GTEC Holdings Is A Cannabis Industry Dynamo In The Making
July 17, 2018
GTEC Holdings (CVE:GTEC) (OTC:GGTTF) is comprised of a Cultivation License under Health Canada’s Access to Cannabis for Medical Purposes Regulations (“ACMPR”) and a Dealers License from Health Canada’s Controlled Drugs and Substances Act – Narcotic Control Regulations and several Late Stage ACMPR applicants which are dedicated to completing their respective Phase 1 buildouts on time and on budget.
We are favorable on this structure and the wait-and-see approach. After the Phase 1 buildouts are completed, GTEC will analyze how these producers operate and will focus on expanding capacity for the ones that are the most profitable.
We are favorable on this operating structure and have highlighted the company’s subsidiaries below:
Alberta Craft Cannabis Inc. (ACC) is a based in Edmonton, Alberta and operates a 14,000 sq. ft. craft cannabis cultivation facility with estimated annual output of 1.3 million grams. ACC was granted a Cultivation license from Health Canada and is completing is final test crop before receiving its Sales license.
GreenTec Bio-Pharmaceuticals is a late stage ACMPR applicant in Kelowna, British Columbia that is constructing a 80,000 sq. ft. state-of-the-art purpose-built facility that is expected to produce 10 million grams a year. Phase 1 of 20,0000 sq. ft (1.5M grams) is facility is expected to be complete by Q4 2018.
Grey Bruce Farms is a late stage ACMPR applicant in Kincardine, Ontario that is building a 15,000 sq. ft. craft cannabis cultivation facility with projected annual output of 1.6 million grams. Grey Bruce has made substantial progress in completing a major retrofit of its existing industrial building and expects this process will be completed by Q3 2018.
Spectre Labs is a cannabis oil extraction facility in British Columbia that will be developed in a phased approach and will serve as a Good Manufacturing Practices (GMP) grade facility with extraction, formulation, compounding and export capabilities to support GTEC's Licensed Producers and the global medical market. Spectre has acquired land and building to develop the facility, completed initial design work and submitted an application to the Office of Controlled Substances for a Dealer's License.
GTEC also intends to utilize Spectre to manufacture edible products that are expected to be incorporated into Health Canada's regulatory framework in 2019. Upon Health Canada approval of phase one, the facility will be able to produce up to 24,500 grams of cannabis oil per day (equivalent to more than 8,500 kilograms per annum) and has significant room to expand. Spectre is expected to be licensed and operational by Q2 2019.
Tumbleweed Farms is a late stage ACMPR applicant in British Columbia that is building a 10,000 sq. ft. craft cannabis cultivation facility with projected annual output of 1 million grams. Tumbleweed anticipates completing this facility in Q3 2018 and signed a contract with the Pacific Agricultural Certification Society (PACS) to become one of the first certified organic cannabis companies in Canada.
Zenalytic Laboratories Ltd. is a full-service chemical and microbiological diagnostics laboratory that has just been granted a Section 56 Class Exemption Dealer's License under the Narcotic Control Regulations. Now that Zen Labs has received its Dealers License, GTEC will be able to conduct in-house analytical testing without the risk of delays associated with outsourcing as well as, be able to apply for certain amendments including import/export, R&D and extraction.
Falcon Ridge Farms is an existing certified organic farm, currently licensed by Health Canada for multiple Natural Health Products, which are non-cannabis related. Falcon Ridge holds the application queue number within the first 10 ever issued in the entire MMPR / ACMPR, and GTEC intends to purpose build and operate a complementary cannabis cultivation facility within this existing farm.
Issues Update on Canada’s Recreational Market
Earlier this month, GTEC provided an update on its Canadian recreational marijuana retail operations. The company said that after the shares started trading, the Alberta Gaming and Liquor Commission (AGLC) immediately processed 24 retail cannabis storefront applications under the name Cannabis Cowboy.
In March, GTEC’s subsidiary, GreenTec Holdings Ltd., subscribed for 25% of the issued and outstanding common shares of Cannabis Cowboy, which provides safe and reasonable clinic access to medical patients who qualify under Health Canada's ACMPR.
Cannabis Cowboy completed the development of their recreational brand and strategy and plans to convert its existing medical consulting clinics to cannabis retail stores and has further secured additional retail locations in Alberta. Cannabis Cowboy will own and operate each such cannabis retail store through one or more wholly owned subsidiaries.
GreenTec's wholly owned subsidiary, Alberta Craft Cannabis working to complete the final step in Health Canada's ACMPR licensing progress, obtaining a Sales License. Upon receiving a Sales License from Health Canada, ACC intends to pursue a supply agreement with the AGLC.
In June, GTEC's application into the Saskatchewan Liquor and Gaming Authority (SLGA) lottery process was selected to apply for a cannabis retail permit. GTEC has identified two locations, one to serve as a retail storefront and one to operate the online e-commerce segment of the license.
In early July, the British Columbia Liquor & Cannabis Regulation Branch released the application process for cannabis retail storefront locations. GTEC has already secured 2 retail locations that comply with their respective municipal zoning by-laws, with the intention of applying for over 20 locations within BC.
Issued Dealer’s License By Health Canada
Yesterday, GTEC announced that Zenalytic Labs had received its Dealer’s license from Health Canada. This marks a major milestone for the firm and a testament to the team’s ability to execute.
“Obtaining a Dealer’s License is a major step forward for the GTEC group of companies”, said Norton Singhavon, Chairman & CEO of GTEC Holdings. “The Dealer’s License will play a key role in allowing GTEC to achieve greater control of its cannabis production supply chain. We are extremely pleased that the turnaround time with Health Canada was only 17 days from the initial inspection.”
Led By Founders With “The Right Stuff”
The strength of a company’s management team is a critical component of any successful venture and GTEC has assembled a world class team. With decades of experience across North American Markets we have faith that these guys have “the right stuff” to drive the organization forward. The founders Norton Singhavon and Michael Blady have quite the cannabis industry pedigree:
Norton currently serves as the Founder and Executive Chairman of Doventi Capital G.P. and Doventi Capital Fund II L.P. Norton has extensive experience at the senior management level of capital investments and has been involved in several large acquisitions, consolidations, and start-ups in Canada’s legal cannabis sector, both private and public.
As an investor and advisor to numerous companies in Canada’s ACMPR sector, he has been responsible for deploying over C$22M into the legal cannabis sector and has been involved in another C$50M of public M&A ACMPR transactions. Norton also is an advisor to, and significant investor in, Invictus MD (IMH.V). As an experienced corporate leader, he has facilitated in regulatory matters, corporate matters, raising capital privately and publicly, as well as strategic corporate development within the public markets.
Michael formerly served as a Director of Invictus. He is also an advisor to Doventi Capital G.P. and Doventi Capital Fund II L.P. Michael holds degrees in Kinesiology and Geology from Simon Fraser University. As a venture capitalist, he has been involved since 2009 in the start-up and senior management of numerous public companies as well as performing the role of Consultant and Advisor.
In his recent role as Director and Senior Executive of Invictus, Michael helped oversee the acquisition, management and growth of a diverse portfolio of cannabis-centric businesses owned by Invictus. These businesses include manufacturing hydroponic equipment, laboratory testing and services, cultivation, media, marketing and biopharmaceutical applications. Michael has been directly involved in raising more than C$65M of capital in the cannabis sector.
A Stock to Watch
GTEC represents a very interesting opportunity and we are favorable on the growth potential. If the management team is able to execute on previously announced initiatives, GTEC will have significant room to run. The growth plans are fully funded, and we are favorable on this aspect of the story.
We are very favorable on the smokeless product market as well as the international opportunities. GTEC is executing flawlessly and working to capitalize on these burgeoning opportunities. The valuation is attractive following the recent decline and will monitor how the team continues to execute.
GTEC has attractive leverage to the retail market and this is an exciting aspect of the story. This side of the business can significantly enhance margins and improve overall fundamentals. We are keeping an eye on this one.
