FSD Pharma

Assembling the World’s Largest Legal Indoor Cannabis Production Facility

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

Overview

FSD Pharma Inc, (CSE:HUGE), wholly owns FV Pharma,  a Canadian licensed cannabis producer under ACMPR aiming to develop the largest legal indoor cannabis facility in the world. As such, FV Pharma has acquired the former Kraft Foods (NASDAQ:KHC) production plant in Cobourg, Ontario and is converting it for cannabis cultivation with its joint venture partner, Cannabis Wheaton Income (TSXV:CBW) (“Wheaton”).

As part of the agreement, Cannabis Wheaton will design and develop all aspects of the facility in staged phases. FV Pharma’s joint venture partner will receive a 49.9 percent stream of all cannabis produced at the facility and will also participate in the company’s governance. Cannabis Wheaton CEO Chuck Rifici is the co-founder of Canopy Growth (TSX:WEED) and has signed on to assist FV Pharma in their burgeoning operation.

By retrofitting a former food production facility, FV Pharma is following in the footsteps of two of  the world’s largest cannabis companies by market cap, Canopy Growth and Aphria (TSX:APH), which also began their work with the acquisition of Hershey’s and Heinz facilities, respectively. At over 3.8 million square feet, FV Pharma’s completed facility aims to be the largest legal indoor cultivation and processing space in the world.

Having been granted its production license in late 2017, the company is currently cultivating and in the process of obtaining the sales and provisions portion of the license and will be applying for the Dealers License. This is being done so the company will be able to engage in research and development related to the extraction of CBD rich cannabis oil for use in the production of concentrated cannabis oil extracts, infused sublingual sprays, vapes, capsules, edibles and the like. FV Pharma plans on expanding their product line beyond dried cannabis flower to also include pharmaceuticals, vaporizer cartridges, edibles and more.

FV Pharma’s experienced management team is led by CEO and president, Thomas Fairfull. As the founder of dynaCERT Inc. (TSXV:DYA), the most actively traded TSXV stock in 2016, Fairfull brings years of experience in the biotechnology and cannabis industries to the company’s helm.

Company Highlights

  • ACMPR licensed producer
  • $53,000,000 of equity capital raised to date
  • Plans in place to develop world’s largest legal indoor hydroponic cannabis production facility
  • 100 percent ownership of former Kraft Foods facility measuring 32 acres, leaving 40 acres available for construction
  • Latest cultivation technologies to be employed at the facility
  • Management team with expansive knowledge in cannabis cultivation techniques
  • $35 million on-hand and no debt

Flagship Project: The former ‘KRAFT’ Cobourg Facility

FV Pharma’s cannabis production facility is located in Cobourg, Ontario, only one hour east of Toronto. The company’s joint venture partner, Cannabis Wheaton, is retrofitting the former Kraft Foods facility with the eventual goal of developing approximately 3.9 million square feet of cultivation space. Cannabis Wheaton will also be providing operational advisory services, and will play a role in the management of FV Pharma to ensure the success of the large-scale project.

Thanks to its proximity to a metropolitan hub, the facility is easily accessible and is supported by sufficient infrastructure to conduct its operations. In addition to the necessary security, the building has an on-site electrical substation that provides enough power for 9,000 1,000-watt grow bulbs, multiple natural gas lines, 26 loading docks and a 24-inch main sewage pipe.

By consolidating operations under one roof, FV Pharma has access to greater economies of scale and the ability to reduce costs as it can host all production and processing activities under one (massive) roof.

Additionally, the facility’s proximity to Toronto, the fourth largest city in North America, is another cost-saving advantage.

The former Kraft Facility sits on a 70-acre parcel of land. Currently, 20,000 square feet of the facility is fit for cannabis cultivation. It is anticipated that 4 X new grow rooms will come online in the coming weeks effectively doubling the company’s production capacity.

The company’s expansion of their facility is outlined in multiple phases of development. With the goal of eventually reaching the total capacity of the land and owning a 3.9 million-square-foot facility by 2020. Cannabis Wheaton, is currently in the process of submitting to FV Pharma – blue print renderings – for the buildout of 200,000 sq. ft. of new cultivation area. The company anticipates breaking ground on the planned construction in summer of 2018. The first round of expansion phases will increase the property to 820,000 square feet, in anticipation of the final round of development that will make the property the largest indoor cultivation facility in the world.

Business Model

To meet the overwhelming demand for cannabis in Canada in anticipation of a legalized recreational market, FV Pharma intends to pursue the cannabis market with a disciplined approach, patterning its business model after the pharmaceutical industry. The company aims to maintain tight cost controls and achieve economies of scale while taking full advantage of their spacious facility. The backbone of our business is supported by a core competency in quality cultivation that will support all of the company’s planned business lines under one roof.

The facility will also be the testing ground for technological innovations within the cannabis space, such as new energy-saving lighting and new technologies to manage bacteria and mildew issues. As a former food-grade production facility, FV Pharma’s production space is already well-equipped to minimize the presence of pests.

Joint Ventures

FV Pharma’s partner, Cannabis Wheaton, specializes in financially supporting cannabis companies for a portion of their equity in addition to rights to a portion of their cannabis yield. As outlined in the agreement, Cannabis Wheaton will receive 49.9 percent of all cannabis products produced at the former Kraft Foods facility once the expansion is complete. This equates to approximately 2 million grams of cannabis annually.

The company’s CEO, Chick Rifici, helped found Canopy Growth, a company with a reported market cap of C$6 billion in 2017. A corporate cannabis pioneer, Rifici and Cannabis Wheaton as a whole will be lending their extensive expertise in design, development, financing and operations to FV Pharma’s project.

Investments

The company has made two investments to date that complement its current business model and will assist in driving the business forward through cultivation in Quebec and federal retail distribution pipelines.

Cannara Biotech, is one of the company’s investments, plans to create the largest indoor medical cannabis growing operation in Canada. Currently, Cannara Biotech owns a 625,000-square-foot facility in Quebec, 45 minutes from Montreal. The combined size of the facilities held by both parties exceed 1.2 million square feet of indoor cultivation space and FSD Pharma owns 25% of Cannarra Biotech.

The partnership with Cannara Biotech also allows FV Pharma to establish a foothold in Quebec, where both companies can collaborate on product innovation. As an added benefit, Quebec offers the lowest rates for electricity in North America, a boon for energy-intensive operations like cannabis cultivation.

FSD has also made a strategic investment into a fully integrated retail distribution company in Canada: High-Tide Ventures. High-tide has applied for 31 retail cannabis permits in Alberta and 16 in Saskatchewan, with application expected to be submitted for British Columbia shortly. The company owns four of Canadas most prominent retail brands that are poised to take advantage of the legal recreational market in Canada which is anticipated to be enacted into law in fall of 2018.

Additional joint ventures and investments in the company’s pipeline include opportunities beyond producing dried cannabis flower. Future partnerships are being targeted to develop pharmaceutical app development of cannabis, topical creams, drinks, vaporizer cartridges and edibles.

Management

Thomas Fairfull—President, CEO

Thomas Fairfull has extensive experience in guiding companies through the process of developing, testing and commercializing products and consulting with companies bringing innovative products to market. In 2001, he founded Dynacert (TSXV:DYA) which specialized in on-board hydrogen generation technology, which is currently being used by PepsiCo. Dynacert (TSXV:DYA) was the most actively traded TSXV stock in 2016. In 2004, he successfully raised in excess of $20 million in private equity and subsequently took the company public in a successful initial public offering (IPO) and became president and CEO of a TSXV-traded corporation.

Zeeshan Saeed, Executive Vice President and Director

Michael Ash, Chief Commercial Officer

Gerry Feldman, CPA, CA Chief Financial Officer

Donal Carroll, Director

Gerald Goldberg, CPA, CA Director

Vladimir Klacar, Director

Zach Stadnyk, Head of Investor Relations


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