GreenTec Holdings

A Vertically-Integrated Entry into Canada’s Cannabis Market

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

Overview

GreenTec Holdings (TSXV:GTEC) is a Canadian company with a multi-pronged approach to entering the premium cannabis market with a diverse range of products. GTEC’s wholly-owned holdings are at various stages of Health Canada’s Access to Cannabis for Medical Purposes Regulations (ACMPR) licensing process and specialize in cannabis cultivation, processing and  testing. The company is deeply involved in every stage of their product from cultivation to the point of sale.

GTEC has a wealth of experience in multiple aspects of the cannabis sector to draw upon:  its management team was integral in the creation of Invictus MD Strategies (TSXV:GENE,OTCMKTS:IVITF), and current members of GTEC’s operations team were previously contracted by industry leader Cronos Group (CVE:CRON) to acquire sales licensing for one of their operations.

Vertical integration is key to GTEC’s business model. As such, GTEC has applied for approximately 100 retail partnerships with companies in Western Canada, like with Cannabis Cowboys in the province of Alberta. As an equity holder of Cannabis Cowboys, GTEC will be able to leverage consumer feedback and market demand on certain products, which will assist in product development through our extract and formulation Dealer’s License, Spectre Labs. Working with its wholly-owned holdings, GTEC will have five unique brands on offer initially, but plans to expand their product line to oils and edibles in accordance with the law.

Aiming to satisfy the demand for premium indoor cannabis products, a sector of the market which would be less affected by a flooded market, GTEC plans on capturing a share of both the retail and wholesale cannabis markets. European countries are an area of particular interest for GTEC, where product can be sold at a significant markup.

Once the appropriate licenses have been obtained, GTEC will begin the first phase of its operations. Within two to three years, the company hopes to increase its production to a rate of 50,000 kilograms of cannabis annually.

Company Highlights

  • Management team with history of growing and consolidating licensed producers–maintains relations with many key industry players
  • Six different subsidiaries gives GTEC access to every facet of the industry
  • Targeting the premium market reduces market value capitulation in a potentially flooded market
  • Retail partnerships will help provide up to 80 percent of shelf space for GTEC products
  • Management raised over $30 million in capital within 12 months

GTEC’s Holdings in the Canadian Cannabis Field

Research shows the Canadian cannabis market is booming. Deloitte, in their report titled “Recreational Marijuana: Insights and Opportunities” valued the Canadian retail cannabis market at between $4.9 billion and $8.7 billion.  With legislation for legalizing recreational cannabis looming, the market for cannabis in Canada is only expected to continue growing.

Furthermore, the Canadian Parliamentary Budget Office (PBO) published a report in 2016 finding the demand for cannabis in Canada to be steadily increasing. The report found a number of factors which could increase demand for cannabis, such as increased social acceptance and changing cultural attitudes, decreased chances of legal repercussions, lower prices, substitution for alcohol or complementary effects with other substances like tobacco, widespread marketing, and increased access.

With the growth of this market, in Canada and abroad, GTEC is developing a strong foothold in the space through the acquisition of six Canadian cannabis-related subsidiaries, which will allow them to satisfy increasing demand.

GTEC’s Wholly-Owned Holdings

Alberta Craft Cannabis

Formerly GrenEx Pharms, Alberta Craft Cannabis (ACC) is GTEC’s key subsidiary in the province of Alberta, Canada. ACC was the first Health Canada license to be granted in Edmonton Alberta. GTEC announced it had acquired the company in early 2018.

With a currently producing 14,000 square foot facility, Alberta Craft Cannabis is already capable of growing 1,300 kilograms of cannabis annually. The facility was issued an ACMPR cultivation license by Health Canada in September 2017. Alberta Craft Cannabis will be calling for a sales license inspection upon completion of it’s third harvest. This is anticipated to occur in Q3 2018. The company is aiming to attain a sales license by the fall of 2018. GTEC projects revenues from Alberta Craft Cannabis to reach C$10.4 million.

Grey Bruce Farms

Located in Kincardine, Ontario, Grey Bruce Farms is a wholly-owned subsidiary of GTEC. The company has submitted its production license application under ACMPR regulation and is awaiting pre-licensing inspection, one of the final stages of becoming a licensed producer of medicinal cannabis.

Grey Bruce Farms’ boutique craft cannabis production facility is currently in the final phases of construction. Once completed, the operation will enjoy 15,000 square feet of cannabis cultivation space and has expansion capabilities of 500,000 square feet. GTEC hope to begin production by early August 2018 at a projected rate of 1,500 kilograms of cannabis annually. GTEC currently owns the facility and real estate clear title. The on-site master grower in charge of cultivation has over 25 years of expertise. Grey Bruce Farms’ staff also includes a quality assurance expert charged with ensuring the company’s stringent standards and an experienced facility designer to oversee construction.

Zen Labs

Zen Labs is a full service chemical and microbiological diagnostics laboratory for soil, water, and cannabis. Zen Labs is in the process of obtaining a Section 56 Class Exemption Dealer’s License under the Narcotic Control Regulations. Zen Labs will analyze cannabinoid profiles, moisture content, heavy metals, microbials, aflatoxins, pesticides and other contaminants as per the regulations set out by Health Canada’s ACMPR, for Licensed Producers, Production for Own Medical Purposes, Production by a Designated Person, and individuals who are authorized for personal medical consumption. Zen Labs also intends to be able to conduct full analytical testing on terpene profiling and residual solvents for authorized clients.

Tumbleweed Farms

In nearby Chase, BC, Tumbleweed Farms is a late stage ACMPR applicant which consists of 10,000 square feet of boutique craft cannabis production space nestled on a quite 22 acre parcel land. The company’s real estate was acquired in 2017 is wholly-owned.

The facility is built out of pre-fabricated steel and allowed for a quick and relatively inexpensive purpose-built facility. The exterior is now complete and the work has shifted to outfitting the interior to GTEC’s exacting specifications. exIn the project’s first phase, the company is targeting 1,000 kilograms of cannabis production annually. Tumbleweed Farms also possesses expansion capabilities of 1 million square feet with the option of increasing that number to 8 million square feet, if they choose.

Tumbleweed Farms’ cultivation license is expected to be approved at the same time as its sister operation, Grey Bruce Farms, by third or fourth quarter, 2018.

GreenTec Bio-Pharmaceuticals

One of GTEC’s highest priorities is the development of their 100 percent owned GreenTec Bio-Pharmaceuticals subsidiary, a late stage ACMPR applicant.  GreenTec Bio-Pharmaceuticals will initially produce 1,500 kilograms of cannabis annually but has the capacity to produce up to 10,000 kilograms of cannabis annually.

GreenTec Bio-Pharmaceuticals is located in Kelowna, BC. The company is a late-stage ACMPR applicant and is in the midst of constructing an 80,000 square foot production facility for cannabis cultivation.

The operation also has the potential to establish a 160 acre satellite facility in the north Okanagan and a 35 acre facility on the Trans Canada Highway. GreenTec Bio-Pharmaceuticals is expected to break ground on expansion in the fourth quarter of 2018.

Falcon Ridge Farms

GTEC’s final Kelowna-based subsidiary is Falcon Ridge Farms. The organic farm is certified under Pacific Agricultural Association guidelines and is run by two long-time Kelowna residents with nearly 90 years of combined organic herbal cultivation experience.

Although not a conventional cannabis cultivation operation, primarily growing more traditional herbs like echinacea for use in tinctures, Falcon Ridge Farms reached out to GTEC in late 2017 to expand the scope of their operations to include cannabis. Falcon Ridge Farms has consistently followed Good Manufacturing Practices and Hazard Analysis and Critical Control Points protocol and will continue to do so once cannabis cultivation begins.

GTEC plans to construct a 10,000 ACMPR square foot facility on the property which will exist concurrently to the pre-existing farm. Once completed, the first phase of the farm’s production is targeting 1,000 kilograms of cannabis production annually.

Management

Norton Singhavon—Founder, Chairman and CEO

Norton Singhavon currently serves as the founder and executive chairman of Doventi Capital. He has extensive experience at the senior management level of capital investments and has been involved in several large acquisitions, consolidations, and start-ups in Canada’s legal cannabis sector, both private and public. As an investor and advisor to numerous companies in Canada’s ACMPR sector, he has been responsible for internally deploying over $45 million into the legal cannabis sector and has been involved in another $65 million of public M&A ACMPR transactions.

He is also an advisor to, and an early-stage investor in, Invictus MD (TSXV:IMH). As an experienced corporate leader, he has facilitated in regulatory matters, corporate matters, raising capital privately and publicly, as well as strategic corporate development within the public markets.

Michael Blady—Co-Founder and VP

Michael Blady formerly served as a director of Invictus. He is also an advisor to Doventi Capital.  Michael holds degrees in kinesiology and geology from Simon Fraser University. As a venture capitalist, he has been involved since 2009 in the start-up and senior management of numerous public companies as well as performing the role of consultant and advisor. In his recent role as director and senior executive of Invictus, Michael helped oversee the acquisition, management and growth of a diverse portfolio of cannabis-centric businesses owned by Invictus. These businesses include manufacturing hydroponic equipment, laboratory testing and services, cultivation, media, marketing and biopharmaceutical applications. Michael has been directly involved in raising more than $65 million of capital in the cannabis sector.

David Lynn—Chief Operating Officer

David Lynn formerly served as the President & CEO of Sun-Rype Products. During his tenure at Sun-Rype, he achieved record net sales and EBITDA while taking Sun-Rype from a $13 million EBITDA loss to a $15 million EBITDA profit in his first year. Previous to Sun-Rype, he served as the senior VP of marketing at Saputo Canada, where he oversaw the consumer marketing strategy for the largest division of the company.

He has successfully lobbied federal and provincial governments on regulatory and policy issues including working with BC Liquor Policy Review and the Liquor Control and Licensing Branch (LCLB) to modernize liquor regulations in BC. With some provinces already electing to control distribution and sales in the future adult-use market through their provincial liquor control board, his extensive background will be a tremendous asset in navigating through the complex and diverse federal and provincial regulations. His lengthy tenure with publicly traded companies on the TSX will be immensely beneficial in guiding GTEC’s future growth. He holds a Bachelor of Commerce (Marketing, Honours) and Master of Business Administration (Finance) from the University of British Columbia.

Kam Thindal—Director

Kam Thindal is a co-founder and managing partner of Core Capital Partners (formerly Hamza Thindal Capital Corp, “Core”). Kam also currently serves as an advisor to Doventi Capital. He holds a Bachelor of Technology in technology management from the British Columbia Institute of Technology. Prior to forming Core, he spent five years as an independent capital markets advisor for several TSXV listed companies. In 2014, he lead both the private funding and IPO financing for Canada’s fifth licensed cannabis producer, Thunderbird Pharma (currently known as Emerald Health Botanicals – EMH.V), simultaneously attracting capital investors while acquiring a control position.  He and his partners have funded and acquired both medicinal and recreational cannabis assets in Canada and the US.

For the past seven years he has sourced investments, negotiated financings and acquisitions in various sectors with a particular focus on biotech, healthcare, technology and special situations, including cannabis in both private and public companies. He has funded several pre-clinical and clinical stage health care companies with an aggregate investment of over $50 million.

Jeremy Wright—CFO

Jeremy Wright currently serves as the president & CEO of Seatrend Strategy Group. He has significant experience serving as a director of Demetra Minerals, Budly Software, and Pacific Community Resources Society, and previously serving as a director with PreveCeutical Medical, and the Canadian Freestyle Ski Association. Additionally, Jeremy currently serves as the CFO for several public and private companies including: Centurion Minerals, Demetra Minerals, and Portofino Resources, and was previously the CFO for PreveCeutical Medical.

Jeremy is a chartered professional accountant (Certified Management Accountant). He has extensive negotiation training, including the University of British Columbia’s Sauder School programs: “Advanced Negotiation Skills” and “Strategies, Skills and Tactics of Negotiation”. He also holds a Bachelor of Arts, with honours in Environmental Economics from Brock University.

David Buckle—VP, Operations

David Buckle is the former senior grower at In The Zone (currently known as Original BC), a licensed producer under the ACMPR. He was responsible for: overseeing the junior growing team; developing a cultivation regiment that would ensure satisfaction to Health Canada’s QA/QC standards; overseeing harvests; and all over general cultivation duties. He was integral to establishing the first three harvests for In The Zone, which played a pivotal role in them acquiring their sales license from Health Canada. He also serves on the advisory board of Doventi Capital.

Aaron Dow—Director

Aaron Dow serves on the advisory board of Doventi Capital Fund II L.P. He practices law as a solicitor at Farris, Vaughan, Wills & Murphy LLP in Kelowna. He specializes in the areas of corporate and commercial law, real estate, bank lending, and wills and estates. He holds an undergraduate degree in science as well as a law degree, both from the University of Victoria. He also currently sits on the board of directors of the Metro Up Financial Literacy Society and is a member of both the Canadian Bar Association and the Kelowna Bar Association.

Derek Sanders—Director

Derek Sanders is a partner at Spence Valuation Group, where he specializes in business valuation, mergers and acquisitions and financial litigation support. Prior to joining SVG, he worked for national firms in valuations, transaction advisory and audit roles, in London, Kelowna and Vancouver. He has extensive experience in the valuation of privately-held companies for purchase & sales transactions, shareholder disputes, corporate reorganizations and estate freezes. He is a chartered professional accountant (CPA), a chartered business valuator (CBV) and a chartered financial analyst (CFA).


 

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