SpeakEasy Cannabis Club: A Craft Experience with Farming Ingenuity
May 23rd, 2018
Exclusive, News, Top News
Canada’s cannabis industry is projected to reach C$22.6 billion over the coming years, according to Deloitte, driven by the legalization of adult-use cannabis. While there are many investment opportunities in the space, investors may want to consider newer entrants that may offer more compelling valuations than established companies. Companies targeting the new recreational market may also have greater upside potential when legalization occurs.
SpeakEasy Cannabis Club (CSE: EASY) is a late-stage ACMPR applicant that’s in the final stages of review. By taking a craft cannabis approach, the company aims to appeal to Millennial recreational buyers and patients looking for precise dosing and unique delivery methods. Investors may want to take a closer look at the company.
Many licensed producers are run by finance executives looking to gain a piece of the lucrative cannabis industry. In contrast, SpeakEasy Cannabis Club’s management team has deep expertise in cannabis and farming.
CEO Marc Geen has over 10 years of experience in the medical cannabis industry helping growers comply with the MMAR, MMPR, and ACMPR programs introduced by Health Canada over the years. Prior to that, he spent 14 years as the head of operations of one of North America’s largest ginseng producers, Kettle Mountain Ginseng Ltd., and is a fourth generation British Columbia farmer that’s knowledgeable when it comes to all aspects of farming.
Chairman Merv Geen served as the Chairman and Director of Sun-Rype Products Ltd. until its eventual sale to Pattison Group in 2013. He also served as a Director of the British Columbia Fruit Growers Association, BC Tree Fruits Ltd., and BC Fruit Packers.
The experienced team aims to aggregate craft style cannabis growers that deliver high quality and low cost to both medical and recreational markets. In particular, the company plans on targeting the Millennial recreational market, which is willing to pay a premium for unique strains with differentiated flavors, aromas, and effects. Its cannabis oil products will also appeal to medical cannabis patients looking for precise dosing and delivery mechanisms.
SpeakEasy Cannabis Club’s long-term goal is to develop a cannabis campus housing five craft growers with individual identities and genetics under a single umbrella. With over 300 acres of land – and the potential to expand to 2,000 acres – in the “Napa Valley of Weed”, the company is one of the largest licensed producer landholders with plans to expand into both indoor and outdoor cultivation when Health Canada gives the go-ahead.
The company currently has a fully built 10,000 sq. ft. facility with the capacity to produce 1,100 kilograms of dried cannabis per year, the facility has the potential to generate $7.7 million in annual revenue.
On April 24, the company announced an update on its Phase II build-out. The company is progressing on schedule and is expected to be completed by early June, 2018. By the end of September, 2018, the company expects the interior to be completely built out. While the facility was originally planned for 80,000 square feet, utilizing best practices learned from previous developments, the design was optimized to incorporate an extraction facility. The additional space will provide added capacity to accommodate administrative and production staff. The new facility will house 1,600 lights spanning 40,600 square feet of flowering rooms, maximizing available floor space and allowing for a fully controlled and optimized environment to facilitate a harvest every two weeks, and enable the grow teams to complete all procedures in the same day.
Commencing October 2018, Speakeasy Cannabis Club will have an initial production run rate of approximately 8,100 kilograms, increasing to 11,000 kilograms of cannabis per year based on the improvements realized from phase 1 plus the construction of the phase 2 facility. Given the unique climate and location of Rock Creek in British Columbia, the company is in a position to cultivate some of the highest quality cannabis in Canada. With access to significant natural gas, water and electricity, the property’s infrastructure makes Speakeasy Cannabis Club very competitive in comparison with other producers while producing high-quality cannabis at one of the lowest cost per gram in the industry.
On May 17, the company also announced a multi-purpose partnership agreement with Valens GroWorks Corp. (CSE: VGW). Under the terms of the agreement, SpeakEasy will source an interim supply for Valens of 2,500 to 5,000 kilograms per month of cannabis material. Valens Dealer’s License also provides SpeakEasy with a platform to conduct R&D, store cannabis derivatives, export cannabis oils, and process natural health products.
Many licensed producers trade at lofty valuations based on market projections rather than existing revenue. As they scale up operations, many of these licensed producers have had to issue dilutive stock to raise capital since access to the debt markets has been difficult.
In terms of dilution, the company has only issued about 42 million shares to date and plans on having less than 50 million shares outstanding when it receives a cultivation license.
SpeakEasy Cannabis Club (CSE: EASY) represents a compelling investment opportunity in Canada’s burgeoning cannabis industry. By aggregating craft growers, the company hopes to rapidly expand its cultivation operations and reach high-margin Millennial recreational buyers, as well as patients looking for precise dosing and unique delivery methods. Investors may want to take a closer look at the stock given the discount to its peer group and the fact that it only recently went public on April 5, 2018, making it a relatively undiscovered opportunity.
For more information, visit the company’s website at www.speakeasygrowers.com
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