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VIDEO: Delta 9 Cannabis (CVE:NINE) Partnerships and Canadian Expansion

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Delta 9 Cannabis (CVE:NINE) (OTCMKTS:VRNDF) (FRA:V5D1) CEO John Arbuthnot talks with James West about Delta 9’s recent licensing agreement with Nanosphere Health Sciences. The partners plan to use patented technology to increase the uptake of cannabinoids in Delta 9 products. Arbuthnot explains Delta 9’s vertical integration strategy with regards to the recreational market, stating that the company aims to roll out retail locations in Winnipeg, Brandon, and Thompson by the end of the year. Once this retail framework is established, Delta 9 intends to look to Saskatchewan, Alberta, British Columbia, and Ontario for expansion opportunities. Delta 9 partnered with Fort Garry Brewing Company, Manitoba’s largest craft brewery, to produce Legal Lager Hemp Beer and the two companies are currently collaborating on developing non-alcoholic, cannabis-infused beverages.

Transcript:

James West:   Hey, welcome back to Midas Letter Live. My guest in this segment is John Arbuthnot. He is the CEO of Delta 9 Cannabis, trading on the TSX Venture under the symbol NINE. John, welcome to the show.

John Arbuthnot:    Thank you for having me.

James West:   Despite many technical difficulties, we’ve got you live here; I can’t believe it. John, we’ve talked to you a couple of times in the past and, you know, you’re based in Manitoba, right?

John Arbuthnot:    That’s correct.

James West:   And which for a lot of Canadians, you know, remains an afterthought; anything that comes from Manitoba, people tend to overlook, but you have not let that slow you down in your development, and you have just entered into a licensing agreement with Nanosphere Health Sciences. Tell me about that.

John Arbuthnot:    Yeah, really interesting technology there. Essentially, technology that increases the bioavailability, or uptake, of cannabinoids, and can be put into several applications that are very interesting. And whether we’re looking at the medical or the recreational side of the business, you know, again, something that, if we can walk in through the Health Canada process, would have a number of applications. We now have that exclusive license for that patent here in Canada.

James West:   Interesting. And so what is the – I mean, besides the bioavailability, what is the technology based on? So, is it like a way to make cannabinoids water-soluble?

John Arbuthnot:    Well, I mean, the big challenge with cannabis as an ingestible, or in a number of applications that are non-smoked, is the uptake. It can take, in some cases, 30 minutes or several hours for the drug to become effective. Of course that’s why patients, in many cases, are leaning back to smoking or vaporizing, because that effect is relatively instantaneous. The nanotechnology is effectively a way to change the size of the cannabinoid molecules in a way that increases the uptake and effectively makes it faster. It makes it so that that effect can be spread out over a longer period of time, and effectively increasing the effectiveness of the drug itself.

James West:   Mm-hmm. Okay, so the idea would be to then put that into some of your products, or license that technology through your products?

John Arbuthnot:    Well, I think both, James. We would look at, of course, putting this technology into some of our more basic ingestible oils that we’re currently working with. You know, I think we would also look to work with other licensed producers and processors who are, perhaps, going a little further than we are on the drug development side, and see, you know, how we can spread this technology around the Canadian market to the fullest extent.

James West:   Wow, very cool. So your website says that your focus is small-batch, hand-trimmed, craft quality cannabis. So at this point, are you mainly focused on premium dried flower?

John Arbuthnot:    Yeah. Right now, that is our main focus. You know, we really bring that back to our grow methodology, and that’s through our Delta 9 grow pods. It allows us to very precisely dial in those factors that affect product quality: your light intensity, temperature, humidity, parts per million C02 saturation, and then of course growing hydroponically. You know, we feel all of these factors, when combined, place us into the premium part of the dried flower segment, and that will very much be our focus moving forward.

James West:   Okay, so is your product organic?

John Arbuthnot:    Not certified organic. I believe there’s only one or two producers that are making that push for organic certification. Of course, we have entirely organic inputs, although we’ve not yet taken that step for certification.

James West:   Okay. So are all your customers in Manitoba, or are you selling your product across the country?

John Arbuthnot:    Well I think from the last time we spoke, we had 2,000 or 2,200 registered patients; we’re now upwards of 3,500 a few months gone, here. So, you know, still seeing that rapid growth in the medical side of the business. You know, I think we’re distributed around the country; more of our focus is here in Manitoba. About 50 percent of our overall patients are currently based here in Manitoba.

James West:   Okay, interesting, and I see that you’ve got yourself four locations in Manitoba for the onset of the recreational program?

John Arbuthnot:    Yeah, you know, and as we speak toward the recreational market, our focus will be very much on vertical integration. The first steps for us on that strategy are here in Manitoba; hoping to roll out four locations by the end of this calendar year. First two being focused here in Winnipeg, one in Brandon, and Thompson is two ancillary markets for us that are interesting.

Really the goal here is to proof that concept, to come up with, you know, for lack of a better term, a cookie cutter that we can begin to expand out over the rest of the country.

James West:   Interesting. So the big announcement July 25th was that you’d achieved a $12 million financing with a Tier 1 bank. Is that a debt instrument?

John Arbuthnot:    Yeah, so a few different components to that financing. Really, the largest component of it would be mortgage-based financing for our previously announced property acquisitions, which allow us to secure our position on our existing site here – about 180,000 square feet of warehouse space on about 47 acres of land that we’re looking to acquire as a part of our existing Health Canada facility and also an extension of that. This financing would be very much in connection with that, but to clarify on the announcement, you know, we have come to terms with a Tier 1 chartered bank here in Canada. We’re still walking through the final due diligence processes, you know, some final conditions regarding the site acquisition, but we are very confident, and an announcement on that definitively will be coming in the near future.

James West:   Okay. So I guess that’s good news for shareholders who aren’t going to be diluted by your CapEx requirements.

John Arbuthnot:    Well you know what, I think it’s a great testament to the stage of advancement for our business that we’re perhaps debt-ready, you know, and are seeing one of the larger banks step to the table. Also, I think we’re starting to see this progression across the industry, where the banks are starting to pay attention, and that speaks to the maturity of the industry as a whole.

James West:   Right, okay. Now back in June, you released some news about partnering up with Fort Garry Brewing for a legal lager-hemp beer. And that’s intriguing. So is this a beer brewed from cannabis?

John Arbuthnot:    No, this is a barley-based beer. We put some hemp into the mash as a part of the brewing process. It comes with a very unique flavour set; really, this was an interesting, you know, co-marketing or branding play for us and Fort Garry, which is Manitoba’s largest craft brewer. We feel we’ve really come up with a very unique product there. It’s allowed us to market that product throughout the summer at a number of different events, festivals, things like that. You know what, I was discounting the amount of attraction that the broader beer consumer would have towards a hemp-based beverage, and really, sales have taken off from there. So it’s been a very positive experience for us.

James West:   Sure, you bet. Well, I used to drink Bowen Island Hemp Ale, was my beer of choice when I lived in Vancouver for a number of years. It’s no longer available, but it was really, really great beer. So if yours is anywhere near as good as that, I’m looking forward to trying it! Now, are you going to broaden the product sort of range that incorporates hemp?

John Arbuthnot:    Well, I think given the success of the legal lager, you know, it’s certainly something that we’ll look into. We are seeing a little bit of an expansion of the hemp regulations as a part of legalization this fall, so I think, you know, again, something that we’ll continue to pursue, particularly in the drinkables segment.

You know, of course, phase two of our stated agreement with Fort Garry Brewing is to now start to formulate a de-alcoholized and cannabis-infused beverage. Obviously a lot of excitement in the space, I think, around the de-alcoholized and cannabis infused beverages.

James West:   Fantastic. Tell me: what are you going to do to carve out more market share for yourself in the immediate term and later in 2019? What’s the next year hold for Delta 9?

John Arbuthnot:    Yeah, so I guess, you know, speaking on two factors there, I mean, we’re aggressively expanding our production facility here. You know, again, last we spoke, I think we had 15 to 20 of our Delta 9 grow pods in production; we now have 100. So you know, growing really exponentially based on the rollout of these pods in our warehouse. Our production capacity is about triple again, when we last spoke. So main focus, I guess, from the production/distribution side is just ramping up that capacity to be able to supply the market and acquire market share.

Again, from there, our focus is on a vertical integration strategy into retail. The first push there will be the four stores in Manitoba. You know, from there, we look at other markets that have announced retail frameworks: Saskatchewan, Alberta. BC I think will come a little bit later for us, but of course, the most exciting announcement or upcoming announcement in the space is the potential for retail in Ontario.

James West:   You bet. All right, John, we’re going to leave it there. We’re going to come back to you soon. Next time, we hope to do this with the camera in your grow space, if that’s possible.

John Arbuthnot:    Absolutely, James, and you know what? At some point we’re going to have to get you out here to Manitoba to enjoy a Legal Lager with us.

James West:   Well, I love what they’ve done with Winnipeg down by the river there, so you’re on. I’ll make an arrangement, we’ll come out there. John, thanks very much for your time today. We’ll come back to you soon.

John Arbuthnot:    Thank you, James.

More Great Cannabis Content

Original article: VIDEO: Delta 9 Cannabis (CVE:NINE) Partnerships and Canadian Expansion

©2018 Midas Letter. All Rights Reserved.


Source: https://midasletter.com/2018/08/video-delta-9-cannabis-cvenine-ceo-on-vertical-integration-plan/


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