The Advantage of True Cannabis Entrepreneurs
This Chemistree Technology Inc. profile is part of a paid investor education campaign.*
Chemistree Technology Inc. (CSE:CHM; OTC:CHMJF) is leveraging its management team’s decades of cannabis industry expertise to build a high-profile portfolio of vertically-integrated cannabis assets. Through strategic partnerships, Chemistree is creating a network of multi-state cannabis operations from cultivation and processing to distribution and retail. Beginning in Washington State and now entering the California market, the company is quickly expanding its reach with the goal of building a coast-to-coast empire in the US cannabis market.
Chemistree currently owns operational assets and branding rights for the Washington-based Sugarleaf brand, a 50 percent interest in a cannabis processing company in Humboldt County, prospective cannabis cultivation lands in southern California and has entered the Canadian cannabis sector through its investment in Pasha Brands. As part of the company’s expansion plans, Chemistree has moved into New Jersey by investing in Applies Cannabis Sciences of New Jersey, a vertically-integrated medical cannabis applicant. Chemistree has also acquired an ownership stake in The Physician’s Choice CBD, a hemp-derived CBD product developer. The new additions to Chemistree’s business are expected to help grow its Sugarleaf brand and product lines.
The Sugarleaf brand has an established foothold in the US cannabis industry. At the November 2018 MJBiz Conference in Las Vegas, Sugarleaf and Chemistree co-sponsored the High Times magazine party. The brand has also been featured on CustomGrow420’s 1.6 million subscriber YouTube channel and in Dope Magazine, one of the largest global media publications in the cannabis industry. Now that Chemistree has the global rights to the brand, the company is moving forward with plans to expand the facility’s canopy to increase output in order to support new product offerings and a much larger retail footprint.
Chemistree’s strategic partnership with a licensed processor in Humboldt County gives the Sugarleaf brand an attractive entry point into one of the world’s largest cannabis markets. Chemistree is providing both the capital and management depth needed to rapidly expand the processor’s business across the state of California and into new jurisdictions in the US.
In southern California, Chemistree’s subsidiary has been granted a conditional use permit (CUP) from the City of Desert Hot Springs—an oasis in the desert for California’s cannabis industry.
Chemistree’s most valuable asset is its management team. Some of the most respected leaders in cannabis along with highly successful entrepreneurs from other industries have brought their deep skillset and wealth of experience to benefit the company’s shareholders. Almost all of Chemistree’s founding members have successfully built $50 million companies, providing the team with the expertise and experience necessary to succeed in a highly-competitive industry.
Chemistree’s savvy management team lead the company to acquire Sugarleaf and its Tier 3 producer and processor license after the company was revealed to be in distress. By taking advantage of Sugarleaf’s early struggles, Chemistree was able to secure the company and its licenses for only US$1 million, a significant discount when compared to the shutdown value of its assets at the time.
Chemistree President Karl Kottmeier has two decades of experience in listing, financing and administering TSX and TSXV-listed companies. In that time, he has raised more than $150 million in equity capital.
In October 2018 the team strengthened its roster by recruiting industry star player Sheldon Aberman as Director. Aberman has been instrumental in the design of thousands of cannabis grow operations around the world and has built multi-billion-dollar brands, including Black Label and Frost Box. This experience along with his expertise in the accessory market has proven to be invaluable to Chemistree’s US expansion campaign. The company is making moves to stack its roster with more of the cannabis industry’s top talent.
In California, Chemistree team members have already demonstrated the heights of their abilities by securing the CUP license at the Desert Hot Springs property in less than seven months. In March 2019, Chemistree raised $10,830,000 for the expansion of its Washington state facilities, brand expansion into California and the continued development at its Desert Hot Springs property.
Chemistree Company Highlights
- Vertically-integrated company expanding into premiere cannabis jurisdictions in the US and beyond.
- Team of true cannabis entrepreneurs with decades of experience in managing all aspects of profitable cannabis businesses including branding, cultivation, manufacturing and finance.
- Strong foothold in Washington State, a market with nearly 750,000 recreational cannabis consumers.
- Immediate access to one of the world’s biggest cannabis markets via California processor’s license for Sugarleaf-branded products.
- Granted CUP license at 9.55-acre Desert Hot Springs property.
- Plans in 2019 to increase cultivation yield at Sugarleaf facility, expand retail footprint, product offerings and develop Desert Hot Springs greenhouse cultivation facility.
- Chemistree has entered the New Jersey cannabis market by making strategic investments.
- Well-financed with $10,830,000 capital raise completed in March 2019.
- Tight share structure with management and consultants holding 35 percent of shares, representing more than $2 million in insider investment.
Chemistree’s Management Team
Karl Kottmeier — President and Director
Karl is a former Investment Advisor and member of the McDermid St. Lawrence and Raymond James Corporate Finance teams. Mr. Kottmeier has 20 years of practical experience in listing, financing and administering companies listed on the TSX and TSXV. Mr. Kottmeier has raised in excess of $150,000,000 in equity capital for resource-based ventures. He holds a Bachelor of Arts degree from the University of British Columbia.
Doug Ford — CFO
Doug has been the General Manager of Dockside Capital Group Inc. a private merchant banking and venture capital firm specializing in providing services to, and arranging funding for, emerging growth companies from 1987 to the present. Mr. Ford has been a director of a number of public companies and he holds a Bachelor of Arts degree from the University of British Columbia.
Sheldon Aberman — Director and Chief Cannabis Officer
Sheldon has been involved with, managed and designed thousands of cannabis grows across the globe. His expertise and hands-on approach to product development have created leading-edge grow room designs that are ideal for commercial applications. Before building a reputation as one of the foremost experts on cannabis cultivation, Sheldon spent his time building multi-million-dollar brands including Black Label and Frost Box. In addition to consulting and cultivation, he also is an expert in the accessory market including vape pens, e-cigarettes, silicon mats and extraction tools.
Nicholas Zitelli – Director
Nicholas Zitelli is a partner and director of High Times Media and also founded the Cannabis Genetics Institute (CGI) in Amsterdam, Holland. He is best known for his writing on various topics across the industry under the pen name Nico Escondido.
Dennis Hunter — Advisor
Dennis is an experienced and trusted adviser for Chemistree Technology Inc. He is a pioneer in the California cannabis industry and is an invaluable asset to the team. Dennis is a respected leader in the medical cannabis field in one of the world’s largest markets. He is the owner of Care By Design and Canna Craft, and also runs Left Coast Wholesale, a successful distribution business he started in 2014. Collectively Hunter’s operations have generated revenue of nearly $50 million and employ 140 local people, by far the most potent cannabis enterprise in Northern California. In addition to his business interests, Dennis is also responsible for organizing acres of cannabis growing collectives throughout the State of California.
Kirk Gamley — Consultant
Kirk is an investor relations consultant to a number of publicly listed TSX and TSX Venture companies for over 8 years. Mr. Gamley is the President & CEO of Contact Financial, one of western Canada’s largest investor relations and corporate communications service providers. Prior to working in the public markets, Mr. Gamley had successful careers with Coca Cola Corporation as a senior sales account manager and with the Bank of Montreal.
Jeremy Deichen — Advisor
Jeremy has 20+ years in video production experience and is also an expert in the digital marketing field. Jeremy has been responsible for creating content for a list of television networks including MTV, Spike TV and the Speed Channel. Jeremy has already developed and branded several companies in the cannabis industry and will continue to manage the day to day business operations including social media, marketing, and the web development team for Chemistree Technology Inc. Previously, Jeremy had already turned his talents towards the cannabis industry by producing a staggering amount of content. With over 500 videos now completed, he is credited with hundreds of how-to-grow videos, product videos, and is best known for his creation of the Growing Exposed series, currently distributed by the largest media publication in the cannabis industry, High Times.
The US Cannabis Market
Reports by the industry’s top analysts including Grand View Research, ArcView Market Research and BDS Analytics predict the global cannabis market will surpass $100 billion by 2025. North America’s cannabis markets are expected to contribute at least $47.3 billion to that market growth. Those dollars are expected to come from the increasing number of consumers who live in legal cannabis jurisdictions throughout the US. More and more states are choosing to take advantage of the economic benefits legal cannabis has to offer, including job creation and tax revenue.
California is the epicenter of the US cannabis market. Worth an estimated $3.7 billion in 2018—nearly half the country’s legal sales—the Golden State’s cannabis sales are expected to exceed $5.1 billion by the end of 2019. The target for 2025 is pegged at $6.5 billion.
Home to more than 700,000 recreational cannabis consumers, Washington state is one of North America’s most important cannabis markets. In 2017, revenues from cannabis sales eclipsed that of liquor by $113 million. Washington state collected a total of $315 million in legal cannabis income from the state’s cannabis sales tax.
Chemistree has adopted a four-pillared corporate strategy aimed at acquiring, branding, developing and expanding vertically-integrated cannabis assets in maturing and emerging jurisdictions.
- Acquire existing cultivation, processing, distribution and retail operations.
- Brand and market proprietary products to maximize seed-to-sale margins.
- Develop purpose-built cultivation facilities to provide low cost product.
- Expand in other regions with similar objectives.
Chemistree is leveraging its strong management team and strategic industry partnerships to secure cannabis supply and increase the diversification of its products and brands.
Through its expanding portfolio of brands and hard assets, Chemistree intends to provide a public vehicle entity for investors interested in vertically-integrated companies with a growing footprint in the US cannabis market.
Sugarleaf: Growing a Top Shelf Cannabis Brand
Chemistree took a major step forward in its expansion plans in December 2018 by acquiring the global brand and marketing rights to Sugarleaf. The company has also strategically partnered with a Washington-based company that is in the process of acquiring Sugarleaf Farm LLC’s 502 Tier 3 producer and processor license. This license type allows for the wholesaling of cannabis to other licensed producers and processors in the state.
Chemistree’s 2019 growth strategy includes supporting its 502-licensee partner in improving yields and increasing the production canopy at Sugarleaf’s 10,000 square-foot indoor facility. The operation’s infrastructure has recently undergone significant renovations aimed at reducing costs and optimizing efficiencies including the addition of an automated irrigation system. Alongside equipment, improvements to cultivation techniques are also being implemented such as the introduction of new nutrient feed programs by Green Planet Nutrients that are designed to promote high yield plant growth. Another 5,000 square feet of additional cultivation and/or processing space is planned for 2019 to allow for further scaling of the production capacity at Sugarleaf.
Sugarleaf produces 18 unique high-quality cannabis strains and its flower-based product lines are currently sold in more than 20 retail stores. Chemistree master grower Jason Flynn has been recognized by the Cannabis Cup twice for his strains, including White 99, one of the company’s signature products. Sugarleaf’s White 99 strain is a 50/50 hybrid that boasts an elite THC level of 36.6 percent.
Chemistree has plans underway to increase its retail footprint to more than 100 stores by the end of 2019. Chemistree’s strategy with this new product line is to leverage the rising demand and high price point for cannabis concentrates, which now account for half of all cannabis product sales in leading US markets such as Washington and California.
This retail expansion is expected to include more offerings within the current brand as well as new product lines. One of those soon-to-launch product lines is expected to include cannabis oils developed for use in a special edition Sugarleaf branded Vapor Slide V2. This novel distillate vaporizer is a hybrid of pen and dab technology.
Chemistree: Now Entering California
Through its strategic collaboration with a well-respected Humboldt County cannabis company, Chemistree has immediate access to the California market for its Sugarleaf-branded products via the partner’s state processing license.
“This is a significant advancement for Chemistree’s growth plans and I am grateful to our tremendous team of advisors in California who are helping us access a market that is expected to exceed $5.1 billion next year,” said Chemistree President Karl Kottmeier. “Sugarleaf is a high quality, flower-based product line in Washington state and now, working closely with our new processor partner in Humboldt, we will be able to develop and produce Sugarleaf manufactured products as well as flower products in the world’s sixth-largest economy – the massive California market.”
While making its mark in northern California, Chemistree is also expanding its commercial reach into the hot cannabis climate developing in southern California. This region of the US is blessed with an abundance of sunshine year-round which makes it an ideal jurisdiction for low-cost greenhouse growing operations. Like northern California, the state’s sunnier southern region also has a well-established cannabis culture that’s highly supportive of growth in both the medical and recreational markets.
In February 2019, the company’s wholly-owned subsidiary, CHM Desert, LLC, was granted a CUP by the City of Desert Hot Springs covering 9.55 acres of property in the city’s cannabis cultivation-friendly Green Zone. With 3.8 dispensary licenses per 10,000 people, Desert Hot Springs enjoys the second-highest ratio of dispensaries per capita in the US.
Plans for the Desert Hot Springs operation include two 64,000-square-foot greenhouse facilities with ample water supplies. Once constructed and fully-licensed, Chemistree expects the operation will have the capacity to produce approximately 50,000 pounds of dried-cannabis flower annually. The company is also planning on a 40,000 square foot vertically-integrated processing and product development facility with the ability to process, manufacture and distribute a wide range of cannabis-related products.
Chemistree: Now Entering New Jersey
Chemistree entered the New Jersey cannabis market by investing in Applied Cannabis Sciences of New Jersey (ACS), a vertically-integrated medical cannabis applicant. ACS was established by a team of seasoned professionals from the legal medicinal and adult-use cannabis industry whose collective experience exceeds 50 years and includes over 20 cultivation, processing and manufacturing licenses across four states: Washington, Oregon, California, and Colorado.
ACS intends to apply in the state’s upcoming request for applications through New Jersey’s Department of Health. The state plans to issue 24 new permits comprising of 15 dispensary permits, five cultivation permits and four vertically-integrated permits. If successful, ACS will receive a fully integrated cultivation, manufacturing, processing and retail sales license. This will allow the company to participate in the expansion of the state’s medical program, which aspires to increase its registered patient count to over 200,000, and the adult-use market if passed by voters in the 2020 referendum. Currently, there are only 12 facilities servicing the 49,000 patients enrolled in New Jersey medicinal cannabis program.
“We are excited about partnering with ACS, a highly experienced group recognized in the medical and recreational cannabis space that brings a track record of innovation and success. The potential to expand Chemistree’s presence outside of California and Washington state and ultimately introduce our signature brand Sugarleaf to the large New Jersey consumer base by partnering with ACS is consistent with our growth strategy,” said Kottmeier. “New Jersey is home to over nine million people currently being served by only 12 cannabis operators in its medical program. New Jersey is a logical place for Chemistree to expand into, bringing the Sugarleaf brand to the New Jersey market.”
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