GTEC

A Vertically-Integrated Entry into Canada’s Cannabis Market

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

Overview

GreenTec Holdings Ltd. (TSXV:GTEC, OTC:GGTTF, FWB:1BUP) is a Canadian company focused on the premium cannabis market with a diverse range of brands and products. GTEC’s wholly-owned subsidiaries hold multiple Health Canada licenses, including: cultivation, processing, sales (medical) and analytical testing. The company has three fully operational cultivation facilities, located in three different provinces, with a combined annual capacity of 4,000 kg. Additional facilities are expected to come online in 2019 and 2020.

GTEC has also formed partnerships within the cannabis space to ensure the company is bringing the best products to market and that its brands are on the shelves. The company is currently selling bulk cannabis to multiple Licensed Producers to facilitate on-line medical cannabis sales. These partnerships have allowed GTEC to launch the “GreenTec” brand of medical cannabis, which is currently available via both CannMart (Namaste) and CannaFarms (Vivo).

GTEC has developed six unique premium cannabis brands and intends to launch recreational cannabis products in late 2019. These products will market exotic cannabis cultivars, enhanced by superior cultivation techniques, and leading-edge marketing.

As part of the company’s vertical integration model, GTEC has applied for retail locations throughout Western Canada with the intent to capture a share of the retail and wholesale cannabis markets.

GTEC has a management team with diverse skill sets and backgrounds, spanning the cannabis, food & beverage and premium alcohol industries.

GTEC’s Company Highlights

  • Multiple operating subsidiaries give GTEC access to every facet of the industry.
  • Fully licensed cultivation facilities are currently operating in three provinces: British Columbia, Alberta and Ontario. Total annual output of 4,000 kg.
  • Head Office and Analytical Testing Lab are located in Kelowna, British Columbia.
  • Six premium-quality cannabis brands targeting specific consumer segments.
  • GreenTec brand is a top selling product on CannMart.
  • Targeting the premium market reduces market value capitulation in a potentially flooded market.
  • Management team with history of growing and consolidating licensed producers–maintains relations with many key industry players.

Canadian Cannabis Market

According to a report released by Deloitte, Canadians are expected to spend approximately $7.17 billion on cannabis products in 2019. Most of this growth can be attributed to the numerous products that cannabis companies are providing consumers, with edibles expected to capture most of the market. Research also shows that many consumers are buying cannabis to help relax, sleep and relieve pain.

Cultivation Facilities

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 14,000-square-foot facility already in production, Alberta Craft Cannabis is capable of growing 1,300 kilograms of cannabis annually. The facility was issued an ACMPR cultivation license by Health Canada in September 2017 and received its updated license in November 2018. In addition to its cultivation license, ACC also received a standard processing and a sale for medical purposes license from Health Canada in July 2019.  ACC is currently operating at full capacity.

Grey Bruce Farms

Located in Kincardine, Ontario, Grey Bruce Farms is a wholly-owned subsidiary of GTEC. The company was issued its standard cultivation license by Health Canada in July 2019.

Grey Bruce Farms’ boutique craft cannabis production facility boasts 15,000 square feet of cannabis cultivation space and has expansion capabilities of up to 500,000 square feet. GTEC has commenced cultivation and is projected to produce approximately 1,640 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.

Tumbleweed Farms

In nearby Chase, British Columbia, Tumbleweed Farms has 10,000 square feet of boutique craft cannabis production space nestled on a 22-acre parcel of land. The company’s wholly-owned real estate was acquired in 2017 and secured its standard cultivation, standard processing and medical sales licenses in August 2019.  Tumbleweed has a projected annual output of 1,000 kilograms.

GreenTec Bio-Pharmaceuticals

With three fully operational cultivation facilities, one of GTEC’s highest priorities is the completion of its wholly-owned GreenTec Bio-Pharmaceuticals subsidiary. GreenTec Bio is a 20,000 sq.ft. facility located in Kelowna, B.C., with a projected annual output of 2,150 kilograms. In addition to being a relatively large purpose-built indoor cultivation facility, GreenTec Bio has major potential for expansion on the existing site.

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F-20 Facility

In July 2018, GTEC formed a partnership with F-20 Developments Corp., a private company involved in financing and constructing licensed cultivation facilities in North America, to develop a 240,000-square-foot indoor cultivation facility in Vernon, British Columbia. At the time the agreement was signed, F-20 had already secured a property with an existing 60,000-square-foot building that the company was retrofitting as part of its Phase 1 development plan. Phase 2 is expected to consist of building out a secondary purpose-built 180,000-square-foot facility.

GTEC has commenced construction and expects the facility to be fully built by the end of 2019, with licensing and cultivation to commence by early 2020.

Lab and Extraction Facilities

Zen Labs

Zen Labs is a fully operational chemical and microbiological diagnostics laboratory for soil, water and cannabis. Zen Labs received their dealer’s license in July 2018 and is now performing analytical testing on cannabis and specific cannabinoids as well as process cannabis flower into cannabis oil. Zen Labs analyzes cannabinoid profiles, moisture content, heavy metals, microbials, aflatoxins, pesticides and other contaminants as per the regulations set out under the Cannabis Act. Zen Labs is also able to conduct full analytical testing on terpene profiling and residual solvents for authorized clients.

Spectre Labs

GTEC’s final Kelowna-based subsidiary is Spectre Labs, which is focused on cannabis oil extraction. Spectre is currently in the process of acquiring its dealer’s license. GTEC is currently developing the facility in a phased approach and it will serve as a GMP-grade facility with extraction, formulation, compounding and exporting capabilities that will support the company’s licensed producers and the global medical market. Spectre will also be able to manufacture edible products once the regulatory framework has been approved and incorporated by Health Canada.

GTEC Retail Strategy

As part of GTEC’s vertical integration strategy, the company has secured retail locations in British Columbia, Alberta and Saskatchewan.

In Alberta, GTEC has acquired a 25% interest in Cannabis Cowboy Inc. Cannabis Cowboy has also developed a recreational cannabis brand and intends to develop retail locations in Alberta. Cannabis Cowboy recently signed an agreement with Fire and Flower to sell 8 locations, facilitating full payback of GTEC’s loan investment. GTEC will retain its 25% equity stake in Cannabis Cowboy following this transaction.

The company has also secured a retail location in British Columbia and has the intention of applying for a total of eight locations within the province. GTEC acquired 4,000-square-feet of retail space in one of Vancouver’s most affluent and diverse neighborhoods. The area receives significant foot and vehicle traffic. The retail store was previously licensed to operate and sell medical cannabis and is expected to operate under the storefront name, Cake Cannabis Co.

GreenTec Retail Saskatchewan

In Saskatchewan, GTEC has a 75 percent stake in a retail initiative that includes a cannabis store in Nipawin and an e-commerce fulfillment center in Saskatoon. The company is in the process of finalizing the construction of both of these facilities.

GTEC and BATC Investments Inc. have entered into an option agreement to form a joint venture company named GreenTec Retail SK Inc. (GreenTec SK). Under the terms of the agreement, both companies are expected to identify, secure and develop cannabis retail opportunities in Saskatchewan through the joint venture company. BATC has the option to require GTEC to repurchase its interest in GreenTec SK after the first retail store has been open for business for six months.

GTEC’s Brands

The company has developed a line of six premium-quality craft cannabis brands that will target specific consumer segments. Each brand has been trademarked. The six brands are:

  • BLK MKT, which will pay homage to the origin of cannabis and will feature exotic cannabis strains high in THC;
  • GreenTec, the company’s flagship medical cannabis brand that is designed to aid and support patients with pain relief and ailments.
  • Cognoscente, which will target the true connoisseur, one that is looking for excellence in flavour, aroma and diverse terpene profiles;
  • TENZO, a lifestyle brand that will be an ideal entry point for newer users, and will aim to offer a balanced portfolio of effects;
  • Tree Hugger, a line of organic cannabis that offers an environmentally-friendly product;
  • FN, a specialty brand that will celebrate and target the First Nation communities through the company’s First Nations partners

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 in public M&A ACMPR transactions.

He is also an advisor to, and an early-stage investor in, Invictus MD. 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, VP and Director

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, where he oversaw the consumer marketing for the Canadian Dairy Division. David also 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 B.C. He holds a Bachelor of Commerce (Marketing, Honours) and Master of Business Administration (Finance) from the University of British Columbia.

Kendra Blackford — Interim CFO

Kendra Blackford is a corporate finance executive with over 10 years of experience in accounting and financial management, including all aspects of corporate administration, financing and strategic initatives. She is a designated Chartered Professional Accountant, Chartered Accountant and holds a Bachelor of Business Administration degree from the University of British Columbia.

David Buckle—Head of Cultivation

David has extensive legal cannabis cultivation experience, having worked for multiple Licensed Producers. His specialty is building and running purpose-built indoor cultivation facilities, with a focus on premium quality cannabis. David also has a robust knowledge of Health Canada laws & regulations, Standard Operating Procedures (SOP’s) and the Canadian cannabis market.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.

Jurgen Schreiber – Director

Jurgen Schreiber is a highly-accomplished executive with extensive senior management experience in the global retail pharmacy, health and beauty sectors. He was previously President and CEO of Shoppers Drug Mart, President and CEO of Rexall Health and CEO at Kats Group. He has also held senior positions with Reckitt Benckiser, Health and Beauty Erope and A.S. Watson, where he was responsible for 4,000 store in 23 countries.

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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