RavenQuest Smartly Increasing Cannabis Production Capacity Ahead of Legalization
April 19th, 2018
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As full legalization of adult-use cannabis approaches in Canada, licensed producers have been expanding growing space in anticipation of greatly increased demand. At the same time, with each province setting its own rules for distribution and sales, many LPs have been trying to diversify geographically so they can compete in local and regional markets. With the Canadian recreational cannabis market expected to reach upwards of $10 billion in the next few years, the stakes and potential rewards are high for those LPs that execute smart expansion plans over the coming quarters.
RavenQuest BioMed Inc. (CSE: RQB) (OTCQB: RVVQF) (Frankfurt: 1IT) is one such licensed producer and recent developments indicate the company is on the path for shrewd growth, both in terms of production capacity and of geographical diversity. Upon completion of its recent agreement to acquire a British Columbia-based late stage LP applicant, and assuming full capacity at all facilities, the company anticipates having 51,000 kilograms/year of production capacity spread across Alberta, Ontario and BC.
New British Columbia Presence
RavenQuest recently announced a Memorandum of Understanding to acquire 100% of Western Agripharma Ltd., a late stage applicant with designs on building a 125,000 square foot production facility in Port Mellon, on BC’s Sunshine Coast. The relationship began as a consulting arrangement between the two companies, a model RavenQuest is perfecting as it turns its extensive consulting business into hard assets.
“The Western AgriPharma facility would be RavenQuest’s first 100% owned, purpose-built, large scale facility to incorporate our entire suite of proprietary grow technologies,” said George Robinson, CEO of RavenQuest. “Using our proprietary grow methodologies, 125,000 square feet is more like two or three times that footprint, when you factor in what our Orbital Gardening can produce in grams-per-square-foot,” he continued. “This MOU is the culmination of what began as a simple services contract which has evolved into a potentially transformative addition to our expanding portfolio of licensed facilities. It truly illustrates the power of our services division to generate deal flow for our investment division. We believe we can continue to execute on this strategy, moving forward.”
The company anticipates about 25,000 kg/yr production from the Western Agripharm operation at full capacity, accounting for almost 50% of RavenQuest’s expected overall production. As important as the production capacity is, the geographical diversity afforded by the potential acquisition could prove equally crucial. In short, it will be more difficult for LPs to compete in markets that require extensive shipping from the production facilities to the local stores or distributors. With a presence in Alberta, Ontario, and now BC, RavenQuest will have production facilities in provinces that account for about 60% of Canada’s total population, spread from east to west.
What Is Different About RavenQuest
As mentioned earlier, RavenQuest cut its teeth by providing consulting, training and implementation services to licensed producer applicants. This Services Division provides an important revenue stream, helping to limit cash burn and decrease the need to raise potentially dilutive revenue as the company grows. In addition to providing deal flow for the Investment Division, the success of the consulting contracts demonstrates RavenQuest’s expertise in the development and implementation of cannabis operations. Think about it, LPs are paying RavenQuest for advice while the company builds out its own operations utilizing the experience gained through consulting.
Another aspect of RavenQuest’s business that sets it apart is its commitment to serving the Indigenous Peoples of Canada. This is a significant niche within the industry, with the country set to allocate about 20% of production to Indigenous Peoples lands. As a result of this focus, the company is working with the Assembly of First Nations in Saskatchewan and recently developed a collaboration agreement with the Fort McMurray #468 First Nation in Alberta. The Fort McMurray deal would give RavenQuest a 30% stake in the initial proposed 24,000 square foot facility, with a planned expansion soon to follow up to 250,000 square feet. At full size and capacity, the Fort McMurray operation would provide RavenQuest approximately 15,000 kg/year of flower production.
RavenQuest also has a research and development arrangement with McGill University to address several issues facing cannabis producers. The team of researchers is working on maximizing yield, stabilizing plant genetics for more consistent product, and classifying strains through genetic identification to assist in clinical research.
Additonally, RavenQuest has developed a revolutionary gardening environment called the Orbital Garden. The technology maximizes production space through the use of a 360 degree growing chamber that takes the popular vertical gardening technique a step further.
Put It All Together
RavenQuest BioMed is rapidly implementing a diverse business plan throughout a wide variety of industry niches. In addition to developing an impressive menu of production sites and capacity, the company is spreading across Canada in the hopes of becoming a nationally recognized player in the nation’s booming cannabis sector. Combined with the R&D, consulting, and Indigenous Peoples aspects of the business, recent agreements point to the company as one to watch over the coming quarters.
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