VIDEO: NorthBud Farms Inc Going Public This Month

NorthBud Capital is an equity player providing early-stage seed level capital to primarily US-based companies operating in the cannabis space. NorthBud Capital was a seed player in NorthBud Farms Inc, which took over a late-stage ACMPR application from Tetra Bio Pharma Inc (CVE:TBP) (OTCMKTS:TBPMF) (FRA:JAM1), and it is going public in late September. CEO Ryan Brown shares that the return on investment for NorthBud Capital has been approximately 120 percent over the past 14 months and all the appreciation has occurred in the private sector. NorthBud Farms plans to develop unique cultivars that can be used by its biopharmaceutical partner, Tetra Bio-pharma, in addition to other biopharmaceutical and food-grade companies. The segment concludes with a discussion of the value catalysts in 2018 and 2019 that will drive NorthBud stocks when it goes public.

Transcript:

James West:   Hey, welcome back to Midas Letter Live. My guest this segment is Ryan Brown, CEO of NorthBud Capital and NorthBud Farms, Inc. Welcome to the show.

Ryan Brown:   Thanks for having me.

James West:   Hey, Ryan, so tell us: What is NorthBud Capital, and what is the difference between NorthBud Capital and NorthBud Farms?

Ryan Brown:   So NorthBud Capital is an incubator fund that we started about 14 months ago. Our goal was to provide early-stage seed level capital to companies that were operating within the ancillary space, primarily in the United States. You know, unique companies backed by savvy operators that had identified a niche for their products or services within the ever-expanding cannabis space. So we raised some capital a little over a year ago and have deployed the majority of it over the past year to help incubate and develop these companies, as they’ve all moved on to subsequent financing rounds based on our initial capital investment.

James West:   Right. Okay, so essentially a royalty player, then, much like iAnthus or CannaRoyalty?

Ryan Brown:   No, we went straight equity. We got in early with a lot of these companies; we secured ourselves equity positions, anywhere between 7 to 15 percent, leaving a little bit of, you know, equity on the table for subsequent financing rounds knowing that we were in early, and all of these companies have subsequently gone through Series A and Series B financing rounds which have provided us a really healthy return on the initial capital that we put in.

James West:   Okay, so you started with some capital and you’ve grown it, and now you’re going to go public?

Ryan Brown:   The company that goes public late in September is our NorthBud Farms project. NorthBud Capital was a seed investor in NorthBud Farms, which was a spinout of Tetra Bio Pharma, a late-stage ACMPR application that we took over from Tetra and are financed and are developing that on our agricultural land located just north of Ottawa. Expect to have that online by the end of the year, early 2019.

James West:   Okay. And you’re a co-founder of Tetra Bio Pharma as well?

Ryan Brown:   Correct, yeah. I was a co-founder of Tetra Bio Pharma, still a large shareholder and avid supporter, and we look forward to working with Tetra as a potential cultivator for the cannabis required for their ongoing pipeline of pharmaceutical products.

James West:   Okay, interesting. So who are most of your investors? Like, who put the money into NorthBud?

Ryan Brown:   Our investors, for NorthBud Capital, our investors range from, you know, accredited investors, people who have invested with us in the past – we’ve got a few small US institutions that have put some capital in as well. Myself, you know, my partner, André Audet, we financed a substantial portion of it, which, you know, we believe that putting our money in first and putting our money in a locked-up position in these companies provides other investors with a certain level of security; shows that we’ve got some skin in the game, as well.

James West:   Sure. And so since inception, what has been your return on investment?

Ryan Brown:   For NorthBud Capital, we’re sitting at approximately 120 percent over the 14 month period. Important to note that none of the companies we’ve invested in have seen any public market liquidity yet, so this appreciation has all occurred within the private sector. Us as a seed investor, and then these companies follow up with independent investments in Series A and Series B rounds, which we typically do participate in as well, but usually in a smaller amount than our initial investment in the company.

James West:   I see. Okay, and then so, your IPO round coming up, is that something that our audience could participate in if they’re accredited?

Ryan Brown:   Yeah, certainly they can reach out to us. We have a little bit of overflow from the pre-IPO round; we expect to list the third week of September, so they would have to get into contact with us relatively quickly. But we see a tremendous value in NorthBud Farms, not only as a company but also as an investment vehicle or investment opportunity for investors looking to get into the space.

James West:   Okay. So you – NorthBud Capital has a 15 percent equity stake in NorthBud Farms?

Ryan Brown:   Correct.

James West:   Okay, and what is the growth profile in terms of the product that NorthBud Farms is developing right now? Or where is it at, in the cycle?

Ryan Brown:   So our late-stage ACMPR application that we took over from Tetra, we’ve just began construction of the actual facility. Previous to that, we had done all of the infrastructure implementation; we’re working with a very well-respected construction company out of Drummondville, and we expect construction to be completed by the end of 2018, possibly early 2019, and ready to submit our confirmation of readiness evidence package to Health Canada. Our focus moving forward from a cultivation perspective is to really develop unique cultivars that can be used by our pharmaceutical partner, Tetra Bio Pharma, as well as other biopharmaceutical and food-grade companies looking to break into the space. We believe that we’ve got access to a very interesting and unique genetic portfolio that will set us apart from a lot of the other kind of late-stage applicant/early stage cultivators that have had to rely on a lot of the existing genetics in the space.

James West:   Oh, interesting. Okay, so is that by your association with Tetra Bio Pharma that you have the access to this specialized technology?

Ryan Brown:   It’s not in the technologies per se, it’s more so our network and some of our investors from overseas that have access to unique genetics. One of the benefits for NorthBud Farms is being licensed under the Cannabis Act, we’ll qualify for the ability to bring in genetics from outside of the existing LP system, which is a real benefit that the government has included in the Cannabis Act for the next wave of cultivators that enter the space.

James West:   Interesting. So, sounds like you’re really pursuing quite a multi-faceted investment and operational model under Tetra – sorry, under NorthBud Capital. So is it your intention, then to continue to add portfolio holdings like NorthBud Farms, in which you hold a significant stake?

Ryan Brown:   Yeah. NorthBud Capital will operate as a completely independent entity from NorthBud Farms. My focus is going to be on NorthBud Farms; I’m the CEO of NorthBud Farms, I put together the Board of Directors, the management team; my energy is going to be focused on that, and we’ve got a team around us that will continue to raise capital and invest capital to really help incubate the next wave of companies breaking into the space. Ancillary companies, primarily; we’re not opposed to investing in US-based cultivation, but we have yet to find the right fit for us.

James West:   Sure. I see you have an equity stake with LiveWell Farms, or LiveWell Canada, rather, who is also invested in by Canopy Rivers, the investment arm of Canopy Growth. Do you have access to invest alongside the pipeline of investments of Canopy Rivers on a go-forward basis?

Ryan Brown:   We don’t have any affiliation with Canopy Rivers other than being co-investors in LiveWell. LiveWell being an Ottawa-based company, us being an Ottawa-based company as well, I’m quite familiar with a lot of the principles of LiveWell, and we thought that it was a good entry point for us as we kind of develop that more market-focused aspect of our portfolio. Previous to that, we had only invested in private, US companies, so that was our first private placement kind of pre-IPO investment.

James West:   Okay. How much money has been raised into NorthBud all together?

Ryan Brown:   NorthBud Farms, we’ve raised approximately 5.5 million, putting us at a market cap of 12.75 million post-money. So when that lists at the end of the month, we believe that that provides a unique opportunity and a unique, you know, relative value entry point for investors looking to participate in the space. NorthBud Capital, we raised approximately 4 million, which as I mentioned, we’ve grown by approximately 120 percent in the last 14 months.

James West:   Wow. That’s fantastic. Okay, so what are the big value catalysts in the rest of 2018 and 2019 that are going to drive value into NorthBud when it goes public?

Ryan Brown:   We believe that our unique platform being located in the province of Quebec, you know, with low-cost electricity, low-cost land acquisition, will allow us to cultivate these unique cultivars at a significantly reduced price to, I guess, a lot of the competitors in the space. We believe as the consumer product goods segment continues to expand, that we’re uniquely positioned to be a developmental partner for some of the small and mid-size food and beverage companies that are looking to break into the space. Focused on pharmaceutical-grade production; we believe that that’s a very close parallel to what you’re going to see from the requirements from a food-grade perspective as well. You’ve got two highly regulated industries that are kind of at a cross-section now between food and cannabis, so we believe that having a clean slate and being able to tailor our business to this rapidly developing segment of the market could provide us with some very unique value that we could add to either existing companies in the space, or those looking to break into the space.

So obviously, the legalization of cannabis October 17^th, we see that as being the next catalyst that will really attract and draw new entrants to the space that are going to be looking to team up with like-minded companies. We’ve got a very sophisticated Board of Directors with Fortune 50 experience, consumer packaged goods, regulatory as well as pharmaceutical, so we believe that we’ve got a lot of value to add to our potential collaborators as we move forward.

James West:   All right, Ryan, that’s fantastic. That’s a great introductory story on NorthBud; we are going to come back to you when you go public and see how you’re making out. Thanks for your time today.

Ryan Brown:   Great, thanks a lot for having me on. Appreciate it.

James West:   Bye for now.

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Original article: VIDEO: NorthBud Farms Inc Going Public This Month

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