RavenQuest Eyes Massive Micro Cultivation Market
June 29th, 2018
Exclusive, News, Top News
Canada recently passed the Cannabis Act and full federal legalization is finally set to happen in mid-October. Licensed producers have been working to scale up their production, but relatively few investors are familiar with micro-cultivation.
RavenQuest BioMed Inc. (CSE: RQB) aims to help micro-cultivators move from the black market into the legal ACMPR framework in exchange for equity and/or royalty agreements. Investors may want to take a closer look at the stock after the company signed its first letter of intent in the space to prove out the business model.
Micro Cultivation & Processing
The Government of Canada introduced Bill C-45 — better known as the Cannabis Act — in April 2017 to legalize and regulate cannabis throughout the country. After passing the Senate this week, the bill will be signed into law following the Royal Assent and Prime Minister Justin Trudeau expects cannabis to be fully legalized on October 17 — a slight delay from the anticipated July launch date.
A little-known element of Bill C-45 is the introduction of micro-cultivation and processing as a means to produce cannabis. This license category is designed to enable the participation of small-scale growers in the legal cannabis industry by authorizing the same activities as a license for standard cultivation at a smaller scale.
The final draft of the bill cited the following requirements:
- Micro cultivation permits would authorize a canopy area of no more than 200 square meters — or 2,153 square feet.
- Micro processing permits would permit the processing of no more than 600 kilograms — or 13,228 pounds — of dried cannabis per year, or the entire output of a single micro-cultivation license.
The government’s intent with these micro-cultivation licenses is to bring former MMAR and compassionate-use producers into the legal fold. With limited resources and a small production footprint, many of these cannabis producers operate in the black market and outside of the scope of the ACMPR. The government hopes to bring these producers into the legal realm and help them comply with the new laws.
RavenQuest Acquires Elephant Extracts
RavenQuest BioMed Inc. (CSE: RQB) recently announced a letter of intent to acquire a majority 51 percent equity stake in Elephant Extracts, a license applicant under the ACMPR and a distributor of cannabis products and accessories. The company owns a. production facility that will be classified as a “micro cultivator” license upon passing of the Cannabis Act in Canada — meaning it could produce up to 600 kilograms per year.
“RavenQuest is committed to helping micro cultivators come into the legalized space across the country,” said CEO George Robinson. “We expect this will be the first of many micro cultivators to work with RavenQuest. Our services division, which has helped several LPs become licensed, brings an expertise which is unmatched in the cannabis space. Our experience in this highly regulated space brings precisely what is needed by the many micro cultivators who wish to properly transition to the legalized space.”
Under the terms of the agreement, RavenQuest BioMed would receive a controlling 51 percent interest in the company that can be redeemed at any time after it receives a license to produce under the ACMPR. The company will also be granted an ongoing royalty of 15 percent of the gross revenue from production at the facility developed by Elephant Extract. The transaction is subject to due diligence and other considerations before being executed.
The company’s goal is to help a select group from these thousands of these smaller producers move into the legal market through the micro-cultivation license option. Because of its consulting division and lengthy experience in this area, RavenQuest is uniquely qualified to do just that. In addition to helping them navigate the legal requirements, RavenQuest BioMed offers these companies access to its breakthrough cannabis cultivation technologies including the Orbital Garden 2.0. These technologies can help micro-cultivators greatly increase their production from the limited footprint that they’re permitted.
Micro-cultivation will play a big role in the newly legalized cannabis market. For a historical comparison, consider the fact that tobacco companies leveraged small producers to meet tremendous demand early in that industry’s formation. These same dynamics are true in the cannabis industry where standard licensed producers will have trouble meeting the significant demand for cannabis following recreational legalization.
RavenQuest BioMed Inc. (CSE: RQB) is well positioned to capitalize on these dynamics by working with micro-cultivators. In exchange for its expertise, the company could gain access to a combination of equity and royalty payments from these smaller producers.
For more information, visit the company’s website at www.rqbglobal.com.
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