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VIDEO: Quinsam Capital Corp CEO Exposure to Unique Cannabis Opportunities

Wednesday, June 13, 2018 12:51
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Quinsam Capital Corp (CNSX:QCA) (OTCMKTS: QCAAF) (FRA: 0Q4) CEO Roger Dent describes the unique investment model Quinsam Capital Corp uses inside the Canadian and international cannabis space. Roger also highlights particular investments inside Quinsam’s portfolio and the company’s greater focus on the more attractive aspects of the cannabis industry.


James West:    Hey, welcome back to Midas Letter Live. My guest this segment is Roger Dent. He’s the CEO of Quinsam Capital Corp, trading on the CSE under the symbol QCA. Roger, thanks for joining me today.

Roger Dent:    Glad to be here.

James West:    Roger, let’s start with an overview: what does Quinsam Capital do?

Roger Dent:    Well, Quinsam is a publicly traded company, trades on the CSE. We are an investment company that is, at this point, 100 percent focused on the cannabis sector both in Canada and internationally.

James West:    Okay, so more as a merchant bank model, more as a fund model, or what is the exact structure?

Roger Dent:    I would say we’re a hybrid model. We try to invest in companies that are not available to the typical investor, either retail investor or an institutional investor. We do a great deal of pre-public RTO transactions, we do some early stage private company investments, we do some structured loan investments, and we occasionally will just buy a conventional public company. But we very rarely buy just conventional public companies in the open market; that’s something we really have not done to any material degree.

James West:    Okay. So this differs from the royalty model that Ianthus and CannaRoyalty…

Roger Dent:    Yes. You know, they started out, in the CannaRoyalty case, focusing on trying to do structured royalty investments. It certainly looks to us that they’re becoming more and more of an operating company as time goes on. You know, we are interested in perhaps doing royalty investments; we haven’t actually done any to date. We find that the conventional equity investments and debt investments are easier to negotiate and are easier for our investors to understand the valuation of.

James West:    So is there a model that you employ, or is it more like an opportunistic sort of pick and choose and kill what you eat kind of thing?

Roger Dent:    Well, I would say we have a preferred model. We like to, when we can, make debt investments with conversion features with warrant features, where we get on the one hand the equity upside, but on the other hand, the downside protection of debt. So that’s our preferred structure, however, if a company is sufficiently attractive and is not wanting to do that structure, we’ll entertain other structures as well.

James West:    Mm-hmm. So then, tell me about some of your favourite investments that have really worked out for you so far.

Roger Dent:    Well, I guess, you know, we have a whole variety of investments, some of which we think are very good but we haven’t sold yet, so, you know, we’re big believers that you don’t know if an investment is a success until you’ve sold it.

James West:    Right.

Roger Dent:    But you know, one of the ones that I guess we just have sold in the last week, which was a great success for us, was a company called Dosecann. This was a private company based in Prince Edward Island that was going through an application procedure for a license, but it was focused on the pharmaceutical side of the business: dosing of cannabis. And it was marching down the path to go public, we were expecting it to be a public company in 2018, but Cannabis Wheaton stepped in and purchased the company last week. So we owned it for about four months; we went in in a convertible debenture security with warrants, and we made over 100 percent return in four months.

James West:    Wow, that’s great. The cannabis market generally is becoming somewhat mature, at least relative to three, four years ago, and so there’s a lot of sort of impression that it’s too late to become a grower and start out with an ACMPR license and say you’re going to grow the best and biggest. What, in your opinion, is the more attractive aspects of the cannabis industry generally right now?

Roger Dent:    Well, you know, we would agree that at this stage of the game, to set out, to make an application for a conventional Canadian cultivation license is not that interesting. There’s still, I think, a place for more players, but as an investor, we aren’t terribly interested in these companies right now, unless we can get involved in a very creative and interesting way from a financial perspective.

So, as a for instance, we are involved in one in Brantford where we took a second mortgage on a piece of real estate in the GTA; we think that that, in and of itself, is an interesting investment, but we got a 30 percent interest in the license application for free, so you know, that’s an unusual way to get involved, and we were happy to do that.

But as far as we’re concerned, the most interesting aspects of the industry right now are countries outside of Canada, where there are companies and investments that are still at the stage that Canada was at three and four years ago. And we’re also interested in companies with very specific technologies, either pharmaceutical research projects or recreational dosing or delivery mechanisms, branded product strategies, these sorts of things.

James West:    Mm-hmm.

Roger Dent:    So we’re looking for people that have something proprietary, something value-added, but you know, the traditional Canadian cultivator for us right now – not that interesting.

James West:    Right. Do you focus strictly on Canadian companies?

Roger Dent:    No. At this point I would say we are about half and half Canada and international, and most of our new investments at this stage are going either into the United States or into other countries. So in the last month to two months, we’ve taken a position, an approved Uruguayan licensee, at a very, very nominal value. We got involved in a Jamaican project. We’ve become involved with several of the major US companies; two in particular, two of our largest investments to date, one is in a company called Acreage Holdings.

Acreage has got some press coverage because a former Speaker of the House, John Boehner, is joining their advisory board. They have operations in over 20 states in the United States, one of the biggest operators in the United States, perhaps the biggest.

James West:    Sure.

Roger Dent:    So that one, we think, is going to be a very exciting company when it comes public, which we expect later this year.

James West:    Do you think that they’re going to wait for the Federal legalization of marijuana in the States?

Roger Dent:    I don’t think they’re going to wait for it. I mean, it might work out that way; I think at this point they are going through the process of consolidating all of their operating companies into one entity to go public. They had, initially, investments in a large number of companies in almost a sort of a fund-type structure, and they’ve been putting it all into a conventional corporate structure, and that is obviously a process that involves a great deal of work.

James West:    You bet.

Roger Dent:    So we think it’ll go public once that process is done. We don’t think they’ll necessarily wait for legalization; that’s still quite unpredictable. We think that is the direction things are going in, whether it’ll be 2018, whether it’ll be 2019, 2020, we’re not sure. We’re also not sure if it’s going to happen in one step. I think it’s more likely that it’ll happen in various small steps, all of which will be positive in our view.

James West:    Great. All right, well, that’s a great introduction to the company. We’re going to follow you with interest. Thanks so much for coming in today.

Roger Dent:    Appreciate it. Thanks very much.

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Original article: VIDEO: Quinsam Capital Corp CEO Exposure to Unique Cannabis Opportunities

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