From Plants to Premium Cannabis Products
This profile is part of a paid investor education campaign.*
Valens GroWorks Corp (TSXV:VGW, OTCQB:VGWCF) is 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, beverages and edibles. The company has assembled a portfolio of profit centers in Canada including cannabis extraction and processing facilities, testing facilities, and product development facilities which have the potential to serve both medical and recreational markets in the forms of products and services.
Valens’ Plants to Premium Products (P2P) strategy includes:
- Solvent-free extraction and derivatives services;
- State-of-the-art research and development and consumer and industry education;
- Largest available scale in Canada and diverse offerings of best-in-class extraction services: and
- A wide array of premium organic and non-organic cannabis products.
In May 2017, Valens received its dealer’s licenses for cultivation, extraction, testing, research and development through its wholly-owned subsidiaries Valens Agritech and Valens Labs, an ISO 17025 accreditation holder. In March 2018, the company also began processing and producing cannabis oil, currently running at a maximum capacity of 240,000 kilograms of input per month. In October 2018, Health Canada granted Valens it’s ACMPR license to cultivate and process oil.
In anticipation of the eventual commoditization of cannabis production, Valens 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 overall accuracy, consistency and potency of cannabis ingredients and products.
For these important reasons, Valens is dedicated to best-in-class extraction, product development and analytical testing. With a state-of-the-art testing laboratory in partnership with US $100B scientific instruments company, Thermo Fisher Scientific, Valens Labs is focusing on setting global standards by publishing methodologies for cannabis testing. It’s extraction and product development facility is equipped with five types of extraction and multiple finished product offerings for it’s clients. Valens has signed cannabis and hemp extraction services agreements with licensed producers including GTEC Holdings (TSXV:GTEC), Canopy Growth (TSX:WEED), Organigram (TSX Venture: OGI-X), Harvest One (TSXV:HVT) and Tilray (NASDAQ:TLRY), among others.
In March 2019, Valens entered into a bought equity financing agreement with AltaCorp Capital Inc. for $37.5 million. The proceeds from the financing will be used to expand Valens’ Canadian presence, geographic expansion, increase production capacity as well as white label product offerings.
Valens is led by an industry-experienced management team and advisory board. The company’s CEO Tyler Robson has extensive expertise in plant genetics and cultivation techniques for the production of consistent medical-grade cannabis. Robson’s unique skill-set and operational knowledge have been key drivers for the expansion of the company’s growing Canadian and international commercial interests. Robson’s robust relationship network and exceptional commercial marijuana cultivation record enhances their ability to engage in strategic transactions, and to attract both licensed producers and selected late-stage licensed producer applicants seeking support and partnership alternatives.
- Seasoned team with 75 years of combined medical cannabis 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
- Cannabis and extraction services agreements in place with Canopy Growth, The Green Organic Dutchman, Organigram, Tilray and Harvest One, among others
- Extraction input capacity of 240,000 kilograms per month at Valens Agritech
- Scalable operations for cost-controlled expansion
- Multiple research collaborations and leadership initiatives
- Bought equity financing agreement in place with Altacorp for $37.5 million
The Global Cannabis Market
Recent Health Canada data shows that sales of dried flower are decreasing month-to-month while cannabis oil sales are 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 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, is a state-of-the-art cannabis research, extraction and product development center located in Kelowna, British Columbia. Valens Agritech received a dealer’s license in May 2017 allowing them to analyze, cultivate, process, sell, import and export cannabis and cannabis-related materials. Valens also received a producers license (under the ACMPR) for cannabis cultivation and oil processing, which was updated in November 2018. It allows the company to sell cannabis and cannabis products and engage in B2B sales.
The 25,000-square foot facility has Health Canada Schedule 7 security level clearance that allows for vault-secured storage of up to $6.25 million in product. Valens’ pending Schedule 10 security level will allow the company to store as much as it desires within the vault (upwards of $100 million).
Having received its dealers license, Valens Agritech began carbon-dioxide-extracted cannabis oil production in March 2018 for research and development. The company started with an extraction processing rate of 400 kilograms per month and has since raised the processing rate to 20,000 kilograms per month.
Valens Agritech also plans to offer contract R&D services including third-party clinical trial management, custom formulation and production, derivative formulations and extraction technology and pharmacology absorption optimization
In May 2018, when it was cultivating, Valens reported the success of its first cannabis harvest. 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. 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.
In April 2018, Valens launched its 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, British Columbia. 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.
The initial crop planting 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.
In October 2018, Valens launched its subsidiary Valens Labs. Valens Labs is the company’s lab service. The company was formed after Valens sold its Supra subsidiary to RotoGro for $11 million. Valens retained all of Supra’s assets, such as the ISO 17025 certification, the dealer’s license and its analytical laboratory testing operations.
With the aim of setting the standard of third-party product verification, Valens Labs is a specialist in the testing of metals, residual solvents, pesticides, mold, terpenes and cannabinoid profiles. Valens Labs also conducts academic and commercial research projects for itself and its clients.
Partnership with Thermo Fisher
In September 2017, Valens partnered with Thermo Fisher Scientific Inc. (NYSE:TMO), a USD $100 billion market cap scientific instruments company, to develop a ‘Center of Excellence in Plant Based Science’ in Kelowna, British Columbia. Under the partnership, Valens will make use of Thermo Fisher’s instrumentations to provide analytical services, R&D, forensic analysis and support for clinical trials.
Valens expanded its original R&D agreement with Thermo Fisher in November 2018. As part of the new agreement, Valens will use Thermo Fisher’s instruments and consumables to develop and validate analytical methods for the study of cannabis. Findings from the study will be co-promoted and published for global use.
“We are excited to expand our partnership with Thermo Fisher Scientific and capitalize upon our mutual interests to strengthen industry testing standards and increase patient safety,” said Robson. “This research collaboration showcases the level of expertise of our scientific personnel and their drive to lead the industry in the analysis of cannabis. Our ISO 17025 accredited laboratory combined with the resources and scientific experience available from Thermo Fisher puts us in a great position to execute on our initiatives in the analytical testing space.”
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.
In September 2018, Valens signed another LOI with Medigrowth Australia Pty. Ltd., a medicinal cannabis company based in Victoria, Australia. Under the three-year agreement, Valens will 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.
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. The 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 long-term, 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.
Bottom of Form
Valens will also have the exclusive rights to produce, sell and distribute all of Tarukino’s branded products to the Canadian market including top sellers Happy Apple™, a cannabis-infused sparkling cider, and Pearl2.0™, a cannabis-infused food and beverage mixer.
In November 2018, Valens signed a multi-year cannabis extraction services agreement with GTEC. Under the terms of the agreement, GTEC will ship bulk quantities of cannabis to Valens over a four-year period. Valens will receive and process the cannabis on a fee-for-service basis before shipping the finished product to GTEC for final sale and processing.
In November 2018, Valens signed a multi-year cannabis extraction services agreement with Harvest One for cannabis extraction and value-added services. Under the terms of the agreement, Harvest One’s subsidiary, United Greeneries, will ship bulk quantities of cannabis to Valens for processing for a three-year period. Valens will receive a fee for its processing services. Valens will also conduct R&D services to support Harvest One’s development of cannabis-base health and wellness products, beverages, vape pens and nutraceutical products.
“We are excited for the opportunity to utilize our extraction services and R&D technology platform to support Harvest One in delivering innovative, high quality consumer packaged goods to the market,” said Robson. “Valens’ expertise in both cannabis extraction and cannabis derivatives offers Harvest One a competitive advantage in the marketplace, especially considering the proven consumer uptake and shelf life stability benefits we are able to make available through the use of SōRSE™ technology. The team at Valens intends to work closely with Harvest One to put the best possible products on the shelves for Canadian consumers.”
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.
Valens has also signed a multi-year extraction services agreement with Canopy Growth. Under the terms of the agreement, Valens will provide extraction services to provide Canopy Growth with high-grade cannabis resin.
“We are pleased to provide specialized extraction services to support Canopy Growth’s innovative product offerings, while also capitalizing on our CraftGrow partnership to bring Valens branded products to market in the new year,” said Robson. “We take pride in our proprietary extraction processes and are honored to be recognized for our capabilities in supporting the growth of the cannabis market, particularly with the increasing role cannabis oils will soon play in the edibles space.”
In January 2019, Valens signed a three-year extraction services agreement with Sundial Growers Inc., a privately held, Alberta-based licensed cannabis producer. Valens will be providing its extraction services as well as R&D service to support Sundial’s product development initiatives.
Later that month, Valens signed a multi-year extraction services agreement with Organigram Inc. (TSXV:OGI,OTC:OGRMF). Under the terms of the agreement, Valens will process cannabis and hemp from Organigram’s operations. Organigram will use the concentrate to produce oils, edibles and vaporizable cannabis products. Valens will also provide lab services for Organigram on an as needed basis.
In February 2019, Valens signed an initial and renewable two-year cannabis and hemp extraction services agreement with Tilray, a global leader in cannabis research, cultivation, production and distribution. Under the terms of the agreement, Valens will process a minimum of 15,000 kilograms of dried cannabis flower and hemp annually. Tilray will complete the final processing and sale of the cannabis distillate and oil produced by Valens.
“Partnering with Tilray to support their existing and emergent product offerings marks another milestone for Valens,” said Robson. “We take pride in our proprietary extraction processes and are honoured our best in class extraction capabilities have been recognized by Tilray, a pioneer in the global cannabis market, which we believe is a testament to the quality and reliability of our services.”
Green Organic Dutchman
The following month, Valens signed a two-year cannabis and hemp extraction services agreement with The Organic Green Dutchman (TGOD) (TSX:TGOD), a premium global organic cannabis company with operations in Canada, Europe, Latin American and the Caribbean. Under the terms of the agreement, TGOD will supply Valens with a minimum of 30,000 kilograms of cannabis in the first year and 50,000 kilograms the second. TGOD will be using the cannabis concentrated cannabinoid resins and distillates to produce oils, sprays, capsules, edibles, beverages and topical products.
Valens will also be working with TGOD to expedite the process of gaining organic certification for the company’s organic processing methods. Once Valens obtains its certification, the company will offer a one-year exclusivity to TGOD for organic extraction processing services.
“We are excited to work with TGOD, Canada’s premier certified organic producer,” said Robson. “Organic resonates with consumers, and Valens looks forward to helping accelerate TGOD’s time to market with the launch of its hemp-derived CBD product line in the coming months.”
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.
Jeffrey Fallows, LLB/MBA — President
Mr. Fallows is an accomplished finance professional with over 17 years of experience working on a wide range of financial advisory mandates in the cannabis, consumer products and industrial products industries including mergers and acquisitions, initial public offerings, private placements, and strategic reviews both domestically and internationally. Prior to joining Valens, Mr. Fallows was a Managing Director at AltaCorp Capital Inc. where he was the Head of the Life Sciences and Diversified Industries investment banking teams.
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. Buysen has a Bachelor of Commerce degree from the University of Alberta, a Master of Professional Accounting degree from the University of Saskatchewan and is a CPA, CA.
Chantel Popoff – COO
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.
Everett Knight — EVP of Strategy and Investments
Everett Knight has analyzed hundreds of cannabis companies and toured countless facilities globally. He has managed one of the only institutional investment mandates focused on the cannabis industry. His investment experience in the sector began in 2014 and since that time, he has accumulated a thorough understanding of the industry, regulations, subsectors, and the companies involved in this fast-growing space.
Scott Young—Vice President 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.
Quinn Shiskin – Head of Production
Quinn Shiskin’s career emanates around production as a multi-ticketed Red Seal tradesman; where he worked in a variety of industries including mining, oil sands, LNG, pulp and paper and construction. In 2015, he had the foresight to enter the rapidly growing cannabis industry where he took extraction training in multiple facilities around North America. Upon gaining an in depth understanding of the specific process of extraction, he began designing and fabricating a variety of high throughput extraction systems. With his ever-growing knowledge of plant science and extraction processes, he is now the extraction process manager at Valens Agritech.
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.
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.
Phil Donne’s background in the food and brand / communication industries extends over 30 years, spans 8 countries and incorporates rebrands, restructures, re-launches and bold brand and communication initiatives. From foundation experience at General Mills and Coca Cola up to his last role as President / CEO of Campbell Company of Canada, Mr. Donne’s bias has been to truly push the status quo and to spark innovation to achieve new levels of potential and awareness. His years at Campbell’s witnessed a spurring of the health and wellness renovation and relaunch of the entire soup portfolio. At Campbell’s, Mr. Donne also led the first “meal replacement” offering in a can that was used to help in the fight against hunger both domestically and abroad. With Kellogg’s, Mr. Donne gained experience across Europe as President in several posts. Returning to Canada as CEO of Kellogg Canada, he led a relaunch of the business that featured the breakthrough introduction of North America’s first “meal replacement” cereal, Vector which remains the single largest new cereal product of the last 20 years.
Brett Channer has over 25 years of marketing industry experience leading businesses as the CEO, President, and Chief Creative Officer and is now the founder of Mass Minority, a media studio with patent pending technology that works with creative content to outperform the market. Mass Minority is enjoying exponential growth and in less than three years has become a top agency in Canada. Before starting Mass Minority, Mr. Channer created the agency start up Red Lion for the Publicis World Wide Group, a digitally rooted company that shaped brand behaviour. Profitable in its first year, Red Lion became a change agent for Publicis and for clients seeking a new way to connect with customers. At Saatchi & Saatchi, Mr. Channer worked into the role of CEO and CCO. He was responsible for leading Saatchi Canada to “Most Improved Agency in Canada” as recognized in Strategy Magazine, as well as one of the top 10 most creative agencies in Canada. Becoming one of the top performing offices for growth in the Saatchi Network, Mr. Channer was the first Canadian to be invited onto the Saatchi Worldwide Board where he had shared responsibilities in the company’s global performance.
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