Here is some technical info and interviews with Chief Scientific Officer and CEO. I apologize for how long this is but I could not provide a link as its a private investors letter and you would be asked to sign in. It's a great read, but a long read.
Beverages are going to be the next big cannabis industry.
Cannabis soda may seem like a novelty, but it reality it could be one of the biggest drivers for new cannabis companies.
You see, despite all of the progress that has been made, there is still a stigma on smoking marijuana.
While it is becoming far more mainstream, there is still that lingering discomfort when someone sparks up a big joint at a casual dinner party. Most people have no problems with pounding a few brews, draining a bottle or two of Pinot Noir or knocking back a half-a-dozen martinis. But if you fire up a doobie, you'll still get a few cock-eyed glances.
But if you were to show up to a party with a couple of cannabis colas, I doubt too many other guests would bat an eye. In fact, they may be more interested than you'd think.
That's because less people are smoking marijuana and more people are eating and drinking it in more palatable forms.
Cannabis beverage sales quietly raked in over $35 million last year. That's only including legal states like California, Colorado, Oregon, and Washington. We've seen double-digit growth over the past three years. As more states legalize marijuana, these numbers are going to go crazy.
But perhaps the most important part for investors is that big beverage companies are already placing their bets and planning massive buyouts of small companies. We've already seen that when Constellation Brands — which sells Corona and Modelo beer, Svedka vodka, and other big brands, ponied up around $191 million for a 9.9% stake in Canopy Growth Corp.(WEED.TO).
More companies will follow...and more importantly for our stocks, more global beverage companies will be looking to buy up the smaller guys, which I think it the ultimate end game for many of them.
I found one in the very early stages that could be a prime buy-out target...
What excites me about the company is the patent they have pending for water-soluble cannabis ingredients. Currently companies use butane or CO2 to scorch the cannabis pant in order to extract oil for smoking, edibles and other products. Oil is not soluble and is difficult to properly infuse into edible products. Our bodies simply don't process them quickly or efficiently. Water, on the other hand, is much easier and cleaner for such uses.
Sproutly teamed up with Infusion Biosciences, which is a biotech company that specializes in discovering cannabis-based technologies. They developed two ingredients based on their patent-pending "Aqueous Phytorecovery Process":
Infuz2O: The first truly water-soluble cannabis solution to be formulated into beverages/drinks.
BIO-NATURAL OIL: Cannabinoid oils infused into natural edibles or transdermal delivery while
retaining strain specific characteristics (“BNO”)
They expect the results to be a revolution for the industry for these reasons:
Predictable – less than 5 mins to feel effects, less than 90 mins to wear off
Experience – effects comparable to smoking and vaping
Discrete Consumption – odorless and smokeless
Formulation Versatility – numerous end-user applications
Precise Dosing – ability to deliver a measureable amount of cannabis
You can clearly see how valuable such a technology would be. You could drink a soda, have it kick in almost instantly, and then wear off in plenty of time for you to continue your day. Or, if you are so inclined, drink another one or two.
That team is headed by Dr. Arup Sen, who has over 35 years of experience in research and executive management positions at biotechnology and pharmaceutical companies including J&J, Biomet, GCC and Tokuyama Soda of Japan and Sandoz/Novartis. He also was a faculty member at the National Cancer Institute and at the Scripps Research Institute focused on cancer research.
He holds five U.S. patents and numerous international patents and pending patent applications in the fields of cancer therapeutics, bone repair biologics and devices and diagnostics.
Oh yeah, he has a PhD from Princeton too.
Credentials like that make me pretty confident that they'll be able to land a patent for water-soluble cannabis products.
Interview with Dr. Arup Sen
Dr. Sen is the Chief Science Officer of the company and has been responsible for several patents and has also been researching cannabis since the 1970s -- long before his peers. I think you'll really enjoy our talk.
Here's part one of our conversation...
Jimmy: Hello Dr. Sen, I appreciate you taking the time to speak with me. I’m sure you are very busy.
Dr. Arup Sen: Oh, yes, how are you?
Jimmy: I'm doing well, thank you. These are exciting times. I just found out about your company recently and have been doing my due diligence. I think you guys are getting into a very lucrative part of the business. I was curious to find out more about how the actual science works with the water soluble cannabis, so I figured you were the guy to talk to.
Dr. Arup Sen: Yes. So, I'm assuming that you have been with and/or following the industry for awhile?
Jimmy: I have, yes.
Dr. Arup Sen: And obviously you have heard the term "water soluble cannabinoid"-- a term being used by a lot of companies because it really seems to take the editorial liberty of calling things water soluble that actually aren't.
Oils, the classic cliché is that oil and water don't mix. That remains true even today. In the laboratory both
pharma companies and market companies, other chemical engineering companies have been doing all
sorts of formulation to keep oil in water without them separating out like you’d see in salad dressing.
You have to shake before you use it.
Jimmy: I like the salad dressing analogy. People can relate to that. Is there a more scientific parallel you could draw?
Dr. Arup Sen: Well, the only exception to that would be what mother nature does and to draw an analogy. Cholesterol as you know is an oil, both effect is different in tissues of our bodies, especially in deposits because the cholesterol is made of components of that.
And it is free oil that's distributed all through the body in specific locations, preferentially versus others. However, how did cholesterol get from one place to another? So the major transport system is the blood.
So, unlike back in the 70s when you went to get your blood drawn to assess is your cardiovascular health in good condition, they would take blood samples, process it, extract out the pure isolated oil (triglyceride, cholesterol, and so on and so forth) and measure it.
However, in the 1980s, Brown and Goldstein made the discovery that even blood is naturally water soluble forms of cholesterol. It’s now named the “good cholesterol” and the “bad cholesterol” (HDL and LDL).
Those are not all droplets. As over time found depending on how mother nature creates those water soluble forms, they are the ones who are able to transport cholesterol that's made in different places to other places where it belongs. So it remains water soluble as they go to their final home, as the story states, and they get deposited there now in the free liquid form – no longer water soluble.
Our question was, does the same thing exist in plants? And then when we planted, for example, chlorophyll (the green pigment) which also is an oil and not water soluble, but you didn't see oil droplets. What you see is an absolute water soluble form of chlorophyll.
Jimmy: What did you find when studying cannabis plants? We’re you able to recreate something similar?
Dr. Arup Sen: The industry for the last 40+ years has either been looking to chemical synthesize THC. In 1977, we used chemically synthesized THC to look at it's effect on normal brain cells versus tumor cells, and so on and so forth. And the toughest part to us is that due to the pure chemical molecules of dopamine, THC does not dissolve in water and as a result, when you put it in laboratory systems of cultured cells, or what have you, it just doesn't go in.
So we resorted to using transport chemicals to get it in, but that's not a natural means and obviously that's not applicable to delivering a product to a human.
Our whole philosophy revolves around two goals. Number one, simply using THC to get people stoned is not the business we want to be in. And we believe it's difficult when we have been developing technology to make molecules water soluble or isolate water soluble from a substance. Different plant chemicals like antioxidants from plants themselves.
We believe that there is a giant market, which is the beverage market, not just cannabis beverages, but beverage which now exceeds $50 billion globally starting from bottled water all of the way to functional beverages and other forms such as non-alcoholic beer, non-alcoholic wine, sleep aids, energy drinks and all of that mount and aggregrate to a 50+ billion dollar market.
So the goal was to produce materials that could actually go into real beverages, not just what the industry considers a “cannabis beverage”. Again, obviously if you're trying to make Pepsi with CBD, you're not going to be able to put in emulcified and encapsulated stuff in Pepsi or Coke or bottled water and products like that.
That's where it all started and we were able to develop patent pending methods to process plant materials both buds and trim, some leaves and the like. We abide without completely disrupting the plant substance which is what's done in all the extraction methods, be it organic solvent, butane or what have you.
Jimmy: From what I’ve read, it sounds like a much more natural process than scorching the plant with butane or other solvents.
Dr. Arup Sen: We kept the material pretty much in its instantaneous state and created a scenario where by the water base material that only contains dietary ingredients, to pull out any water soluble masses of water soluble form. This means either oil or other plant chemicals, be it vitamins or whatever, if it does exist in cannabis plants.
We pulled a whole plant profile of naturally water soluble material from the different strains of plants.
Once that is done and that's what we call Infuz2O, so that's pretty much infusing naturally water soluble forms of all these magnets or bring them to life into water.
Then once that's done, probably the bulk of all these molecules that are in the form of free oil, especially in the buds, not as much in the trims. Because of the way that plant material now is processed after the infused tool material being taken out, the residual plant material and all of the other oils can be simply soaked into any natural oil. So for topical applications for example we'd use coconut oil or jojoba oil for oral administration it's gonna be anything from MCT to olive oil, grape seed oil, anything.
So again without disturbing the natural context or proportion of the oils in the plants, we can pull out a full plant specific - in this industry called the “full spectrum”.
Jimmy: So that is what makes it unique? The lack of disturbance in the plant?
Dr. Arup Sen: The unique thing about the water soluble Infuz2O is that it completely effects the plant species or strain that it comes from. Infuz2O from say, cookies, is completely different from the green, or what have you. It's not disturbing anything unique to that specific plant strain. Not extracting out selective components of the oils that is enriching for THC to be in, what people are usually focused on.
We're specifically presenting the whole plant in a water soluble form to people who do not wish to smoke. They're also providing the beverage industry with the form that again represents the full plant and can be readily added directly to anything from a cough syrup versus an energy drink versus an antioxidant mix or what have you, that can go into the beverage and stay as water solution no matter what you do to it because that's how mother nature created remaining water solutions in blood, in plasma, and plants, liquid and all of that material.
That has been what we have accomplished so far and interesting enough – as one would predict – a lot of water soluble into 2O has been extremely rapid and predictable onset time that doesn't vary from plant to plant, all less than five minutes. As one would expect from any orally administered small molecules, it clears within about 90 minutes. The bulk of it is completely gone, so people come out the high, relaxed at the situation or what have you and the effect of the cannabinoid oil completely disappears, those products are no longer present and or detectable in blood, urine, and what have you.
Again that from a recreational beverage perspective then makes more like a bottle of beer, you can drink one or if you want to get completely plastered, you can drink a 12 pack. So there's a lot of people to judge what they want to do.
Jimmy: I think that's one of the more important points. Can I stop you for a second because I have a couple of questions?
Dr. Arup Sen: Yes.
Jimmy: Because I do want to get into the beverage market, but talking through it, it seems like this is a way to really get the essence of the plant. Instead of having to do a somewhat violent process like butanes or torching, it seems like you really are extracting what makes the plant this special to begin with. Initially I was thinking about this more for beverages like you were saying, but the same process could be used for any number of things.
Dr. Arup Sen: Oh, absolutely. In fact, I didn't give you my dream yet! Back in 1970 when I lived in California – I'm an old man <laughs> – I got my PHD when I was 22 back in 1970. There have been endless impacts of biotech pharmaceutical companies and research and all of that, but it’s a long time for an advocate.
When I was in California, I started collecting wine. I don't think you know this, but in the mid 1970s the U.S wine industry became capable of and recognize the importance of what's called bridle in the wine industry.
40 years later after paying the debt that I accumulated back in 1977, I came back and I saw all these incredibly interesting varieties. I said, "Oh my god, now we should be able to create bridle cannabis beverages." They're much similar to what the wine industry has done.
Jimmy: This is in the late 70s? So you've been at this awhile.
Dr. Arup Sen: Oh, yeah.
Jimmy: That's amazing.
Dr. Arup Sen: Like I said, I'm an old man.
Jimmy: Wow, well way ahead of your time as it seems.
Dr. Arup Sen: The thought of it was mother nature created plants and clearly when she organized the evolution of species and so on and so forth, that all of the interactions between the different living things in the world.
Interview with CEO Keith Dolo
I sat down with CEO Keith Dolo to discuss the new patents the company landed, and where the market is going now that it’s prime takeover time. Coca-Cola and Pepsi and both actively searching for cannabis stocks, and I believe Sprotuly is one of the best under-the-radar options for such a merger.
Jimmy Mengel: Hi Keith, thanks for joining me today.
Keith Dolo: It’s always my pleasure.
Jimmy Mengel: So, I've seen this craze happen a couple of times since I've been following the industry, but it continues to build. The stakes are larger. You've got Coca-Cola. You've got Pepsi coming out today. Now that you're you're starting to get into some of that, the big money, I think it's kind of a sea change for the industry.
Keith Dolo: Yeah, every kind of month I start thinking that it's going to plateau, especially as we came up to legalization here. I thought October 17th was going to be the big discussion point, but really it's been the multinationals investigating whether or not they want to enter into the space in some sort of capacity. That's really driven a lot of the discussion points away from just Canadian legalization, to be further investments and what companies will do from an M and A perspective, in that regard, so it's ever-changing. It's a constant liquid environment in the cannabis space, that's for sure.
Jimmy Mengel: I mean, an exciting time for where you're at, for sure. I guess, officially, do you wanna start there, because I think, last time I talked to you, you guys were just RTO-ing, and becoming Sproutly?
Keith Dolo: Yes, we had a very busy summer. We went out into the markets, publicly, July 10th, and we closed up the acquisition of Infusion Biosciences Canada, which was obviously in the works before going public, because we talked about in our road show and publicizing it. But officially, that happened August 1st, which was a big milestone for us. We closed up the acquisition of another subsequent technology probably around the last week in August.
Now, obviously, as you saw last week, we announced that we are having a bought deal financing being put together over the next couple of weeks, so that was somewhat our lead focus over the past three to four weeks, to get that shored up on the path that it was going to take.
Now that we have a 20 million bought deal financing announced, obviously, there's somewhat of a hush period, where we've got to be cognizant of what types of press releases and a direction the company goes publicly, till the deal is actually closed and the financing is complete, which we're shooting for October 18th as the close date on the deal.
But all in the meantime, really, between the acquisition of Infusion Biosciences in August and right up until today, the company's been working very hard on a number of different milestones out there, to continue to advance the business model from a scientific standpoint, but also right through to a business standpoint about how we're going to be attacking the market with our joint-venture partners or our branded products being distributed once legalization of beverages occurs later, in 2019, here, in Canada.
The company's been working pretty hard in the background to make sure that it continues on. We're excited, as we go into the fall now, to start being able to share with some of our shareholders in the street about what we've been kind of working on quietly over the past couple of months here. Lots more news to come out as soon as we get a couple of these milestones completed over the next kind of month here.
Jimmy Mengel: I think that's the way to do it. I did notice, in the press release, that you have a new patent.
Keith Dolo: We do. Preceding the Infusion acquisition, we were able to acquire another license agreement with a patent that allows us to be able to additionally infuse into our cannabis products water-soluble nutrients and minerals. Think of things like potassium, magnesium, zinc, calcium, that typically companies have a very difficult time infusing into water beverages or different functional beverages that taste well.
We were going down the path parallel to the Infusion acquisition, to be looking at the acquisition of this technology as well, which we locked up, which just gives us another tool in our tool-belt, essentially, to be able to create another level of products that have additional nutrients and vitamins in them, above and beyond just infusing cannabis into a standalone beverage that's out there. It gives us another tool in our tool-belt to be able to look at different types of beverages into the health and wellness space rather than just infusing existing products with a simple cannabinoid or simple water-soluble cannabis solution.
Jimmy Mengel: So you, I guess, ideally, you’d have a stable of functional beverages, cannabis and otherwise?
Keith Dolo: Correct. We have the option, now, to put out a functional beverage with just cannabis infused into it or a variation of that functional beverage with something that has potassium, magnesium, zinc, calcium, all also on your daily requirement list, to be infused into it, and that's technology that we acquired in the second licensing agreement with a company called MTI out of Minnesota.
They currently have products on the shelf in the alkaline water category, that are distributed through many different types of retail outlets in the US, so it's not a new technology but it's one of the top technologies for water-soluble nutrients and minerals that exists, currently, in the US, so we're quite fortunate to be able to bring that under our banner for the exact same jurisdiction that we licensed through the Infusion acquisition, which was Canada, Israel, Jamaica, Australia, and the entire European Union. We did a licensing agreement for that same technology.
Jimmy Mengel: Yeah, I was going to ask about the MTI stuff. It seems like the MTI stuff ... Is that kind of like a placeholder for you guys, just to get shelf space and work up the brand while, here, in the States, we catch up on some of the cannabis stuff?
Keith Dolo: No, we're not using it a placeholder. Are you thinking non-cannabis brands out there?
Jimmy Mengel: Yeah, I'm thinking legal CBD stuff that we could possibly offer. I'm trying to figure out this beverage market, because I know, in Canada, you're having some problems until next year. Here, we have different regulations. I'm trying to figure out what happens in between, where ... as a company and as a brand, you need to establish shelf space, you need to establish brands, but if you can't sell your main products, do you pull in these other products?
Keith Dolo: Yeah, so obviously the endplay for Sproutly is the different types of consumer products that we're going to be able to create through our Infuz2O or our bio natural oil. The first products you're going to see come to market are going to be products into the new year, when we get our sales license here in Canada, which will compete in the existing oil market. Our technology provides a bio natural oil as the second step of the process, which will be able to work under the Health Canada regulations, to be able to put out there in things such as sprays, capsules, and oil-based products.
There is a product that will come out to market, that we'll be able to achieve revenue on, but all in the meantime, I think the technology and the Infuz2O product that it creates, to be able to be infused into beverages, is kind of our standalone market differentiator, if you will.
In Canada, yes, it's not going to be legal until 2019, but creating this type of mainstream beverage, it takes months and months of formulation, shelf stability tests, testing and process and approval by Health Canada, so albeit legalization for product shelf space of those beverages isn't going to be till later, 2019, it certainly doesn't mean that we're not in the process of working on formulations about how to create those with both ourself and our joint-venture partners, so once legalization occurs, we can have products hitting the shelf space instantaneously.
I think, if we look to other jurisdictions, outside of Canada, such as the EU, which currently has hemp-based CBD drinks available in certain jurisdictions, or Jamaica, or Australia, we're going to be able to work on beverages much quicker in those jurisdictions, and you'll start to see us announce some kind of discussions regarding how we're going to tackle the beverage space, globally, which will probably happen much sooner than it will, obviously, here, in Canada, but we're still shooting for whenever the regulations approve beverages, here, in Canada.
Jimmy Mengel: How are you guys are rolling out the eventual legalization of cannabis beverages?
Keith Dolo: I think you'll see some partnerships or international expansion plans come to fruition over the next 30, 60, 90 days, let's say, where it will prove out international business model, where we can achieve beverage sales much faster than we'll be able to accomplish here, in Canada, but the Canadian spectrum, because it is so heavily regulated and Health Canada is dotting all their I's and crossing all their T's with whatever products they approve, there is a lot of concern around how beverages are going to be managed within that platform.
Are emulsions or nanoencapsulations even going to be allowed into that platform?
Because if you look at any mainstream beverage that's out there on the market, none of them use an emulsifier as an ingredient within those drinks, so it's really determining how Health Canada's going to play within the beverage space when it comes out, and it's allowing us and giving us enough time to start to ensure that we've got our joint-venture partners locked up and our products ready to go, so that we're not caught behind the eight ball when legalization occurs next year.
Jimmy Mengel: It seems like, based on some of the other companies I follow, your evaluation and some of your patents ... I know you can't talk about all of this, but it's an attractive buy-up possibility. That's basically why I'm looking so closely at you guys, because you seem to have everything going on. I talked to Doctor Sen as well, and it seems like you guys really have a different product than most of the other folks that are trying to do the beverage thing, but maybe almost reverse engineering it, and then they're trying to figure it out. It seems like you guys started from that point.
Keith Dolo: Yeah, well, we get the benefit of having Doctor Sen, who's got 12 years on water-soluble extraction research plus he's formulated a number of beverages within certain jurisdictions, globally, outside of Canada, already, in this space, so we're coming to the market with a little bit more knowledge base than some of the companies that are trying to get there through an existing emulsion or nanoencapsulation.
When you line the companies up, you line up existing products that are currently on the market, even in the US, every single one of them, at this point, right now, all from everything that I can see, uses either a nanoencapsulation or an emulsion technology, and those techs have been around for 40-plus years in the pharma world, and Doctor Sen and a number of other scientists that we've spoken to have used those in a number of different applications for a number of different pharma projects over numerous decades.
We are literally the only one that's coming with a new technology that is somewhat revolutionary, to be able to create a naturally water-soluble cannabis solution that allows us to immediately infuse a beverage, or an edible, or consumable, with a different type of standalone product, rather than trying to encapsulate something oil-based and suspend the particles in the waters so that your eyes can't see them.
But at the end of the day, they're all using an oil-based product as the starting material, so it's a bit of a different take to it, and certainly we're excited to bring it to market, and we're getting a lot of traction from people that are starting to understand the science behind it and are taking the time and attention to sit down with us and learn the theory and methodology that's being developed in the lab to get us to this point. Obviously, that's going to hold true, obviously, with our business model, moving forward as well.
Jimmy Mengel: Yeah, for beverages and all sorts of products, like you said, capsules or pretty much anything you ingest into your body.
Keith Dolo: The best way to take it into your body is a truly water-soluble form, and we are one of the only, or if the only, one, that we can determine, at this point, that's coming, with an actual truly water-soluble cannabis solution, not something that is just deemed to be water-soluble from the cannabis marketers out there in press releases, because anytime you use an oil, or an emulsion, or an encapsulation technology, it's never going to be soluble. If you look up the definition of water-soluble, it's something that dissolves evenly within water.
Oil particles never dissolve in water. It's the old oil and water. They do not mix and they never will mix.
Jimmy Mengel: Yeah, kind of the definition you learn in science class as a kid.
Keith Dolo: Yeah, there you go. I think the term water-soluble is used almost on a weekly basis, in terms of a press release of a company that's trying to create a beverage.
Jimmy Mengel: I keep seeing it a lot, but I say to myself "Well, if you have them both in there, it won't really work that way, will it?"
Keith Dolo: There are differences. If they say water-soluble and they use an oil, well, it's not. It's water-admissible. It's water-compatible, at best. I think the true realization, if you're able to pull their patent application, within the patent applications is where a company has to truly define their scientific method and actually detail it out in a very true manner.
Once you've identified something that's incorrect on your patent application, you risk it being actually thrown out, so when you pull these water-soluble technologies that are being publicized in the news and through press release, and you pull their application, it doesn't say water-soluble anywhere. It says water-compatible, water-admissible, and there's different terms used because an oil will never be water-soluble. It's the difference between true science and those who are trying to create press releases that will do their company better in the short-term.
In my opinion, there will be products that exist on the market. There are existing products, in the U.S., that use an oil, and they've carved out a niche for them, and there will be a niche market for those types of products, ongoing. We are just very confident that coming to market with a true soluble cannabis solution infused into a beverage with an onset of five minutes and an offset of 60 to 90 minutes will just allow us to stand apart from all the different competitors that are going to have shelf space right next to us, so that's the exciting part that we're starting to see through our discussions with our joint-venture partners.
Jimmy Mengel: I think that is the exciting part, which I've written about before for my readers. Speaking of my readers, one question we have got was about the OTC symbol. I haven't seen anything official on that. What's with the OTC symbol? Is that a relic of the last company? How is that working, and is that an appropriate way to invest in your business?
Keith Dolo: Yes, so our OTC listing was a gray market listing that was then upgraded to a pink sheet listing, not at our discretion. It was done through a broker dealer in the U.S. that had set it up for us, and so we went through, because we did not want to be viewed as just a gray market or a pink sheet listing, not sponsored by the company.
It has been officially upgraded to a company-sponsored OTC QB-board listing (OTCQB: SRUTF), backed by the company, and our financials, and FEC.
Jimmy Mengel: All right, that's crucial. That was one of the main things I've been getting questions about. That's great to hear.
Keith Dolo: Yeah, we didn't get publicized. We're going to put out a general corporate update, of which that's obviously one of them, but yeah, it has been upgraded to an official QB-board, so we have FCC reporting requirements and US Bank reporting standards, now, that we have to adhere to, so it is a legit ticker symbol now versus one that was essentially on then back burner before, through a pink market dealer.
Jimmy Mengel: The ticker, it's the same?
Keith Dolo: Yeah, it's the same: (OTCQB: SRUTF)
The other big thing to know is we literally put zero dollars into any U.S. promotion or any type of investor relations at this point, so as we move forward, after this kind of quiet period, when the financing gets closed out, the company will be looking to have kind of our name, and our brand, and our recognition known a little bit more, going into the fall months here, both in Canada and the US.
Up until this point, it's been a very quiet type of rollout of the company, and that's why you haven't seen a lot of press releases, you haven't seen a lot of pizazz, but we've been kind of hedging down, getting all the business items and milestones kind of checked off here on our point. Hopefully, you start to realize there's a little bit more publications coming out about us, and you ought to see more news for your readers and shareholders to follow, rather than just having to rely on your sources all the time too.
Jimmy Mengel: No, that's nice. I prefer to see things work out that way than a bunch of random press releases that don't mean anything.
Keith Dolo: Oh, I know. The problem with those is you've got to keep up with them. You've got to have one every week, ready to go, in your back pocket, and some of them are so insignificant that it shocks me that people pay to put that information out.
Jimmy Mengel: No, if you're going to swing, take a big swing. I appreciate the time, Keith.
Keith Dolo: Sounds good, Jimmy. Have a great day.
Jimmy Mengel: Take care.
You can learn more about Sproutly (CSE: SPR; OTC: SRUTF) on their website.
You can view their investor deck here.
* As anticipated, Sproutly just reached an agreement with a major beverage company. We're still buying the stock — this is only the beginning for them.
Here are all the details...
Sproutly Canada, Inc. (CSE: SPR) (OTCQB: SRUTF) have struck a joint venture deal to develop their patented cannabis beverages with Moosehead Breweries.
Moosehead is the oldest Canadian brewery, founded in 1867 and is still privately owned and operated by the Oland family.
They also make a damn fine beer...
Details are still coalescing, but there is no other way to say that this is a great achievement for an unknown company that you were the first to read about.
However, we haven't reaped the benefits yet.
I’ll let you read the entire announcement below...
SPROUTLY ANNOUNCES JOINT VENTURE WITH MOOSEHEAD BREWERIES TO LAUNCH CANNABIS-INFUSED BEVERAGES IN CANADANOT FOR DISSEMINATION IN THE US OR THROUGH US NEWSWIRE SERVICES
Sproutly Canada, Inc. (CSE: SPR) (OTCQB: SRUTF) (FSE: 38G) (“Sproutly” or the “Company”), and OCC Holdings Ltd., an affiliate of Moosehead Breweries Limited (“Moosehead”), are pleased to announce that they have entered into a definitive agreement (the “Joint Venture Agreement”) to form an exclusive joint venture (the “Joint Venture” or the “JV”) to develop, produce, and market non-alcoholic cannabis-infused beverages in Canada using Sproutly’s proprietary, naturally produced water soluble cannabinoids known as ‘Infuz2O’. Both companies will bring their respective strengths to the joint venture to develop a line of great tasting cannabis beverages featuring a rapid onset and offset effect unique to the category.
Joint Venture Highlights:
Partnership with the Oldest and Largest Independent Brewery in Canada
Over 152 years of brewing experience through six generations of family ownership
More than 140 million cans/bottles of beer sold annually throughout Canada, the United States and in 15 other countries around the world
Oland family’s proven ability in building, marketing and selling industry leading beers such as Moosehead Lager, Moosehead Radler, Alpine, and Hop City Barking Squirrel
Competitive Advantage Driven by Infuz2O
The JV beverages can deliver the cannabis effect as early as 5 minutes and last up to 90 minutes, providing an edible cannabis experience similar to traditional flower cannabis without the need to inhale smoke
Ability to address the industry challenges of overconsumption of oil-based edibles and beverages
Capability to produce a clear cannabis beverage that is much easier and faster to formulate than its competitors who will be using emulsifiers, encapsulation or chemical modification techniques
Ability to deliver functional beverages that address a “need state” by producing cannabis strain specific experiences
Natural Infuz2O process allows for a premium consumption experience and taste profile
JV Well Positioned to Enter Cannabis Beverages Upon Legalization
Moosehead’s beverage experience and R&D formulation capabilities will ensure that the cannabis beverages produced will be premium in quality and have a great taste profile. Moosehead’s established operational infrastructure will allow the Joint Venture to fast track its go-to-market strategy.
Sproutly’s cultivation facility and processing license will advance the formulation work that has been completed to date as well as production scale up.
Alignment of Interests
The Joint Venture is structured as a 50/50 equity ownership. Matthew Oland, one of Moosehead’s senior executives and Oland Family member, to lead the Joint Venture as Chief Executive Officer.
Moosehead to provide infrastructure support such as R&D, operations, procurement, finance, and distribution
Sproutly to provide proprietary custom compositions using Infuz2O for cannabis beverages in Canada
JV will have exclusive rights to utilize Infuz2O for cannabis beverages for a period of 5 years with a possible 2-year extension
Ability for the JV to enter the European market once recreational cannabis use is legalized
“With the anticipated legalization of edibles in Canada later this year, Moosehead has made the strategic decision to enter the cannabis beverage market. As one of the oldest brands in Canada and a leader in the beer category, we believe we are uniquely positioned to be a leader in the cannabis beverage category.” said Andrew Oland, Chief Executive Officer of Moosehead.
“As a 152 year old company spanning six generations, we are very selective about new business opportunities. After a significant amount of due diligence on Sproutly’s APP technology and Infuz2O water soluble cannabinoids vs other competitive technologies, we are excited to announce this joint venture.
With their advanced technology and our long-standing product development experience, we expect to bring to Canadian consumers cannabis beverages that address the major issues currently limiting appeal of this category in other markets; a beverage that: 1) actually tastes good; and 2) provides an immediate and controllable cannabis experience lasting up to 90 minutes.”
“Moosehead is a truly iconic brand and we are very excited to partner with a company that possesses such deep-rooted Canadian heritage and over 152 years of history in the beer industry. Partnering with a company of this caliber is a strong validation of APP Technology and Infuz20.” commented Keith Dolo, Chief Executive Officer and Director of Sproutly.
“This partnership with Moosehead marks an important milestone in Sproutly’s mission of delivering a safe and consistent whole plant experience from cannabis, with a lead position in the beverage market. We have developed a relationship with Moosehead built on trust and our shared vision of creating safe, responsible and high-quality cannabis beverages and we look forward to making this a reality for Canadian consumers”, added Dolo.
“After careful analysis of the cannabis industry and the cannabis beverage opportunity in Canada, we believe that Moosehead and Sproutly together are well positioned to become a significant player in the category.” said Matthew Oland, incoming Chief Executive Officer of the Joint Venture.
“The JV’s ability to leverage Moosehead’s rich history of building adult-beverage brands, and its established R&D and operational infrastructure, will enable the JV to bring great tasting cannabis beverages to Canadian consumers. The Infuz20 technology delivers a natural cannabis beverage experience, with an onset and offset time similar to traditional flower cannabis, without the need for chemical modification. We believe this will be a game changer for the sector.”
Terms of the Joint Venture
The Joint Venture will be structured as a standalone company with its own board of directors and management team. Sproutly and Moosehead will each hold a 50% interest in the JV and have the right to nominate 3 directors. Moosehead shall appoint the Chief Executive Officer and Sproutly shall appoint the Chairperson of the board of directors of the JV.
Sproutly will provide Infuz20 exclusively to the Joint Venture in Canada for the purpose of producing cannabis beverages (excluding hemp) for a period of 5 years (the “Exclusivity Period”), such Exclusivity Period being subject to a potential extension based on the Joint Venture reaching certain revenue targets.
The formation of the Joint Venture is subject to the satisfaction of certain conditions, including the execution and delivery of various transaction agreements, governance documents and supply agreements. The parties expect to form the Joint Venture on or before May 31, 2019.
