Establishing a Long Term Presence in the Cannabis Industry Through Diversity, Science and Technology
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Alliance Growers Corp. (CSE:ACG;OTCQB:ALGWF;FWB:1LA) is a vertically-integrated global medical cannabis company focused on serving the medical and recreational cannabis markets. The company’s strategy is driven by its ‘four pillars’ organization plan. One: providing services to cultivators (Cannabis Biotech Complex and HOCl), two: global medical cannabis cultivation (including: investments in strategic licensed producer applicants), three: medical-grade CBD oil supply and distribution and four: research and technology.
Of its four pillars, Alliance Growers is primarily focused on providing services to cannabis cultivators and the production of medical-grade CBD oil from its own operations and from strategic arrangements. The company believes that these two streams are the most sustainable, especially medical-grade flower and medical-grade CBD oil which have a global reach and are politically stable. According to a report by Grand View Research, the global medical cannabis market is expected to reach US$146.4 billion by 2025. The oil segment of the market is expected to grow at a CAGR of 40.4 percent due to the safer application methods compared to smoking. In addition, forecasts for CBD oils are expected to reach $1.6 billion by 2020, covering 79 percent of the CBD product market share.
Alliance Growers is working with Pharmagreen Biotech Inc. to jointly develop the Cannabis Biotech Complex which is expected to be built on a 25-acre property located near Mission, British Columbia. The main component of the complex is the first-of-its-kind 62,000-square foot Cannabis Biotech Centre. The centre is expected to house a DNA botany lab, extraction facility and the most significant component: the tissue culture plantlet production facility.
In anticipation of finalizing the construction of the Biotech Complex, Alliance Growers is pursuing strategic investments in licensed producer applicants. The most notable to date is the strategic investment in New Maple Holdings Ltd. (parent company of Canwe Growers Inc.) The company’s investment in Canwe provides access to the most proficient grow team and most efficient grow systems in Canada (former grow team of MedReleaf). As a result of this strategic investment, Alliance now has access to the Canwe grow team and its cannabis licensing professionals.
In keeping with the company’s “picks and shovels” model of providing products and services to cultivators, Alliance has executed a definitive exclusive agency agreement with Irish Sea Organics to become the exclusive distributor of a highly-effective green technology protects crops against bacteria, mold and spores.
Irish Sea Organics’ breakthrough technology is revolutionizing seed, plant, harvest, drying and raw material extraction processes. Irish Sea is a company established to promote the benefits of electrolyzed water/Hypochlorous Acid (“HOCL”) that is used in the various processes in the industrial, agricultural and healthcare sectors. Irish Sea has developed a process utilizing HOCL that is specific for the cultivation of pharmaceutical-grade cannabis crops and can be used in the cultivation of hemp as well.
Alliance Growers has also been pursuing global opportunities for the development and distribution of pharmaceutical-grade CBD oil for medical purposes. To this aim, the company continues to negotiate terms for a farm-in agreement with a private company that is expected to cultivate and exclusively process, package and export all GMP certified CBD, medical cannabis, extracted oils and related pharmaceutical products from two countries in Africa.
Alliance Growers’ Company Highlights
- Focused on the two of the most sustainable streams in the cannabis space; the grow stream (providing products and services to cultivators) and the CBD oil stream.
- First Cannabis Biotech Complex under development in Mission, British Columbia.
- Producing tissue cultured plantlets to provide cannabis growers a superior alternative to clones utilizing the proprietary Chibafreen process.
- The Tissue Culture Facility is expected to initially produce 10 million plantlets annually at $10 per plantlet, with expansion plans to produce 20 million plantlets annually.
- The Biotech Centre is expected to be able to process approximately 100,000 kilograms of raw flower material once completed.
- Alliance has access to Pharmagreens’ proprietary CBD strain, named CBD Dana, which contains at least 14 percent CBD and less than 0.3 percent THC.
- Focused on becoming the leader in high-quality, low-impurity CBD oil.
- CBD oil market expected to reach $1.6 billion by 2020.
- Multiple strategic partnerships with Pharmagreen, Botany Research in Motion (BRIM), Irish Sea Organics and Canwe Growers.
Providing Services to Cultivators
The Cannabis Biotech Complex
In January 2019, Alliance Growers finalized its definitive agreement with WFS Pharmagreen Inc. to acquire a 30 percent equity interest in Pharmagreen’s subsidiary, BC New Co. Pharmagreen and Alliance Growers have secured a 25-acre property outside of Mission, British Columbia that is expected to house a 62,000-square-foot facility that the two companies will co-finance. Construction of the first complex is currently underway.
Cannabis Biotech Centre
The main component of the complex is the 62,000-square foot Cannabis Biotech Centre, which is expected to be the first of its kind in western Canada to house a DNA botany lab, extraction facility and a tissue culture plantlet production facility. The tissue culture facility is expected to provide high-quality germ and disease-resistant plantlets of any cannabis strain. The plantlets are grown using proprietary tissue culture propagation, specifically utilizing the Chibafreen invitro plant production system, which allows more tissue cultured plantlets to be produced in less space and less time.
The facility is also expected to provide botanical DNA services for certifying plant tissue at the genetic level, cold storage technology for tissue culture preservation and extraction services for CBD oils for the medical and retail markets. The complex is expected to house three greenhouses and a 20,000-square-feet extraction and distillation lab. The lab is expected to process approximately 100,000 kilograms of raw flower material to make CBD oil for wholesale purchase.
Alliance Growers and WFS Pharmagreen, a wholly-owned subsidiary of Pharmagreen, have completed the pre-construction phase of the Cannabis Biotech Centre. The company submitted its dealer’s license application, among others, to Health Canada in June 2018. As of February 2019, the licenses are in the “detailed review and initiation of security clearance” stage of the application process.
The greenhouses will be focused on growing and cultivating the flower from Alliance Growers’ proprietary CBD Dana strain for its CBD content. The greenhouses are also expected to grow and produce flower products from various THC strains for their THC and terpene content. The greenhouses are expected to provide bigger plants for cultivators that do not want to purchase plantlets and then produce plants for any R&D initiatives.
Extraction and Distillation Lab
Construction on this facility is slated to begin in early 2020 after the main facility of the complex is in operation. The lab is expected to consist of 20,000-square-feet and should be able to process, extract and distillate approximately 100,000 kilograms of raw flower material for the wholesale of cannabis.
HOCl – Organic solution for cultivators combatting mold, bacteria and pests
The definitive exclusive agency agreement with Irish Sea Organics is expected to provide Alliance Growers with income from equipment and consumable product sales, consultancy and service contracts, along with a royalty stream. The process developed by Irish Sea Organics utilizes HOCl production equipment providing a highly effective green technology to help cultivators protect their crops.
Hypochlorous Acid (“HOCl”) production equipment and the unique applications are used for high-volume, industrial and commercial applications, specifically bacteria, mold and spore control. The introduction of HOCl to any size of cultivation or processing business operation combines proven efficacy and performance with vital cost benefits to the end-user.
Alliance Growers, working closely with the Irish Sea Organics team, intends to promote the benefits of electrolyzed water/Hypochlorous acid that is used in the various processes in the industrial, agricultural and healthcare sectors. Irish Sea has developed a process utilizing HOCl that is specific for the cultivation of pharmaceutical-grade cannabis crops and can be used in the cultivation of hemp as well. Irish Sea delivers a combination of specialized and integrated equipment, consumables, services and consultancy which provides significant economic and efficacy benefits to cultivation, processing, extraction and packaging sectors in the agricultural sector where mold, pests and microbial control are vital.
The Irish Sea Organics team consists of high-quality management with over 75 years of experience among them in health care, medical devices, research and international operations. They bring with them a revolutionary product offering that could add value to companies in the agriculture and cannabis sectors.
The HOCl process is already being employed by Coca-Cola in several US beverage processing plants, and successful installations for clean in place (“CIP”) have shown excellent ROI figures while contributing to improved sustainability goals. Processing Magazine recently reviewed Coca-Cola’s use of this game-changing technology for CIP.
Mold, sporicidal and pest attrition is a major problem for the domestic cannabis industry in Canada but is an even more serious issue for Canadian companies wishing to export globally. Canada, as a global leader in the cannabis market, is expected to be at the forefront of emerging cannabis markets and this technology could assist in that endeavor.
Alliance Growers’ Licensed Cannabis Producers Program
Alliance Growers is tasked with securing the development, investment and acquisition of ACMPR applicants to secure supply contracts for tissue culture plantlets and to develop both medical and recreational distribution channels for the sale of the two company’s branded cannabis products. Pharmagreen will be focusing on tissue culture plantlets and other valuable services for cultivators.
Under the agreements with the following licensed producer applicants, Alliance Growers has secured long-term plantlet sales for the Cannabis Biotech Centre. The company has also secured wholesale flower for CBD oil extraction to provide ongoing support for producers.
Canwe Growers Inc.
Alliance Growers continues to pursue strategic investments in licensed producer applicants. The most notable to date is the strategic investment in New Maple Holdings Ltd. (parent company of Canwe Growers Inc.) a licensed producer applicant in the enhanced review stage under the Cannabis Regulations Act.
During 2018, Canwe completed security clearance and entered the final review stage. Canwe has retained an experienced project management firm to oversee the design and build its planned state-of-the-art production facility, which is projected to be licensed and operational in the near term. Canwe strategically acquired the original grow team that made MedReleaf the most profitable licensed producer in 2016. Strategic advantages of the company’s investment in Canwe include access to this grow team, the most proficient grow team that developed the most efficient grow systems in Canada. Alliance now has access to the Canwe grow team and its cannabis licensing professionals.
Through its strategic investments, Alliance Growers expects to secure long-term supply contracts for tissue culture plantlets produced at the Cannabis Biotech Centre as well receiving off-take of flower at wholesale cost for the production of pharmaceutical-grade CBD oil for medical formulations and distribution.
Alliance Growers’ CBD Oil Production and Distribution
The CBD market is growing at a rate of 30 percent per year, according to the Hemp Business Journal, and is forecast to reach $2.1 billion by 2020. Sales of CBD oils are expected to account for nearly 79 percent of the market. Alliance Growers intends to initially target the US market where 29 states have legalized medical cannabis and an additional 15 states currently allow for the sale of CBD products.
To further advance its position in the CBD oil market, Alliance Growers intends to extract CBD oil from its own flower gained from licensed producers. CBD oil extraction will be direct and also through the Cannabis Biotech extraction and distillation facility. The company intends to take advantage of the BRIM extraction technology and share in BRIM’s proprietary CBD formulations, such as CBD Dana.
Global Medical Cannabis Operations
Alliance Growers has been pursuing global opportunities for the development and distribution of pharmaceutical-grade CBD oil. To this aim, the company continues to negotiate terms for a farm-in agreement with a private company that is expected to cultivate and exclusively process, package and export all GMP certified CBD, medical cannabis, extracted oils and related pharmaceutical products from two countries in Africa. Alliance Growers intends to offer these products to the German medical cannabis market.
The farm-in agreement, initially for 10 leased acres, is expected to require an investment of an estimated $1.6 million payable over the first full year of cultivation to produce an estimated annual net return of $5.1 million based on current forecasted costs and EU sales prices. A definitive agreement is expected to be executed once all due diligence is completed and terms are finalized.
The private company has a specific goal of being the lowest cost and highest volume raw material producer from Africa to the EU medical marijuana market. The locations are ideally situated close to the equator with the requisite sunshine and rainfall, tested and suitable soils, plus natural water readily available. Labor and taxes have been set in all the locations at the lowest levels seen globally, and logistics are secure and transparent.
The company has maintained a relationship with an Israeli medical cannabis company for the development of pharmaceutical-grade CBD oil as well as access to the company’s high-quality CBD products and research.
The Israeli medical cannabis company 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.
Israel’s government has actively encouraged cannabis research since the 1960s. In 2017, the Israeli government announced that it would invest approximately $2.13 million in research projects. The Health Ministry’s medical cannabis unit believes that cannabis should be treated like any other medicinal product. Israel’s medical cannabis market has approximately 26,000 registered patients who have created a market of approximately $20 million.
Research and Technology
CBD Dana Hemp Strain
Through its strategic partnership with Pharmagreen, Alliance Growers has secured access to a proprietary CBD strain named CBD Dana. CBD is used in the treatment of multiple sclerosis, epilepsy, tumors and other ailments.
Pharmagreen has experienced high-demand for its CBD Dana hemp strain and intends to build a 1.5-acre greenhouse at its Cannabis Biotech Complex to grow the strain. The company believes that this will generate revenue quicker and provide a greater supply of the plantlets sooner.
The unique strain has been tested for content, returning between 10 and 14 percent CBD and less than 0.3 percent THC. The CBD yield in the Dana strain is substantially greater than traditional hemp strains, which typically have a one percent CBD content. The lower THC content allows the strain to be classified as “industrial hemp” which makes it ideal for cultivation and has less restrictive regulations.
The female plantlets produced in the tissue culture lab at the Cannabis Biotech Complex are expected to be available for hemp farmers on a global scale. Providing hemp farmers with all-female, fully-rooted plantlets of the strain is expected to provide a significant yield in CBD production for hemp farmers.
BOTANICAL RESEARCH IN MOTION (BRIM) Strategic Relationship
Under the guidance of Peter Wojcik and Dr. Fawzia Afreen, BRIM and Alliance Growers intend to pursue and develop new methods and technologies to establish a presence in the industry’s newest fields.
BRIM will be advising Pharmagreen and Alliance Growers as they develop the Cannabis Biotech Complex. The complex is expected to use BRIM’s Chibafreen invitro plant production system and BRIM’s cryotissue cold storage technology for the long-term preservation of plant tissue samples. This feature could provide cultivators with the ability to preserve desired plant breeds and have specific strains produced as needed.
The Chibafreen process utilizes clean tissue culture to clone new growth while limiting genetic drift. This allows growers to ensure consistent quality and yield in each growing season. The process is efficient enough to produce over one million plantlets per year of any given strain and can be adapted to all varieties of flora to potentially serve additional agricultural industries.
Alliance Growers and Pharmagreen have been investigating the benefits of using hypochlorous acid (HOCL) technologies at the Cannabis Biotech Complex. Pharmagreen has determined that HOCL is beneficial for protecting crops against mold, bacteria and spores when cleaning and disinfecting greenhouses. The two companies intend to conduct additional research into the benefits of HOCL acid.
This research has sparked a definitive agreement with Irish Sea Organics, a company that promotes the benefits of electrolyzed water and HOCL acid in the industrial, agricultural and healthcare sectors. Irish Sea has developed a process that uses HOCL that is specifically for the cultivation of pharmaceutical-grade cannabis crops. Under the agreement, Alliance Growers has been granted the right to market, promote and sell Irish Seas’ products and services in Canada.
Shortly after announcing the partnership, Alliance Growers announced that it was in advanced discussions with a company that has created a turn-key waste management system that provides cannabis cultivators an organic fertilizer that can be used in their grow operations. The system can be implemented with and without the use of the HOCL system.
“Providing an organic cost-effective fertilizer solution to cultivators furthers the companies’ business plan of providing products and services to cultivators rather than competing with them,” said Alliance Growers President and CEO Dennis Petke. “Providing cultivators with cost-effective organic fertilizer and green solutions that help protect their crops from bacteria and mold furthers our ‘picks and shovels’ strategy with the added benefits of being environmentally friendly. These two technologically advanced processes further our goal of establishing a long-term presence in the cannabis industry through diversity, science and technology.”
Alliance Growers’ Management Team
Dennis Petke, CA — CEO, President and Director
Mr. Petke is a qualified Chartered Accountant in Canada, and has been a member of the Institute of Chartered Accountants of British Columbia since 1995. Currently serving as a director and/or senior officer for private and public companies, his responsibilities include strategic and overall corporate management for these companies. Mr. 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.
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 in 2001 until the company was purchased by Detour Gold Corp. on 2011. Prior to this, Harvey taught Financial Management at the National University of Singapore, Hong Kong Polytechnic, and the BC Institute of Technology. Harvey also mentors many young entrepreneurs in the technology sector and is an active member of several Angel Investor groups in the Pacific Northwest where he reviews the financials of presenting companies, including due diligence processes, for companies applying for investment.
Rupert Shore — Director
Rupert Shore has been a barrister and solicitor in good standing with the Law Society of British Columbia since November 1989. Prior to this, Mr. Shore attended the University of Victoria, obtaining a Bachelor of Arts majoring in Geography Resource Management and a Bachelor in Laws. After graduation he served as a clerk to the Judges of the Vancouver County Court and has practiced law as a sole practitioner primarily in commercial litigation. He has made it his goal to resolve legal issues for clients in the most cost-effective manner possible as litigation is expensive and difficult to predict.
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 owner of a compounding pharmacy, Mr. Pirooz has been dispensing pharmaceuticals for over ten years and provides pharmacist and pharmacy management services to many of Canada’s largest pharmacy chains and drug stores. Mr. Pirooz will be assisting Alliance with certain product development with his expertise in compounding, sales, marketing and export of pharmaceuticals.
Ian Lambert — Director
Ian Lambert holds a Bachelor of Commerce degree in quantitative analysis and computer science from the University of Saskatchewan. 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. Familiar with a wide range of business activities including marketing, manufacturing and technology development, Mr. Lambert gives a wide insight into what can be expected moving forward. He is currently a director, officer and/or advisor to several Canadian companies in addition to serving as management of a variety of public interests, and has acted as Chair of various corporate committees.
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. Mr. Rendina’s background includes work as a licensed financial advisor for a large U.S. broker/dealer and, more recently, a partner in Seedfundr.com, one of the first business crowdfunding platforms in British Columbia. He is currently the owner of Rendina Law Firm and a principal of Fourwall Solutions LLP, a real estate development partnership, and a managing partner in Opportunity Northwest LLC., which provides services typically to early mid-stage companies often considering relocation or expansion into the USA from Canada or other out-of-state locations.
Edmund Obasi —Advisory Board
Edmund Obasi has over a decade of relevant business experience, specializing in public companies business financing, private placements and medical marijuana related investments. Mr. Obasi is currently serving as the Chief Executive Officer, Chief Investment Officer and Director of OBASI INVESTMENT LIMITED, a private investment company registered in Alberta Canada. Edmund completed his Master’s Degree in Applied Mathematics from the University of Waterloo Ontario and his diversified experiences to a wide range of business activities include oil and gas, mining, real estate, cannabis and related products. Over the past several years, Mr. Obasi has been focusing extensively on research and investments in cannabis related public companies and the cannabis sector.
Robert Carveth — Biotechnology and Government Relations Advisor
Mr. Carveth has been the President of Consilium Enterprises Inc. since 2002, connecting innovative technology, finance, and management for clients in Canada, United States, and Mexico. He has international business experience as the Director of Mexican Affairs for the Pacific Seafood Group, and as Business Development Advisor to Power Air Canada Corporation. Robert will act as the Biotechnology and Government Relations Advisor to Alliance, bringing his expertise in provincial, national, and international government, structure, function, processes, regulatory, and relations matters as well as experience in early stage technology companies, university research and development, intellectual property, commercialization and licensing.
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