we don't have excess waste and we are going to be funneling that profit back to our investors. So the stock price now I think is very low considering where we're going to be. So that's our advantage, that we don't have to go to the market to get more cash. We don't have any downward sales pressures, the investors that are holders diamond hands and we are adding more and more revenue streams with an amazing footprint to Slingshot us to a very exciting stock rates.
SH: I have to mention your stock has had a very nice bump since mid-July months…nearly doubling in value since then. What can you tell our investor audience regarding the current valuation of your stock and why you think it’s still a good buy right now?
MF: So if you were to look at some of our competitors out there with similar structure and cashflow and sales, I see we're extremely undervalued. I can't wait to get this next quarter out because of every month being better and better and better and so when investors see how much profitability we have, the stock will go up big time.
SH: What’s the long-term strategy for the company moving forward and what should retail and institutional investors be looking out for?
MF: Yeah. So we are only marketing right now and only listed in smaller markets, Canada and part of Germany. So we've been very quiet, focused on building the infrastructure, building the business model, focused on the brands, focus on building the company And now we're just entering, starting to tell the world, Hey, we're here And we mean business and we're here to grow and provide excellent value for investors.
SH: Can you tell our audience a little bit about your corporate management and board teams, along with the experience and innovative ideas they bring to the cannabis space?
MF: Yeah, so I believe that by definition of the company is it's more than one person. So the people in the company is what makes the company. So I have a very pump your tires type view, where I want to empower people to do their best and have an enjoyable work atmosphere where people know what what's expected of them at work and people know when they've done a good job and have incentives to do better. I've employed hundreds of people and I still do and I love the people in the companies and that are helping. I worked for them where I want to make their life better and them have a better day. So if you have happy employees, you have a happy company and you're going to be doing a lot better things for everyone year round. So that's my philosophy and it seems to work really well.
SH: And finally, Michael, if there’s anything I’ve overlooked please feel free to elaborate.
MF: I think we got ‘er Dave.
For regular updates, visit
adastralabs.ca
FULL DISCLOSURE: This is a paid article produced by Stockhouse Publishing.