VIDEO: Valens GroWorks Corp (CNSX:VGW) Expanding Extraction Focus

Valens GroWorks Corp (CNSX: VGW) (OTCMKTS:MYMSF) (FRA:7LV) CEO Tyler Robson explains that a recent bought deal for $25 million provides Valens GroWorks with the financing for expansion, with a focus on extraction, distillates, and beverages. Robson details Valens GroWorks’ international distribution plan and notes that the company has signed letters of intent in South American and Australia. Valens GroWorks is in the process of increasing its monthly extraction capacity from 6,500 kilograms to 12,000 kilograms. A unique feature of the company is that it uses different extraction processes for different products. Robson believes that an evolution is beginning in the marketplace where certain CBDs are developing higher value than others, especially in terms of pharmaceutical development.

Transcript:

James West:   Hey, welcome back to Midas Letter Live. My guest in this segment is Tyler Robson, CEO of Valens GroWorks Corp., and it trades on the CSE under the symbol VGW. Tyler, welcome back.

Tyler Robson: Appreciate it, thanks for having me.

James West:   Yeah. You closed a bought deal for $25 million?

Tyler Robson: We did, yeah. We closed just the other day.

James West:   Okay. Tell me, how did that come about? What’s the purpose, what are you going to use the funds for?

Tyler Robson: Yeah, I think the purpose is just for corporate expansion. I think it’s kind of our coming-out party; we’re getting closer to legalization, and we’ve had a few offers for financing right now, and we finally found the right one, so we took the bought deal. And it’s for expansion, yeah. We’re going to get more into extraction, more into distillates, more into refined products; and one big thing we’re going to look at is beverages. We’re being a little bit quiet about what we’re doing behind the scenes, but at the beginning of every beverage is an extraction. So we think we’ve figured it out a little bit better than most people have.

James West:   So, you’ve been focused on extraction since the get-go, but now you also are a licensed grower. So you can grow, you can extract, you can make beverages.

Tyler Robson: Yeah.

James West:   Have you had any conversations with any big beverage manufacturers?

Tyler Robson: We’ve been talking to a few, and I think the big thing that people are missing right now is the ability to extract in volume. So, some of the beverage companies are starting to place phone calls and start kicking the tires of who we are and what we’re doing. Obviously we’re not the big players like some of these other guys are, but I think we’re still undervalued for what we are today.

James West:   Yeah, sure. Well that’s, I think, probably an attractive feature, that you’re still reasonably priced. You’re not Tilray, which is, you know, circulating out there in the stratosphere.

Tyler Robson: For sure.

James West:   So what else has been happening with the company generally, developmentally, in the last couple of months?

Tyler Robson: Yeah, so we’re basically laying out our international distribution plan right now, so we’ve signed a letter of intent in South America, we just signed one in Australia, and I think our shareholders can look forward to seeing what’s coming in the European Union in the next foreseeable future.

James West:   And what is coming in the European Union?

Tyler Robson: I think as everyone knows that there’s a massive opportunity over there. I can’t touch on it too much more, because we’re still laying it out, but we will definitely have a footprint and a big – what do I want to call it – distribution plan, we’ll call it.

James West:   Great. Is legalization in Europe progressing similarly to Canada at all in terms of recreational?

Tyler Robson: I wouldn’t say it’s recreational yet, but I think it’s definitely happening medicinally. I think if we look at every country over there, they’re going to implement a medical program in the near future, but right now, I don’t think anybody’s moving toward recreation like we are.

James West:   Okay. Run me through your capacity again, your throughput capacity.

Tyler Robson: So our through capacity right now is 6,500 kilograms; we’re in the process of getting it up to 12,000 kilograms, we’ve already placed orders for our next machines. And what’s unique about us is, we actually use different machines for different types of extraction. So we truly believe that it’s a unique extraction process depending on the type of product you’re going to, whether it’s ethanol, sub-critical or super-critical C0₂.

James West:   So, when you say different processes for different products, do you mean the micro-CBD sort of spectrum?

Tyler Robson: Everything, every ancillary product. So we have a different direction to go to the downstream product, essentially. So we’re not trying to make everything out of one type of extraction; we’re very, very unique in that way.

James West:   And how do you see the economics working in terms of margin and cost of the raw material?

Tyler Robson: Yeah, I think at the end of the day, it’s going to be a commodity. It’s going to commoditize, prices are going to come down, and I think the farmers are going to be – it’s going to be tough for them to basically compete. Downstream, at the end of the day, this is a consumer product; you walk into a liquor store, you’re buying brands, not hops or sugar cane. So I think really the value-add is an extraction post-processing and then branded products.

James West:   I’m curious about some of the other sort of processes involved in making a beverage derived from cannabis. For example, we know that THC and CBDs, if left on the shelf, sort of deteriorate into other compounds, and so how do you stabilize THC and CBD in a product like a alcoholic beverage?

Tyler Robson: Yeah, so that’s the magic question right now, and I truly don’t think anyone has figured it out. We’re getting very, very close to becoming a player in that sector.

The big thing a lot of people don’t realize, it has to be water soluble. So a lot of companies are making it an oil-base; that will separate in time, and as you said, it will change. You have to have a water-soluble product that can bind with anything, and I think we’re right there.

James West:   Okay, so there is nobody who’s actually definitively solved that problem?

Tyler Robson: I personally don’t believe so; I know, depending on who you talk to, I’m sure there’s a few guys that’ll say they will. I have not seen it, and I’ve been in the majority of major LPs already.

James West:   Okay. You said you were producing 6,500 and you’re going to 12,000 kilograms – in what time frame are we talking?

Tyler Robson: End of October.

James West:   Okay, and what I’m more or less trying to get at is, is that per month, per year?

Tyler Robson: Per month, yeah, per month.

James West:   Per month? Oh, okay.

Tyler Robson: Yeah, so we plan on having the largest extraction footprint in Canada, if not North America, in the foreseeable future.

James West:   Okay, so if you’re doing 12,000 kilograms per month, how much end product is that yielding?

Tyler Robson: That’s impossible to answer. At the end of the day, that’s subjected to cannabinoid or THC profile, so if you have a 20 percent product it’s very different than extracting a 10 percent product. So it’s almost impossible to answer that question until you know what’s going into extraction.

James West:   So what’s going in, and what you’re targeting coming out, has a bearing on what you get?

Tyler Robson: Exactly, yeah.

James West:   So has there been an evolution in the marketplace yet where certain CBDs, micro-CBDs, are, you know, developing a value that’s higher than others?

Tyler Robson: It is, it’s starting to, and to be honest, it’s very unique, and people are having a hard time separating different cannabinoids. But absolutely – as we move more into a pharmaceutical product, or an ingredient for pharmaceutical products, that’s going to become much more needed, essentially.

James West:   Yeah, for sure. Do you see this sort of becoming, in terms of extraction and consumer packaged goods, from where you stand, do you see it becoming more of a sort of large beverage and food group industry, or more of a pharmaceutical industry?

Tyler Robson: I think it’s going to go down both avenues, essentially. I don’t think you can pick one more than the other. I think if we look at the mature markets in the United States – California, Washington, Oregon – they’ve done a great job kind of showing us the path of what’s happening, but at the end of the day, too, if you look at an international market, everything starts with a pharmaceutical or medical-grade product, so I think there’s two very different avenues coming.

James West:   So in terms of competition, is this something that somebody like, say, if Coca-Cola decided to get into the game and ramp up extraction and beverage production, are they – is it something that a big company like that could easily do, or would they be more inclined, do you think, to talk to somebody who’s already been doing it?

Tyler Robson: I think they’d have to be inclined, and if they weren’t, I think they’d be selling themselves short. Extraction is extremely tough; I personally can’t do it, but our team over at Valens is fantastic. Their efficiency rates are phenomenal, their consistency is perfect. I think people getting into the space now are very far behind. Essentially like you said, we’ve been focused on extraction since Day One, and we’re still working on it.

James West:   Sure. Okay, so what are the big value catalysts for Valens Gro going into the next 12 months?

Tyler Robson: The big catalyst is obviously our last licensed producer status. Obviously, when concentrates and edibles and beverages come online is a huge one for us, especially because where we are. Also getting a footprint out east, I think that’s big for us, to service the market here; yeah, I can’t say too much more on that, because I don’t want to get myself in trouble, but we will be bringing a footprint to the Ontario area.

James West:   Very cool. Okay, well, we’ll leave it there for now, and we’ll come back to you in a quarter’s time and see how you’ve progressed. Thanks for joining me today.

Tyler Robson: Perfect, appreciate it. Thanks, James.

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Original article: VIDEO: Valens GroWorks Corp (CNSX:VGW) Expanding Extraction Focus

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