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Alliance Growers Corp. (CSE:ACG; FWB:1LA) is building a global vertically-integrated cannabis company set to become a leader in cannabis botanical R&D as well as high quality CBD oil. Alliance plans to develop a “one-stop shop” for cannabis growers—the first of its kind in Canada— to register cannabis strain DNA, produce disease-free and genetically-perfect plantlets through tissue culture propagation, and store those plantlets for later use.
As Health Canada begins to tighten regulations on an expanding cannabis market in terms of product consistency and potency, the ability to produce thousands of disease-free and genetically-perfect plant lines for any strain will become a necessity for Canada’s cannabis growers.
Alliance’s Four Pillars for Building Shareholder Value
Alliance’s strategy for achieving global leadership in the cannabis space is supported by its “Four Pillar” business model which includes Marijuana for Medical Purposes Regulations (MMPR) licensed facilities, strong distribution networks, high-quality consumer products and industry-leading R&D.
First Botany Centre now under development
Alliance Growers has finalized an exclusive licensing agreement and a consulting services agreement with Botanical Research in Motion (B.R.I.M.) which will allow for the joint development and operation of multiple Botany Centres in Canada. The agreement includes B.R.I.M.’s proprietary Chibafreen Invitro Plant Production System, which assures consistent composition and purity for each plantlet, and proprietary Cryotissue Cold Storage technology.
Plans for construction of the first centre are now underway and include staged development of a 40,000-square foot facility to be located near Vancouver, British Columbia. The facility will be the first of its kind in western Canada to include a DNA botany lab, extraction facility and tissue culture plantlet production facility. The Botany Centre will have the ability to not only service the cannabis market, but other plant-based agricultural markets as well.
Alliance Grower’s Cannabis Botany Centre will offer customers
- Botanical DNA services for certifying plant tissue at the genetic level
- Unique cryotissue cold storage technology and facilities for long-term tissue culture preservation and regeneration; and
- Extraction services and custom profile creation for CBD oils for resale in various global retail markets.
B.R.I.M. projects annual production from the initial botany centre to reach more than 3 million cannabis plantlets with a potential margin of $4 per plantlet. The company forecasts revenue for the extraction, processing and resale of CBD oil in Canada, the U.S. and offshore markets could potentially reach several million dollars per year.
Tapping CBD Oil market for further revenue generation
The company believes the medical-grade CBD oil market offers much greater long-term stability and wider global market opportunities than the emerging recreational markets. Medical marijuana legalization is on the rise across the world, while recreational legalization remains a non-starter for a majority of countries. Even in countries with newly established legislation expected to open up recreational markets in a big way, there remains inherent political risk that those laws may be repealed or struck down under a more conservative government. The CBD oil process, on the other hand, significantly eliminates the level of THC, the component responsible for the drug’s psychoactive effects.
The growing market for CBD oil is fueled by medical marijuana patients’ preferences for smoke-free cannabis products and high-quality medicine designed for treating specific conditions without any of the mind-altering side effects.
The CBD market is expanding at a rate of 30 percent per year, according to the Hemp Business Journal, and is forecast to each $2.1 billion by 2020. Sales of CBD oils are expected to account for nearly 80 percent of that figure or $1.65 billion. Alliance Growers will initially target the U.S. market where 28 states plus the District of Columbia have legalized medical marijuana and 15 other states currently allow for the sale of CBD products.
Alliance Growers is also in discussions concerning a joint partnership to develop pharmaceutical-grade CBD oil with an Israeli medical cannabis company whose team has extensive expertise cultivating high-quality cannabis in greenhouse operations as well as medical cannabis based clinical research. In contrast with current commercial extraction methods, the Israeli company’s innovative extraction technology removes impurities allowing for the production of the highest quality CBD oil.
The potential partnership would include development of a legally-permitted 50-hectare cannabis grow operation in an offshore, low operating cost jurisdiction. The deal would help to differentiate Alliance Growers from its peers in the Canadian cannabis market who are directly impacted by Health Canada regulations, allowing the company to produce and sell CBD oil from outside Canada.
First strategic partnership with licensed producer
Alliance is building its strategic partnerships and distribution networks by securing long-term plantlet supply contracts and flower off-take agreements for CBD oil extractions.
“As part of Alliances business model, we have begun negotiating with growers at various stages in the license process to purchase interests in their operations in exchange for long term supply plantlet supply contracts and offtake agreements, even before the Centre is built,” said Dennis Petke, Alliance Growers President and CEO. “This guarantees immediate sales which will continue well into the future.”
In December 2016, the company announced it had entered into negotiations to acquire a 10-percent non-dilutive interest in a private Ontario-based cannabis company led by a highly experienced team of growers. “We are pleased to initiate the first of several strategic investments in licensed producers who are at various stages in the licensed producer application process,” said Petke. The agreement will include supplying plantlets to the private grower from Alliance’s Cannabis Botany Centre, in addition to acquiring high quality flower for CBD oil extraction. The partnership is a step toward the development of future botany centres in eastern Canada under the company’s exclusive license of B.R.I.M. technologies.
Strategic investment with Canna Companion
Alliance Growers has made a strategic investment in Canna Companion through its parent company, Pharmagreen, in return for an exclusive long-term CBD oil supply contract. Pharmagreen is a private company which owns the worldwide rights to a proprietary cannabis-based supplement formulation for animals licensed to Canna Companion, a Washington-state based subsidiary that produces and sells whole-plant hemp pet supplements.
The veterinarian-approved formulation comes out of more than 15 years of R&D by two Doctors of Veterinary Medicine who also hold management positions in Pharmagreen. Sales of Canna’s pet products officially launch in February 2016 and by December 31, 2016 net sals had reached approximately US$941,500. In 2017, Canna plans to expands to the Canadian market.
Pharmagreen is in the process of applying for a listing on the OTCBB-QB and plans to complete this process this year as well.
“The opportunity for Alliance Growers to make this strategic investment in Canna provides two great benefits,” said Petke. “First is the investment opportunity. Canna has already shown tremendous success in the lucrative cannabis pet product market and is poised for spectacular growth. The second is the Agreement giving Alliance Growers the exclusive CBD oil supply contract from Canna in Canada.”
- Three strategic partnerships finalized or underway to execute “Four Pillars” business model and build shareholder value:
- R.I.M. partnership secured to develop Botany Centres across Canada
- Finalizing agreement with Ontario-based Licensed Cannabis Producer
- Finalizing joint-venture partnership with Israeli Medical Cannabis Company
- First Cannabis Botany Centre under development near Vancouver, B.C.
- DNA certification for plant tissue
- tissue culture propagation
- cold storage technology
- CBD oil extraction
- Focused on becoming the leader in highest quality, lowest impurity CBD Oil
- CBD oil market expected to reach $1.65 billion by 2020
Dennis Petke, CA – CEO, President and Director
Dennis Petke has accumulated extensive experience in the area of corporate finance, including negotiating and implementing private and public company mergers, as well as facilitating private placement, preference share, convertible debenture, special warrant and debt financings. He is a qualified Chartered Accountant in Canada, and is a member of the Institute of Chartered Accountants of British Columbia (1995). Pekie currently serves as a director and/or senior officer for private and public companies, his responsibilities include strategic and overall corporate management for these companies.
Harvey Lawson – CFO
Harvey Lawson has had many years of experience in the management of public companies. He served as CFO of Trade Winds Ventures from 2001 to 2011 until the company was purchased by Detour Gold Corp. in 2011. Prior to this, Harvey taught Financial Management at the National University of Singapore, Hong Kong Polytechnic and the BC Institute of Technology. Lawson is an active member of several Angel Investor groups in Vancouver and the Pacific North West where he offers his expertise in reviewing the financials of companies presenting to the Angels, as well as in the Due Diligence process of companies under consideration for investment. He also mentors many young entrepreneurs in the Technology sector.
Rupert Shore – Director
Rupert Shore has been a barrister and solicitor in good standing with the Law Society of British Columbia since November 1989. For the past 26 years, he has practiced in both large and small legal firms and has appeared as counsel in all levels of Court in the Province of British Columbia. Since 2004, Mr. Shore has practiced law as a sole practitioner primarily in the area of commercial litigation. During his time at Campney & Murphy, Shore’s practice focused on commercial litigation including strata property issues and he was defence counsel in a landmark decision of the Supreme Court of British Columbia in favour of his client which established law in the area of shareholders’ remedies.
Sina Pirooz – Director
Sina Pirooz is a registered and practicing pharmacist and a professional member of the College of Pharmacists of British Columbia since 2002, with over ten years of pharmaceuticals and pharmacy management experience. As President of SP RX Services, an established pharmacy consulting company, he provides consulting, pharmacist and pharmacy management services to many of Canada’s largest and established drug store chains, pharmacy chains and independent pharmacies and drug stores, including Shoppers Drug Mart, Rexall Drugs, Pharmasave and Guardian Pharmacies. He is also actively engaged in the sales, marketing and export of pharmaceuticals and OTC drugs and health supplements to the Middle East. As owner of a compounding pharmacy in Vancouver, Pirooz has been compounding and dispensing pharmaceuticals for over ten years. He will be assisting Alliance with certain product development with his expertise in compounding, sales, marketing and export of pharmaceuticals.
Ian Lambert – Strategic Advisor
Ian Lambert has had broad exposure to a wide range of business activities includes oil & gas development, marketing, manufacturing, mobile technology, data processing operations and software development, as well as precious metals and mineral exploration and development. His strengths are in corporate management, structuring and strategic planning, regulatory compliance with both the SEC and Canadian regulatory authorities, public financing arrangements and investor and institutional marketing activities. As CEO and a director of Trade Winds Venture Inc., a TSX Venture Top 50 company developing a 4.65 million ounce gold project in Ontario, for twenty one years, Lambert successfully completed the sale of Trade Winds Ventures to Detour Gold Corporation, valued at $84 million. He is currently a director and/or officer and advisor to several Canadian public and private companies.
Charles Rendina – Regulatory and Financial Advisor
Charles Rendina is an international business lawyer, licensed to practice law in Washington and British Columbia, with over 26 years of experience advising business clients in the USA and Canada on various cross border transactional matters. Rendina has provided advice and services negotiating mergers and acquisitions, negotiating and documenting significant loan transactions, intellectual property license agreements, private placements and other financings. He is currently the owner of Rendina Law Firm and a principal of Fourwall Solutions LLP, a real estate development partnership, a director of Fourwall Financial Inc. and managing partner in Opportunity Northwest LLC. Opportunity Northwest is managed by highly experienced professionals dedicated to facilitating business growth and economic development in Whatcom County working with and complementing the activities of State and Local Government agencies, private sector service providers, Chambers of Commerce and other associated business organizations. Rendina’s experience in the financial services sector includes work as a licensed financial advisor for a large U.S. broker/dealer and more recently, a partner in Seedfundr.com. Seedfundr.com is one of the first business crowdfunding platforms in British Columbia that enables entrepreneurs starting new companies to raise capital from investors, customers, and friends.
Robert Carveth – Biotechnology and Government Relations Advisor
Rober Carveth developed has effective networks in academic, business, government, and not-for-profit communities at the provincial, national and international level. As the Director, Industry Liaison, Office of the Dean of Science from 1996 to 2002, he increased awareness within the business community and with venture capitalists, facilitating industry access to UBC-Faculty of Science research expertise, facilities and technologies. In the process, Carveth facilitated the formation of a number of spin-off companies. As Director, Science Communications, Office of the Dean of Science from 1993 – 2002, he fostered relations with internal/external communities served by UBC. Carveth gained international business experience as the Director of Mexican Affairs from 2005 through 2007 for client Pacific Seafood Group, the largest seafood company in the United States, and as Business Development Advisor to Power Air Canada Corporation, a BC technology company organized to commercialize zinc air fuel cells. He has been the President of Consilium Enterprises Inc. since 2002 connecting innovative technology, finance, and management, for clients in Canada, United States, and Mexico.