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Biome Grow (OTCMKTS: BIOIF), (CSE: BIO) |
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April 15, 2019 Issue |
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CEOCFO MAGAZINE |
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With a Team that has helped build some of the largest Cannabis Companies in the World, and strong Local Brands in place, Biome Grow is well positioned to be Canada’s Next Conglomerate |
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Biome Grow (OTCMKTS: BIOIF), (CSE: BIO) www.biomegrow.com
Interview conducted by: Bud Wayne, Editorial Executive, CEOCFO Magazine, Published – April 15, 2019
CEOCFO: Mr. Malik, the first thing you see on the Biome Grow website is “Canada’s next conglomerate”. Pretty lofty goals. Where did the vision start and what gives you confidence you will achieve this? Mr. Malik: We are still a young company, and another way to characterize us is as a startup conglomerate, which is not something most companies should do when they get started. However, there are some factors to differentiate us from your typical startup. One is we have helped build some of the largest cannabis companies in the world, so we know how to do this. We are just building one for ourselves now, where we have started with a blank slate. The other thing is that it is a young industry, and there are many opportunities out there that we know how we can get to them. These opportunities are here now, but may not be here six months from now.
When we launched this company, we launched several verticals at the same time which are now starting to bear fruit. That is where the acting conglomerate comes from, where it is not just doing one thing, but several things and doing it in an intelligent way and not just for the sake of doing it.
CEOCFO: Would you tell us about the team that you have put in place to help achieve this goal and are you the founder of Biome Grow? Mr. Malik: First, yes I am the founder of Biome Grow. With regards to the team, I would characterize it as a, “done it before” team. We have already worked with other licensed producers in Canada. In addition, we have some very senior board members from the liquor and pharmaceutical industries, as well as government which are key to what we are doing next in terms of the growth of this company. We have a large, entirely new team coming onboard at the corporate level as well, beyond the team we have now. We are a very decentralized right now in terms of our company. We are largely a construction zone. Most of our head count is at the production level, with corporate being just a dozen people managing it all.
CEOCFO: You recently announced a Memorandum of Understanding to purchase up to 20,000 kg per year of hemp-grown CBD extract from an industrial hemp grower. Would you tell us about this and how it benefits Biome Grow? Mr. Malik: The way we go into an international jurisdiction is we start with CBD-based, clinical-based, evidence-based offerings. These are purely medicines. Phase one is CBD-based meds, phase two is THC-based meds, and maybe down the road these jurisdictions will go recreational at some point. We only have 36 million people in Canada, but most of our sales will come from these other jurisdictions that we currently working on, and not Canada, although we are based here. These other jurisdictions have very large populations so the potential is significant. In our announcement we say 20 thousand kilograms, but it is not twenty thousand kilograms of extract; it is 20 thousand kilograms of concentrate, which is an entirely different animal. That equates to roughly about 180 thousand kilograms of dried flower. It is probably the largest supply deal in history. What is interesting about it is that it is CBD-based products. which we are going to sell in greater volumes than THC-based or cannabis-based products in a lot of jurisdictions; at least the ones we are targeting.
The company we are sourcing from is called CBD Acres, which is a sister company. We are one of the co-founders of CBD Acres as well, but Biome Grow and CBD Acres are two separate entities. However, what CBD Acres allows Biome Grow to do is to source very high-quality and low cost CBD concentrate that will allow us to provide CBD-based medicine both domestically and primarily overseas, at very disruptive price points and very disruptive volumes. We figured out a way through technology and know-how to produce a very low cost, high quality CBD based in Canada, whereas on the cannabis side of things, the way the regulations are written here, it is a considerably more expensive product. It limits your margins and volumes that you can get out the door, particularly in overseas jurisdictions where it may be cheaper to produce. However on the CBD side we can produce the lowest cost in the world, in Canada as opposed to going to a low-cost jurisdiction and growing over there.
This will allow us to be one of the larger producers in Canada in terms of medical sales, and quite frankly in the world in my opinion if we do our job properly. It does not require us to build hundreds of millions of dollars of our own grow facilities or production facilities to do it. I would rather have someone else be the farmer and provide us the biomass, while we cultivate the brands and the customers and sit in the middle of it. With a considerably smaller footprint we can generate cash flows which are very similar to some large companies that spend hundreds of millions of dollars building facilities and then getting them up and running and then operating these complicated facilities.
CEOCFO: Are you restricted to one grower, your sister company, or are you open to purchasing from other growers as well? Mr. Malik: We will buy from other people as well, although we may find it hard to get the price economics that we will get from CBD Acres, because it is an affiliate. However, we would like a diversified supply mix and vice versa where CBD Acres can sell to other people as well and not just us. Based on the info we are getting so far, a lot of people are knocking on the door and looking for low-cost, high quality CBD based products. I think it will do well and both of us can go in a variety of directions, and we planned to. CBD Acres will not have product ready until late this year anyway, so in the interim we will be sourcing from all over the place.
CEOCFO: Biome Grow has several brands: Highland Grow, Back Home, Great Lakes Cannabis Co., Red Sands Craft Cannabis Co. and WEEDVR. Would you give us a brief background on each and what sets them apart in this ever growing industry? Mr. Malik: First, there are different ways of approaching cannabis brands in Canada than for example California. In Canada you can have a countrywide company brand, you can have product brands. These arel very legitimate ways of building a brand and how all our competitors approach this task. We decided to setup shop in Eastern Canada where there is a lack of competition. The other thing we realized was that in Atlantic Canada, being local matters, and that does not necessarily apply to other parts of Canada. For example, if we grow locally in Nova Scotia and we brand locally, the locals prefer it and will pay more for it. They will also go out and demand the product. We are building provincial brands that are consumer facing. Think of Biome Grow as a parent corporate entity. You will not see “Biome” on any of our packaging labels for Canada. It will be these individual brands that are local and consumer based, and Highland Growth is a perfect example.
Highland Growth is a Nova Scotia company and Highland Growth resonates well with the local area we are in. We primarily set up production facilities in rural locations where we have a greater impact on society and the neighboring area. We are building local ecosystems. Highland is our first licensed commercial entity in Canada. Its product is selling well and we garner the highest price in the province. We have the highest quality or at least it is perceived to be. If you go to any of the stores in Nova Scotia that sell cannabis legally and ask them whose product is in most demand it is Highland Grow. That is based on a few criteria. First, it is local, second it is a very high quality product and third they like our packaging which is less wasteful and more environmentally friendly. In addition, there is a supply shortage right now, so they will be demanding it more, and our price points are well above average. I believe we have the strongest brand in that province.
Back Home Cannabis Corporation is our Newfoundland brand. That facility is under construction, but the first phase will be online in a couple of months. That brand is also local facing. Red Sands Craft Cannabis Company is our Prince Edward Island brand and that is a little bit of a different animal and will be more of a commercial kitchen, with edibles and extracts when they are legal in that province. Great Lakes Cannabis Company is our Ontario brand. We were not going to to sell in Ontario, even though we the corporate headquarters are in Toronto Ontario, but it was a good asset the team came with, so we decided to pull the trigger. However, anything that Great Lakes and Ontario produces will likely be sold in Atlantic Canada and overseas markets. We do not plan on selling product in Ontario that was produced in Ontario for a variety of competitive dynamic reasons.
Finally there is WEEDVR, which is not a growing facility; it is an educational platform. One thing that we learned about this sector early on was there was a lack of education, whether it is consumers or people working in the industry on the grow side of things, to the liquor control boards that handle provincial distribution. There has to be a better way to train people. We are going to have over four hundred employees by the end of next year and we are not going to put them all in a classroom. Each one of them have to be trained in a unique way because this is a highly regulated industry and you will not find an employees ready to go on the first day. There is a lot of work that has to be done. This is basically a virtual reality training and orientation program that works from various verticals. It allows us to get consumers up to speed on things, as well as industry participants. Module One is now ready to go is the consumer facing vertical, where you can learn about different strains and you can play with them, you can vape with them, you can eat edibles, you can pickup buds and twist them around. There is also the whole history of cannabis there as well. It is very feature content rich before you can factor in virtual reality aspect of it. Currently the way people learn about cannabis is they walk into the dispensary and spend ten minutes with the budtender, who educates them. However, that is not possible for everyone, so we need a good solution. The other option is to go online and read, but there is only so much your brain will retain by reading text after text and page after page. Our VR format is a better way for your brain to retain information quickly.
CEOCFO: On February 8th you announced your first shipment of finished product to Newfoundland and Labrador. How did this come about, and what is your geographic range? Mr. Malik: It came out of the Nova Scotia facility, which is a rarity. Typically the Nova Scotia facility is built to supply locals, which is the local province of Nova Scotia. We did a test shipment to Newfoundland because that is our next largest market in Atlantic Canada. We are building our largest facility there. We just wanted to get some product in the system so our consumers could see the quality that they are going to see out of their own in-Island production facility. In addition, every time you go to a new province there is a bunch of upfront stuff you have to go through while setting up your system there, so we sent a shipment there just to get that part out of the way from the administrative and logistical standpoint. This also gives a preview for customers asking for our product, and shows them what a higher quality product looks like, which is lacking in the industry right now. We will be selling internal production from our facility once it is finished. In the interim will supply a little bit from Nova Scotia, but primarily through wholesale contracts with other licensed producers. However, this allows us to get some supply out there and as there is a supply shortage, it will alleviate it for what is our most important market in Canada.
CEOCFO: Do you see BiomeGrow as a major global player? Mr. Malik: I think so. I think the way to look at it is we are going to be a major medical cannabis company around the world and then we will do a little bit of recreational in Canada for the next couple of years. I think by the end of 2020-2021, 80% of our sales will be overseas, with 20% in Canada. We are a little bit of a niche player is Canada.
CEOCFO: Last October you announced that Biome Grow was to begin trading on the CSE, the listing on Frankfurt Stock Exchange and in January 2019 you began trading over the OTCQB. What does this mean for the company? Do you have the funds in place to continue growth or will you be giving a big push for capital either through investors or through partnerships? Mr. Malik: Yes, it is a very capital-intense industry. We will be reaching out for capital later on this year. However, we will probably put some debt on the books first, announce a few things, and get the stock price a little higher before taping the equity markets. However, we do have a very aggressive production build-out schedule, which will require additional capital. Rest assured there will be additional capital raises but at a higher valuation. When we talk about efficiency of our platform, it is also how can we stretch our investor dollars as far as we can. We are pretty good at spending investor capital to get the best bang for your buck. Beyond that, we know when to raise money so we are not diluting our existing shareholders down, which has been a huge problem in this sector before.
CEOCFO: How are you spreading the word about Biome Grow to the investor and cannabis communities? Are you attending industry and investor conference? If so, what has the reaction been? Mr. Malik: Not so much investor conferences right now. We are doing a lot of unique things so we get a lot of earned media to begin with. Beyond that, your traditional IR strategies, as it relates to doing road shows with investors, it is primarily a Canadian focus right now and a little bit in other parts of the world. Some of that IR activity flows into the US as well. We have some decent US following, which is always welcomed. The conferences will probably kick-in later on this spring and summer. It is about getting our name out there. We have commercial product out there and people trying it. We will be ramping up our investor initiatives in the coming months as we have more to talk about.
CEOCFO: What will Biome Grow look like a year from now? Mr. Malik: A year from now most of our internal production facilities will either be finished or well underway. We do not anticipate being a large producer of product in Canada in terms of growing, but we will be small to medium-sized. In addition to that, a year from now you will see some very large infrastructure and ecosystems that we will have been established in a variety of international jurisdictions, which is where the real cash flow comes from. In addition, sales will have already started in several of these international jurisdictions as well. You will really see a commercial cannabis platform which is international and not just Canada. Therefore, we will be a significantly different company a year from now. We will be getting all those things across the line for our investors.
CEOCFO: In closing, address potential investors and people in the cannabis communities. Why is Biome Grow the company to follow? What sets you apart from other companies in this very exciting new industry? Mr. Malik: The majority of the large publicly traded leaders in the space that are currently multi-billion dollar enterprises when on their hockey stick stock price increases. We are sort of that next phase of companies that has not gone on that ride yet. I am not necessarily saying we will be worth billions of dollars a year or two from now, but there is a lot of upward appreciation potential to value of the company. In addition, I think we are the least risky because the way we build our company is very different and I think that most of our competitors will have a harder time surviving a year or two from now when there is more supply in the market.
We have built this company with an eye toward being as low-risk as possible while still giving our investors a very high upside, which is not always easy to do. The way we do it is by going overseas in markets where other people are not and working up large contracts with local partners or government entities. So when there is enough supply in Canada and things start commoditizing, it will be a little blip on the radar screen and not where what we rely on for the bulk of our revenues. This is the problem with most of our contemporary companies with similar market values. These comps are very Canadian-dependent and that is going to be problematic in two or three years from now when more supply comes on line. Therefore, there is a huge upside coming with international announcements, but we are going to be getting there with a lot less risk. The reason it is less risk is we sign off-take agreements and then we build facilities to supply those off-take agreements in terms of production facilities. Which is the opposite of what almost every other cannabis company does, which is build a production facility, cross their fingers and hope there is a customer for today and customer tomorrow at a reasonable price point. We do it the other way. It takes a little longer sometimes, but it is entirely a different risk profile versus your average cannabis company which is operating in a highly volatile sector. We are trying to develop a platform that goes counter to that volatility stigma that is attached to the sector. We feel we can engineer a lot of that risk and volatility out of the equation for our investors and give them predictability in terms of cash flow and hopefully upward trajectory of our market cap.
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“We have built this company with an eye toward being as low-risk as possible while still giving our investors a very high upside, which is not always easy to do. The way we do it is by going overseas in markets where other people are not and working up large contracts with local partners or government entities.”- Khurram Malik
Biome Grow (OTCMKTS: BIOIF), (CSE: BIO) www.biomegrow.com
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Cannabis Conglomerate, Biome Grow, Cannabis financing, Khurram Malik, OTCMKTS: BIOIF, CSE: BIO, With a Team that has helped build some of the largest Cannabis Companies in the World, and strong Local Brands in place, Biome Grow is well positioned to be Canada’s Next Conglomerate, CEO Interviews 2019, Cannabis Companies, Public Companies, Canadian Company, Canadian Cannabis Producer, cannabis growing technologies, cannabis regulatory consulting, cannabis business building, cannabis marketing companies, medical cannabis companies, recreational cannabis businesses, hemp CBD, cannabis cultivators, Biome Grow Press Releases, News |
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Khurram
Malik