Valens GroWorks Corp.

From Plants to Premium Cannabis Products

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Overview

Valens GroWorks Corp (CSE:VGW, OTC:MYMSFis a vertically-integrated provider of cannabis products well-positioned to become a leader in the emerging global-wide cannabis nutraceuticals market which includes cannabis oils, extracts and edibles. The company has assembled a portfolio of profit centers in Canada including cannabis extraction and processing facilities, R&D facilities which have the potential to serve both medical and recreational markets in the forms of products and services.

Valens GroWorks’ Plants to Premium Products (P2P) strategy includes:

  • the acquisition of late-stage applicants and fully-licensed cannabis companies that align with their superior cultivation standards;
  • management, consulting, testing and support services;
  • solvent-free extraction and derivatives services;
  • state-of-the-art research and development and consumer/industry education; and
  • best-in-class cultivation of premium organic cannabis products.

In May 2017, Valens GroWorks received its Dealer’s Licenses through its wholly-owned subsidiaries Valens Agritech and Supra THC Services Inc., an ISO 17025 accreditation holder. This was followed by a supply and sales agreement with Canopy Growth (TSX:WEED) in October 2017 for the distribution, marketing and sale of Valens GroWorks’ branded products. In March 2018, the company also began processing and producing cannabis oil, running at a maximum capacity of 6,500 kilograms of input per month. Most recently, on October 12, 2018, Health Canada granted Valens it’s LP license to cultivate and process oil.

In anticipation of the eventual commoditization of cannabis production, Valens GroWorks is also focusing on supplying premium product to the high-margin nutraceutical industry, expected to become one of the strongest sectors in the medical cannabis industry, expecting to capture an early share of the emerging global cannabis market. The crucial factor in the successful commercialization of cannabis nutraceuticals products is data. Valens wants to set an example and support the government health agencies by going above and beyond the current regulations in terms of consistency and potency in cannabis products; and prescribing healthcare specialists need data to be convinced of the consistency, safety and efficacy of the medical cannabis products they are prescribing.

For these important reasons, Valens GroWorks is dedicated to best-in-class research and development focused on premium, solvent-free extraction and cannabis-based nutraceuticals and has multiple research collaborations with leading universities through both Valens Agritech and wholly-owned Supra THC Services, a Health Canada-licensed analytics laboratory in Kelowna, BC.

Recent Health Canada data shows that sales of dried flower is decreasing month-to-month and cannabis oil by licensed producers (LP) is increasing month-over-month at an average rate of 10 percent. Analysts at Eight Capital estimate that by 2024, the medical marijuana market in Canada will reach $3 billion in annual sales.

Following legalization of the recreational market, the Canadian retail cannabis market is projected to be between $4.9 billion and $8.7 billion annually, according to Deloitte’s recent report, titled “Recreational Marijuana: Insights and Opportunities”. The consulting firm is projecting a supply shortage as the total current capacity of existing licensed producers is far from matching the expected demand levels. Satisfying the recreational cannabis market alone is expected to require 600,000 kilograms of dried marijuana production annually.

Valens GroWorks’ is led by an industry-experienced management team and advisory board. The company’s Chief Executive Officer, Tyler Robson has extensive expertise in plant genetics and cultivation techniques for the production of consistent medical-grade cannabis. Tyler’s unique skill-set and operational knowledge have been key drivers for the expansion of the Company’s growing Canadian and international commercial interests. Tyler’s robust relationship network and exceptional commercial marijuana cultivation record enhances their ability to engage in strategic transactions, and to attract both LP’s and selected late-stage LP applicants seeking support and partnership alternatives.

Company Highlights

  • Seasoned growers with 75 years of combined medical marijuana experience and product knowledge
  • Developing production capacity for premium organic cannabis products in legal jurisdictions
  • Targeting both medical and recreational marijuana markets, wholesale and export
  • Assembling portfolio of fully-licensed cannabis companies for horizontal integration into “From Plants to Premium Products” strategy
  • Supply and sale agreement with Canopy Growth
  • CO2 oil extraction input capacity of 6,500 kilograms per month at Valens Agritech
  • First harvest showed higher THC content than industry average
  • Scalable operations for cost-controlled expansion
  • Recent financing of $27 million
  • Recent partnership on Valens Farms with Kosha Projects Inc. to build out 400,000 square foot cultivation facility specifically grown for oil products
  • Multiple research collaborations and leadership initiatives

Valens Agritech: Cannabis Research and Cultivation

 

Valens Agritech anticipates participation in selective clinical trial programs researching the efficacy of medical cannabis.

Valens Agritech Ltd., a wholly-owned subsidiary of Valens GroWorks, is a state-of-the-art cannabis research, cultivation and extraction center located in Kelowna, BC. In January 2017, the company announced the completion of their final inspection by Health Canada. Valens Agritech received a Dealer’s License for controlled drugs and substances in Canada in May 2017 allowing them to analyze, cultivate, process, sell, import and export cannabis and cannabis related materials. Most recently, Valens also received a Producers License for Cannabis cultivation and oil processing under the ACMPR.

The 25,000-square foot facility has Health Canada Schedule 7 security level applicationthat allows for the vault-secured storage of up to $6.25M of product at a time. The Company is pending Schedule 10 security level which will allow the company to store as much as the Company desires within the Vault itself  (upwards of $100M). The Company intends on using unique medical strain genetics with optimum cannabinoid/terpene profiles to produce pure 100%, high quality cannabis oil. The infrastructure and an impressive, experienced scientific and operational team is in place to allow for the premium production of cannabis products.

In October 2017, Valens Agritech entered into a supply and sale agreement with Canopy Growth, Canada’s preeminent cannabis company, which has developed a strong network of partnerships in the cannabis space. Under the agreement, Canopy will distribute, market and sell the company’s branded products by utilizing Valens extraction process across its extensive CraftGrow distribution network, including Tweedmainstreet.com once Valens Agritech receives all of its ACMPR licensing.

Having received its Dealers license, Valens Agritech began carbon-dioxide-extracted cannabis oil production in March 2018. The company started with an extraction processing rate of 400 kilograms per month and have since raised the processing rate to 6,500 kilograms per month, having added double-capacity, supercritical CO2 extraction machines.

In May 2018, Valens reported the success of its first cannabis harvest at its Valens Agritech facility. It exceeded expectations in terms of THC content, coming in above the industry average for the strain produced.

The Valens Agritech center’s Head of Quality Assurance is Dawn Visintainer, a highly-accomplished scientist in the field of microbiology and biochemistry with years of experience with Health Canada and quality protocol as a lab manager. She will oversee the customized extraction processes at the Kelowna facility in the production of cannabis oils and edibles as well as other natural health products.

Valens Agritech also plans to offer contract R&D services including:

  • Third-party clinical trials management, custom formulation and production
  • Derivative formulations and extraction technology
  • Pharmacology absorption optimization

Supra THC: Accredited Analytical Services and Research Facility

Supra aims to provide scientific leadership and support in the production of the highest quality herbal medicinal products on the market.

Supra THC Services Inc., fully acquired by Valens GroWorks in March 2017, is a fully-licensed, leading-edge analytical services and research lab located in Kelowna, BC. Supra holds a Health Canada-issued Dealer’s License allowing the company to conduct research, provide commercial chemical analysis as well as produce cannabis extracts and derivatives for the purpose of science.

Supra is working to become a leading service provider to the cannabis and natural health products industries. The company offers analytical services, consulting services and contract R&D, and its capabilities include clinical studies, molecular epidemiology and biomarker tracking. Supra’s sector-leading analytical infrastructure has obtained ISO 17025 accreditation,  an accreditation above and beyond the required regulations for Health Canada ensuring superior standards of its testing and calibration facility. The accreditation includes methods for cannabinoids, pesticides, toxic metals, terpenes and residual solvents. Supra is the first Dealer’s License using cannabis as its matrix in Canada to achieve this accreditation.

SUPRA was founded by Dr. Rob O’Brien, an expert in the field of analytical chemistry who has established several advanced analytical laboratories. Before Supra THC he founded Supra Research and Development, a spin-off company from the University of British Columbia’s Okanagan campus.

In September 2017, Supra announced a collaboration that Suprahas partnered with 87-billion-dollar market cap, scientific instruments company, Thermo Fisher Scientific Inc for the development of a “Centre of Excellence in Plant-based Medicine Analytics” in Kelowna. Under the partnership, Supra will make use of Thermo Fisher’s instrumentations to provide analytical services, R&D, forensic analysis and support for clinical trials.

Valens Farms

In April 2018, Valens GroWorks launched a new subsidiary company, Valens Farms. Valens Farms will be focused on the commercial production of premium quality specialty-strain cannabis while making use of dedicated, sustainable monocropping technology.

As part of its launch, Valens Farms announced a joint venture partnership with Kosha Projects Inc. Together, the two companies will build a municipally-approved 400,000-square-foot commercial cannabis production facility in the city of Armstrong, BC. The property will host greenhouse and indoor facilities expandable to a total 800,000 square feet and will be operated by Valens Farms. The joint venture partnership will see Kosha contribute an estimated $75 million in land and all facility development and construction costs and related expertise. Valens will provide design and outfitting inputs, budgetary guidance, consulting and advisory services during construction and development of the facility. Each entity is entitled to 50 percent of revenues earned and a 50 percent interest in all assets.

Initial crop planting is expected in Q3 2019, and the first phase is anticipated to see production rates of up to 56,000 kilograms per year. The cannabis produced at this facility will be primarily for extraction, which will be conducted by Valens Agritech.

Contributors to the Agritech Farms facility include Nexus Greenhouse Systems, an industry leader in greenhouse construction, DIRTT Environmental Solutions, a company known for constructing quality special-purpose interiors that meet GMP certifications, as well as other advisors that will lend knowledge and solutions throughout the construction process.

Strategic Agreements

Eticann

In August 2018, Valens signed an LOI with Colombia-based licensed producer Eticann SAS Zomac. Under the LOI, Valens will have access to purchasing cannabis materials from Eticann and the exclusive right for the company to provide extraction services for Eticann’s premium cannabis oil offerings. Valens will also provide extraction service expertise to Eticann as part of a toll service agreement, increasing the company’s footprint into Colombia and other nearby markets. Lastly, Valens will also have the option to acquire up to 50 percent of Eticann’s issued and outstanding shares.

Medigrowth Australia

In September 2018, Valens signed another LOI with Medigrowth Australia Pty. Ltd., a medicinal cannabis company based in Victoria, Australia. Under the potential three-year agreement, Valens would supply Medigrowth with cannabis flower and oil products for sale and distribution in Australia and for R&D purposes. Valens will also provide cultivation, extraction and lab service expertise to be used in R&D partnerships and collaborations with Australian universities, governments and more.

Takurino Holdings

Solidifying their presence in the extracts market, Valens has entered into a two-part, multi-year agreement with Tarukino Holdings, an R&D company that licenses technology and brands to licensed producers and processors. This agreement allows the company to enter into the cannabis-infused beverage, edible and topical categories.

Tarukino has developed a proprietary emulsion technology called SōRSE™, which transforms cannabis oil and oil-based terpenes into water-soluble forms that can be used in beverages, edibles, topicals and other consumer products. Cannabis products that use this technology can maintain potency when heated, chilled or frozen, and are not plagued with a strong taste or smell.

Under the agreement, Valens will have exclusive Canadian rights to the production and distribution of SōRSE™, allowing the company to develop innovative branded products of their own.

“One of the many key benefits of utilizing “SōRSE™ technology in edibles and infused beverages includes being able to dramatically decrease the time for onset and how long it lasts after consumption. This will improve the experience for our consumers and ultimately paves the path for how we believe cannabis will be consumed in the future” said Robson.

Valens will also have the exclusive rights to produce, sell and distribute Tarukino branded products to the Canadian market including Happy Apple™, a cannabis-infused sparkling cider, and Pearl2.0™, a cannabis-infused food and beverage mixer.

Management

Tyler Robson — CEO and Director

Tyler Robson, Chief Executive Officer, is the former Chief Operating Officer of the Company as well as Director of Operations at Valens Agritech Inc. He attended the University of Saskatchewan on a football scholarship, graduating with a Bachelor of Science degree to return to Kelowna to pursue research and development, plant innovation and life sciences, with an emphasis on medical cannabis and its applications in the treatment of seizures, chronic diseases, pain control, and neurological symptoms.  With over a decade of experience and well-earned respect in the sector, Robson has a heavy hand in the company’s plant genetics, growing methods, and facility operations that ensures consistently produced medical and recreational cannabis products and services of the highest quality.

Chris Buysen — CFO and Director

Chris Buysen has held numerous senior financial positions with reporting issuers over the past 15 years including his current role as Chief Financial Officer of the Company. He has also held a leadership role in a multi-family office, advising high net worth families on investment, business and other financial matters. Mr. Buysen has a Bachelor of Commerce degree from the University of Alberta, a Master of Professional Accounting degree from the University of Saskatchewanand is a CPA, CA.

Chris Irwin — Director

Chris Irwin is a partner in the Toronto law firm of Irwin Lowy LLP focused on securities and corporate/commercial law. He advises a number of public companies on a variety of matters including continuous disclosure and regulatory matters, reverse takeover transactions, initial public offerings and takeover bids. Mr. Irwin is also a director and officer of several public companies.

Nitin Kaushal —Director

Nitin Kaushal serves as Managing Director, Corporate Finance at PwC Canada. He has over 30 years of finance and investment expertise including having held a number of senior roles with Canadian investment banks as well as various roles within the private equity/venture capital industry. Mr. Kaushal sits on the boards of numerous public and private companies. He holds a Bachelor of Science (Chemistry) degree from the University of Toronto and is a CPA, CA.

Ashley McGrath — Director

Ashley McGrath has been involved in real estate development for 14 years as the President and Owner of Glencoe Developments Inc. He has overseen all aspects of the development business including land acquisition, finance and sales of over 850,000 square feet of development space.  He oversees the management of a large rental portfolio of residential and commercial real estate and is a shareholder in an agribusiness operating over 400,000 square feet of indoor livestock production as well as a 23,000 acre grain farm.

Chantel Popoff – VP of Valens Agritech

In 2007, Chantel Popoff was appointed Director of Operations, then Director of Marketing for a fast-growing Western Canadian retail pharmacy chain. She was responsible for overseeing operations, financial performance, and marketing for 21 locations. The pharmacy chain’s success led to an acquisition in 2012 by Shoppers Drug Mart. In January 2013, she took the opportunity to join a Canadian natural health food company for a more fast-paced, entrepreneurial environment, leading the operations and marketing of a national product launch.  By late 2015, Popoff and her team had gained shelf placement in over 8,000 stores, while implementing standard operating procedures, financial reporting structure and national consumer and trade marketing programs to grow the brand and prepare the company for further growth. She was promoted to President of the company in 2016.

Her experience enabled her to successfully gain an in-depth understanding of both the retail pharmacy and retail health food space as well as the regulatory environment necessary to run pharmaceutical operations across Western Canada.

Scott Young—VP of Investor Relations and Business Development

Scott Young’s focus at Valens is corporate finance initiatives. He has spent the past 15 years working in the capital market sectors of Canada, the United States and Europe. Beyond this, he has extensive business development experience in  China, North America and South America. He has helped finance numerous start-up companies through his networks in various industries such as energy, mining, technology and biotechnology. His expertise in financing, marketing and communications help profile VGW to retail and institutional investors globally.


 

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