Ventura Cannabis and Wellness Corp (CNSX:VCAN) Acquires Dispensaries in California and Oregon

Ventura Cannabis and Wellness Corp (CNSX:VCAN) (OTCMKTS:CVHID) (FRA:VML0) operates drug and alcohol rehabilitation programs, offering inpatient and outpatient treatments including a line of marijuana lifestyle supplements.  CEO Jacob Gamble shares details of the company’s recent changes and rebranding. Gamble notes that Ventura is divesting its outpatient assets over the next 12 to 36 months and is prioritizing inpatient care which complements the company’s cannabis focus. Gamble discusses the company’s pivot toward acquiring revenue-generating dispensaries and highlights that Ventura will also start building out its own dispensaries soon. In February, Ventura announced dispensary purchases in California and Oregon.

Transcript:

Narrator: Ventura Cannabis and Wellness Corp. operates a drug and alcohol addiction rehabilitation centre serving patients in the United States and Canada. The company offers in-patient and outpatient intensive treatments, including a line of marijuana lifestyle management supplements.

While Ventura continues to focus on its traditional services, it is exploring the possibility of expanding its addiction treatment service and product offering in the cannabis space.

Ventura Cannabis and Wellness Corp. is listed on the CSE under the ticker symbol VCAN.

James West:   Jacob Gamble joins me now. He’s the CEO of Ventura Cannabis and Wellness, trading on the CSE under the symbol VCAN. Jacob, how are you?

Jacob Gamble: I’m doing well. Thanks for having me.

James West:   Great. So you have taken over this company. I started buying stock in this company, full disclosure, I’m a shareholder in this company, I’m talking my book, I’m not to be trusted under any conditions – but, I’ve got to say, this is one of the first times I’ve bought stock ahead of a rollback, and it’s actually worked out for the better. And so I am looking at what you’ve accomplished in your four short months as CEO and thinking that this is the kind of momentum in a story that I really like to see.

After 7.34 pre-consolidation, you know have 34 million shares outstanding.

Jacob Gamble: Correct.

James West:   You’ve got cash in the bank and you’ve got a solid business plan. Tell us about it.

Jacob Gamble: And cash flow that’s in no debt – I think that’s the biggest factor. If you take our balance sheet compared to anybody out there on the Street right now, we rise above the rest. We are actively acquiring revenue dispensaries – so retail centres and sales centres to gather data. Then our next phase will start where we’ll be putting out greenfield expansions, building our own dispensaries, manufacturing, processing, grow operations that we can be vertically integrated to be able to push all that cost down due to –

James West:   You said revenue dispensaries.

Jacob Gamble: Yes, already generating revenue dispensaries.

James West:   Oh, okay! [laughter] I was going to say, I’d be acquiring revenue dispensaries too. Now, so you inherited a company, essentially, whose primary business was in-patient and outpatient addiction treatment.

Jacob Gamble: Yes.

James West:   And one of the first things you did is, you jettisoned the outpatient treatment business and kept the inpatient treatment business. Why was that, and what are the economics of that?

Jacob Gamble: Sure. I think it’s kind of a twofold process in there: the outpatient side is very onerous to try to keep profitable. So when we looked across the outpatients that we had, it was a flip of a coin on who was doing well or who might continue to do well, or need assistance. And the nexus with moving into cannabis was the kind of front that medicine that moving in to treat marijuana before morphine. So, to have cannabis help with opioid addiction or to stop the addiction in the first place. And so the outpatient side makes it a little bit harder to kind of fold together, and isn’t on the same line as what we’re trying to accomplish moving forward.

James West:   So is it safe to say that cannabinoids make a superior addiction sort of remedy or treatment than do other opiate extracts like methadone?

Jacob Gamble: Sure. I think that’s, anecdotally, we can yes right now. It’s interesting you bring up methadone, because Stephen Goldner is kind of the father in methadone here in the US and has started a pretty big study to go ahead and prove that, in a whitepaper major way. He did some anecdotal research and saw that yes, cannabinoids have been helping the patients that he was looking at, or the opioid addicts, to stay away from opiates moving forward; and he’s also breaking down the cannabinoids to go, if you think about it, to help with sleep, anxiety, stress. And part of that is addiction cravings. So it definitely works into what we’re looking to do, to develop a strain as time goes on, that we can utilize and brand and market.

James West:   I’ve not heard of any other company in the cannabis space approaching addiction so directly with cannabis as the leading sort of avatar for treatment. Are there other companies doing this at this point?

Jacob Gamble: There’s no other companies that I’m aware of at this point, but I’m always happy if somebody wants to point me in the right direction to find some synergy. There is definitely a big push in the States; you have governors, the Governor of New Jersey, Connecticut and Illinois, I believe, that have already been pounding the table for doctors to start using cannabis to treat the opioid addiction issue.

James West:   Sure. Is it possibly a leap of faith to suggest that the intensity of the fentanyl crisis, the opiate overdose crisis, would be largely diminished had cannabis been part of the pharmacopeia legally for a couple of decades?

Jacob Gamble: I definitely think that if cannabis was looked at more medicinally earlier, we wouldn’t be in the situation we’re in. now that we are, let’s deal with what we have, and move forward.

James West:   Sure. Your presentation materials that you recently published suggest that you’re still going to continue with the addiction treatment using cannabinoids as a business, but you’ve also started to make acquisitions in both dispensaries and delivery systems. And tell me about how you’re going to diversify your revenue streams?

Jacob Gamble: Yeah. So moving forward, as you kind of alluded to a little bit where we’re selling off the outpatients – we still have revenue coming in from that, so on kind of a slide scale, as our outpatients, over the next 12 to 36 months are divested, continuing to acquire cannabis assets: ones that are revenue-producing to start with, dispensaries, basically retail establishments that are up and running, and then at the same time, if shareholders approve for us to go from being a healthcare company utilizing cannabis to a cannabis company that’s helping in health care, on April 18^th, they make that vote. Then that’ll allow us to actually start more grassroots campaigns and build the whole company from the ground up while still acquiring revenue-based assets.

James West:   Now, in the State of California, you revealed an interesting fact that I didn’t know, and that’s if you have one delivery license, you’re actually allowed to deliver cannabis to every location in the state.

Jacob Gamble: Sure, or at least every location feasible to drive to.

James West:   Right. So basically, and there’s no restrictions on advertising?

Jacob Gamble: None that I’m aware of.

James West:   So one delivery license gives you the ability to compete with every other producer and vendor of cannabis in the State of California?

Jacob Gamble: Sure, definitely.

James West:   Wow. So I find that really intriguing. You also revealed some interesting statistics yesterday that, of all the counties in the State of California, half of them are not allowing any cannabis.

Jacob Gamble: Sure. Roughly half.

James West:   And within the half that are, half the municipalities aren’t allowing any cannabis.

Jacob Gamble: Correct.

James West:   So that makes a delivery service even more attractive from the standpoint of an investor, and so how do you plan to exploit that little opportunity?

Jacob Gamble: It’s – delivery revenue is, for the delivery services that are out there, whether it’s a retail dispensary that has a delivery license, or a standalone delivery license that pulls it straight from a warehouse, is exploding at an exponential rate. And so it’s definitely something we want to get in on and utilize. So the two dispensaries that we’ve purchased in the State of Oregon and then the one in California, the two in Oregon are ready to go and can start delivering, and the restrictions are a little less in Oregon than it is in California.

California, we have to go through a little bit of a process to get approved, but if you already have your retail license, it’s basically a pre-approved condition; you just have to show that the vehicles set the standards that have to be there for safety.

That ability, then, is just you advertise. And there’s a couple of different avenues we’re going down on the advertisement side, but it is not uncommon for some of just a pure delivery service to do a couple hundred thousand dollars of revenue in a month.

James West:   Wow, that’s fascinating. Now, in Oregon, you’ve got two dispensaries that you’ve made acquisitions; what do the economics look like on those?

Jacob Gamble: Overall, the one we purchased for 1 time revenue and one a little over 1 time revenue, both were very strategic plays to be the first ones. The Salem acquisition, the sellers were very integral in cannabis law, in getting it off the ground, and were the first dispensary, and have a long medicinal license practice in that. And so it was giving us a lot of good information, instead of having to get it all through a lawyer, and having the on-the-ground ability for them to maneuver as rules continue to change – which unfortunately happens every couple of months.

The dispensary in Portland was an acquisition a lot for the actual operator. For the seller, she is an amazing operator; she’s a, what you might want to think of as a Six Sigma lean manufacturing-style individual, and as soon as I walked in, I could immediately tell she ran things differently. There was the least amount of steps from purchase to sale; everything is as efficient as can be, and I’m super excited to have her staying on with us.

James West:   Wow, fantastic. What is the criteria that sort of excludes – what are you excluding from your consideration for future acquisition, and what are the hot points of a business that you might consider acquiring?

Jacob Gamble: So the hot points, I’ll start there first: if they definitely have some moat around them that they’ve created, whether they were the first in the city and have the biggest clientele, whether they already have their delivery license that’s ready to go and we can utilize that, or we come in and see that they’re running perfectly fine, but there’s an ability for us to optimize cost, purchasing power, taxes, and we’ve seen that with all three that we’ve been able to look at.

The one thing that excludes the vast majority right off the top is, they must have 100 percent above-board access. Billing, all of their finances, have to be legitimate, and unfortunately in this industry, and I’ll use Southern California as the base example, there’s a rampant amount of fake dispensaries that are doing everything 100 percent under the table. They’ll still try to sell to you, if you want to buy them, but it goes to sand if you even pay them a penny.

James West:   Sure, interesting. Now, tell me a bit about your background. You’ve been a pretty significant cog in a giant wheel in terms of the growth of Fisher Investments, where you spent 15 years if I’m not mistaken.

Jacob Gamble: Yeah, close to it.

James West:   And, that experience exposed you to a lot of health care investors, both on the institutional and the high net worth private family office side. So that strikes me again as an attractive feature of you as CEO, is that getting capital into this company is not something that’s going to be a problem.

Jacob Gamble: And I wouldn’t put it all on me. Craig Lipsay, our Senior Financial Advisor, amazing, deep roots in Wall Street. Spent almost 30 years at Morgan Stanley and Merrill combined. But absolutely, I’ve worked with some major family offices that have nearly $100 billion, all the way down to family offices at $500 million. Started at Fisher in the early 2000s as roughly the 50^th employee on the dep chart, all the way up till we had 2,500. Ended up earning a couple of different little service lines for them, our institutional business in Europe.

The one thing that I loved, and I was always comfortable with, was being uncomfortable the entire time. We were always growing. I worked at 11 different offices in my 13 years that I was there, and that’s why when I looked at Ventura, formerly Boulevard, there was a huge opportunity for growth here. It was a stagnant company that had not moved. They had a strong balance sheet to basically work with, a blank canvas, and so that allowed us to just jump right in and start moving forward.

Along with running it past a few advisors, I’m very fortunate – my closest business advisor is in Texas, she’s written a couple of best-selling books on strategy; she’s taken two companies public on the NASDAQ. So I’m lucky to have a padded group around me to call when I’m confused.

James West:   Sure. That’s great.

Jacob Gamble: Which hopefully doesn’t happen very often.

James West:   Yeah! Now, in terms of a war chest for acquisitions, you’ve got 13 million in revenue happening this year, at least; you’ve got $5 million in the bank?

Jacob Gamble: I’d be disappointed if it was only 13 million happening this year.

James West:   Right. So you’re not in a position where you’re looking to raise money anytime soon?

Jacob Gamble: We’re not looking – yeah, correct. So we’re not looking, we have 5 million in cash still, we have 3 million in I’ll call leverageable assets, to make up a word, whether it be accounts receivable still coming in or just leveraging real estate that we own. On top of that, I’m not going to say we wouldn’t be interested in raising capital or having the ability, but it would be for the right acquisition, something that would move the needle extremely well for our shareholders. Thank you for being a shareholder; I appreciate that. Our shareholders have been extremely loyal to just to the all ends of the earth for the last few years, waiting for something to happen, and I’m excited that they’re finally getting information, it’s going in a direction they’re interested to go, and it’s moving forward.

And I think if we had to do a large acquisition or a merger, and get capital to do that, depending on what it is, as long as it’s accretive to everyone, I think they’d probably be happy for that.

James West:   Sure. I’m just thinking of your revenue, and typically cannabis companies trade at a multiple of revenue approaching 15x, 14x, call it what you want; but even at 10X, you’re trading at a steep discount to that multiple based on what other companies in your peer group are doing.

Jacob Gamble: Yeah. Don’t tell anybody just yet.

James West:   [laughter] I think we’re telling everybody.

Jacob Gamble: I want to be the overnight success, and it takes me a couple more months to get that all cobbled together.

James West:   Yeah, fantastic. All right, so we’ll keep our eyes peeled for more acquisitions this year?

Jacob Gamble: Definitely. Even on the short term.

James West:   Okay, great, Jacob. Well, we’re going to leave it there for now; we’re going to have you back in an appropriate amount of time. As a shareholder, I have to be a little bit careful. But thanks very much for joining me today.

Jacob Gamble: Perfect. Thank you, sir.

Original article: Ventura Cannabis and Wellness Corp (CNSX:VCAN) Acquires Dispensaries in California and Oregon

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