Alliance Growers Corp.

Building a Global Cannabis Company

This profile is part of a paid investor education campaign.*

Overview

Alliance Growers (CSE: ACG) has created a vertically integrated “Seed to Sale” company starting with the production of genetically perfect, disease free plantlets from the Cannabis Biotech Complex. This includes providing the plantlets required for the production of 99% pure CBD oil derived from the Dana Strain in a joint commercial hemp operation with Pharmagreen.  Additionally, future ACMPR production through BioCannaTech, the Company’s wholly owned subsidiary in Montreal, Quebec, and other ACMPR investments will provide flower at wholesale or cost for Cannabis CBD oil extraction.  The addition of Spyder Vapes Inc., an established, upscale, ‘high-end with competitive prices’ retail store chain for distribution of products produced from the Dana strain and from Cannabis CBD oil will give Alliance Growers and its group of companies a significant advantage in cost and margin compared to competitors.

Investment Highlights

  • Multiple strategic partnerships underway to execute “Four Pillars” business model and build shareholder value:
    • BRIM partnership to develop Botany Centers across Canada
    • 100 percent stake in Biocannatech, a Quebec late-stage ACMPR applicant for licensed production with potential for 70,000-square-foot facility
    • 5 percent stake in Ontario-based Licensed Cannabis Producer, Canwe
    • Finalizing joint-venture partnership with Israeli Medical Cannabis Company
  • First Cannabis Botany Center 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
  • Recently received financing from Alumina Partners Ltd in $5 million equity facility, with option to extend to $10 million
  • CBD oil market expected to reach $1.65 billion by 2020

State-of-the-Art Cannabis Biotech Complex

The first Cannabis Biotech Complex being developed in Derouche, Mission, BC by Alliance Growers in partnership with Pharmagreen Biotech will primarily produce plant clones called “plantlets” as a service for cannabis growers to maintain consistent plant strains. The complex will also house facilities for cold storage of plants, CBD oil extraction, and allow our partner Botanical Research in Motion International Inc. (B.R.I.M.) to continue developing new technologies in house.

The plantlet supply contracts the Cannabis Biotech Complex offers will also secure “offtake” agreements for flowers at wholesale cost to be used in CBD oil extraction. These contracts will be made with both external growers as well as Alliance Growers’ own subsidiary producers.

CBD Dana Hemp Strain

Alliance Grower has secured access to a proprietary CBD strain named “CBD DANA,”. The unique strain has been tested for a content of at least 10% CBD and less than 0.3% THC. This CBD yield is substantially greater than traditional hemp strains which typically have at most a 1% content. The lower THC content allows the strain to be classified as “industrial hemp” which makes it ideal for cultivation with less restrictive regulation.

The female plantlets produced in the Tissue Culture Lab at the Cannabis Biotech Complex will be available for hemp farmers on a global scale. Providing hemp farmers with all female, fully rooted plantlets of the strain will provide a significant yield in CBD production for hemp farmers.

CBD is used in the treatment of multiple sclerosis, epilepsy, potent inhibitor of cancer cell proliferation, metastasis, and tumor growth as well as other symptoms.

Montreal, Quebec ACMPR Acquisition of BioCannaTech Inc

Alliance Growers acquired BioCannaTech which is in the final expedited phase of Health Canada’s “Access to Cannabis for Medical Purposes Regulations” (ACMPR) approval for the production and sales of Medical Marijuana.

BioCannaTech Inc. has a leased a 10,000 square foot facility in Mont-Royal, Québec with an option-to-purchase agreement. Permits have been filed with the municipality to renovate the facility. This facility is expected to produce $5,000,000 per year.

BioCannaTech Inc. is also in discussions to lease the adjacent facility with an option-to-purchase agreement. This facility is 17,900 square feet with a growing area of 16,000 square feet. The additional growing area is expected to produce $12,000,000 in revenue for a combined total $17,000,000 per year in revenue from both facilities.

Seed to Sale Vertically Integrated Cannabis Company with Spyder Vapes Retail Acquisition

Spyder is an established vaporizer and eCigarette retailer based in Ontario, with strong revenues and an aggressive growth plan. The Spyder brand is defined by its high-quality proprietary line of e-juice, liquids and exclusive retail deals, dispensed in uniquely designed stores creating the optimal customer experience. Revenues for the initial two stores totaled $733,000 for the year ending January 31, 2018. Their third store opened in December 2017.

Spyder Vapes, as the retail arm for Alliance Growers, will create a true “Seed-to-Sale” business for the company and its customers after national legalization.

Alliance’s Multiple Growth Strategies

First Botany Center now under development

Alliance Growers has secured a definitive licensing agreement with WFS Parmagreen Inc (Pharmagreen) which will allow for the joint development and operation of multiple Botany Centers in Canada. The agreement includes Pharmagreen’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 center is now underway. Pharmagreen and Alliance have secured a 20-acre property in Mission, BC on which they will co-finance the construction of a 40,000-square foot facility. 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 Center will have the ability to not only service the cannabis market, but other plant-based agricultural markets as well. Having acquired the property on which the first center will sit, Pharmagreen and Alliance are currently in the preliminary stages of an ACMPR application.

Alliance Growers’ Cannabis Botany Center will offer customers

  • 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 retail markets.

The Botany Center will create value for Alliance’s shareholders by

  • generating revenue via cannabis and plantlet contract sales; and
  • the processing and resale of CBD oil in various global markets.

In order to enhance access to the products available in the Botany Center and improve the operations, Alliance has been working with Skill Gaming Inc to the development of the Canna App. This app is designed to be a digital marketplace that provides a means for licensed growers and dispensaries to market their products, facilitating sales and deliveries between dispensaries, producers and customers.

Strategic ACMPR Investments and Partnerships

Alliance is building its strategic partnerships and distribution networks by securing long-term plantlet supply contracts and flower offtake agreements for CBD oil extractions. In February 2017, Alliance entered into an agreement to acquire a 5-percent non-dilutive interest in Canwe, a private Ontario-based cannabis company owned by New Maple Holdings and led by a highly experienced team of growers with the expertise to expedite the license producer application process.

“This relationship is expected to provide synergies and mutual opportunities for going forward for developing business arrangements concerning the purchase and sale between the parties of live cannabis plants and other cannabis products,” said Petke. The agreement will include supplying plantlets to the private grower from Alliance’s Cannabis Botany Center, in addition to acquiring high quality flower for CBD oil extraction. The partnership is a step toward the development of future botany centers in eastern Canada under the company’s exclusive license of B.R.I.M. technologies.

Alliance entered into a partnership with Pharmagreen in April 2018, reporting vertically integrated additions to its business model and profit potential. Alliance and Pharmagreen have agreed upon joint development of the proprietary high yield CBD DNA strain in a industrial hemp operation that begins with tissue culture plantlets produced and grown on what is now referred to as the Cannabis Biotech Complex on the property in Mission BC.

“Expanding our partnership with Pharmagreen by co-development of the commercial hemp operation provides for much greater revenue and profit sharing opportunity. It expands the business model where Alliance Growers already has an incredible investment with the largest Canadian state-of-the-art tissue culture production facility- the Cannabis Botany Centre. This partnership adds relationships with cultivators and extractors to assist in building vast revenue model and exceptional profit potential.  It is one of the best triangular business models for the Cannabis industry, it truly stands out,” exclaimed Dennis Petke, Alliance Growers’ President and CEO.

Alliance has successfully entered the Quebec cannabis market to become a licensed producer with a final agreement to acquire Biocannatech, a Quebec late-stage ACMPR applicant. Biocannatech is incorporated in Québec and located in Côte Saint-Luc. The company is in the final expedited phase of the ACMPR approval for the production and sales of Medical Marijuana. Biocannatech has an application to Health Canada for building a 10,000 sq. ft. facility with an attached 120,000-sq. ft. warehouse which has projected gross revenue of 10 Million per year. With additional approval, the facility can be expanded to 70,000 square feet with a projected Gross Revenue of 70 Million per year. The operations construction phase is targeted for March 2018.

Tapping the CBD Oil market for further revenue generation

The CBD market is growing 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 US 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 has planned an equity investment to finance Canna Companion Products Inc, a wholly-owned subsidiary of a company that produces and sells CBD-infused pet products. This financing would provide Alliance with a viable investment opportunity and a parallel agreement with Canna would give Alliance access to an exclusive supply of CBD oil.

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 the 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.

Management

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). Petke 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, 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 defense 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—Director

Ian Lambert has had broad exposure to a wide range of business activities includes oil and 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 the CEO and a director of West Nevada Resources Inc.

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 US 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

Robert Carveth has developed 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.

Edmund Obasi—Advisory Board

Edmund Obasi has 14 years of relevant business experience, specializing in public companies business financing, private placements and medical marijuana related investments. He is currently serving as the Chief Executive Officer, Chief Investment Officer and Director of OBASI INVESTMENT LIMITED, a private investment company registered in Alberta. Edmund completed his Master’s Degree in Applied Mathematics from the University of Waterloo Ontario. 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, Obasi has been focusing extensively on research and investments in cannabis related public companies and the cannabis sector.


 

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