Stockpools, the CSE and Lift Cannabis Expo have a summer-long challenge underway called “The CSE Cannabis Investment Challenge”, and as usual at Stockpools, there is no cost to join! The Syndicate took a look at title sponsor Abattis Bioceuticals for an overview of the company’s plans and accomplishments within the quickly evolving marijuana industry. Read on for more information on this industry-leader in the cannabis space.
Abattis Bioceuticals Corp (CSE: ATT) (OTC: ATTBF) is powering up the cannabis industry with downstream services for legal producers including testing, extraction and formulation. Led by Rob Abenante, a seasoned public company executive with an impressive track record, Abattis is a vertically integrated biotechnology company that is strategically positioned to be an industry leader in cannabis services and botanical drug development. Everything from patented and proprietary formulations, proprietary extraction technology and toll processing methods to world-class analytics and testing facilities. Abattis consistently works towards providing strategic and operational support to a portfolio of great companies.
Marijuana legalization is taking the capital markets by storm, just ask the CSE. In North America, legal marijuana sales amounted to $6.7 billion in 2016. Abattis is uniquely positioned to not only ride this massive wave of marijuana legalization, but become an industry leader in many parts of the biz. There are legal differences between Canada and the US for how they are approach both medicinal and recreational cannabis legalization. For instance, in Canada, Abattis is able to embark on a nation-wide medicinal market strategy where they can operate legally from a federal standpoint, receiving tax credits from the government for research and development. In the US, it’s a state by state situation, as seven states and the District of Columbia have embarked on legalizing the recreational use of marijuana and 26 states plus the District of Columbia have legalized at least some form of marijuana use.
Revolutionary Business Model for the Cannabis Space
Abattis’ business model is forward-looking, and not only encompasses each aspect of the acronym “GDERS” (Grow, Dry, Extract, Refine and Sell/Science/ Sustainability) but also zones in on downstream areas of the industry which are primed for exponential growth over the next 5 to 10 years. The industry continues to evolve past the race to build the biggest grow op. We have investigated each aspect of their business model in detail below.
Strategic Cultivation Partners
Abattis understands the value in securing cannabis supply, which is why they have a significant investment in a Licensed Producer (“LP”). In fact, their cultivation partner just recently received an Access to Cannabis for Medical Purposes Regulations (ACMPR) cultivation license from Health Canada to grow medicinal marijuana at its facility in British Columbia. Abattis continues to aggressively seek cultivation partners in order to feed its Northern Vine Laboratory with testing and analysis revenue as well as to secure biomass for formulations and extraction technology products. They are also quietly negotiating joint venture agreements with LP partners to sell Cannabis infused finished products.
Proprietary Extraction Technology
Abattis is always looking for that “edge” over its competitors and its proprietary extraction technology is just that. Abattis’ technology partner, Suzhou Raybot Material Tech Corp. (“Raybot”), has developed a proprietary technology which utilizes industrial column chromatography to extract and separate a wide range of materials in a continuous, closed loop system. This method, which is currently used in the mass production of extracts such as Ginkgo Biloba and Stevia, has been specifically designed for the extraction of legal cannabis derivatives such as Cannabidiol (“CBD”), Tetrahydrocannabinol (“THC”) and Cannabigerol (“CBG”) from Marijuana or Hemp. The technology has excellent processing capacity, high extraction yield and significant cost advantages over traditional methods.
It’s capable of extracting CBD from hemp with an over 99% purity level. The current method, which uses multi-staged CO2 extraction, is significantly more expensive and limited in production scale. Raybot’s extraction machines can be customized for any factory production scale. And a factory with a 5,000-kilogram-per-day processing rate is able to produce CBD at only 20 cents per gram. Incredible.
“This technology has the potential to revolutionize the extraction process for THC, CBD, CBG and other cannabis derivatives globally,” stated Robert Abenante, president and CEO of Abattis and Northern Vine. “Raybot’s proprietary extraction method is currently one of the only toll processing technologies that can extract high-purity CBD on an industrial scale. Furthermore, it could lead to the full separation of individual compounds and derivatives at significantly lower costs than today’s widely used methods.”
Abattis looks to utilize the extraction technology in strategic joint-ventures with licensed producers in order to create the lowest cost, full spectrum oils and other cannabinoid and terpenoid oils. The low cost extraction technology will give Abattis a significant competitive advantage over the rest of the industry.
Cannabis Testing is Big Biz
Northern Vine Canada Inc. (“Northern Vine”) is Abattis’ subsidiary specializing in the testing and analysis of Cannabis and Natural Health Products. Northern Vine obtained a Health Canada Dealers’ License pursuant to the provisions of the Controlled Drugs and Substances Act and the Narcotic Control Regulations. On November 30, 2016, the Task Force on Cannabis Legalization and Regulation published a report which emphasized the importance of independent lab testing of all cannabis products. The global cannabis testing market alone is expected to reach USD$1.4 Billion by 2021 and North America accounts for the largest share of that market followed by Europe. Northern Vine is not only one of few federally licensed commercial laboratories, but they have also been quietly working on top secret, cannabinoid infused formulations which have just started to be unveiled for the burgeoning Canadian, Australian, European and California markets.
Health Canada Cracks Down on Pesticides
In May of this year, following three recalls of medical cannabis due to unauthorized pesticides, Health Canada announced that it would begin a series of unannounced inspections. This regulatory move is to provide added assurance to Canadians that they are receiving safe, quality-controlled cannabis products. Health Canada will conduct random testing of cannabis products from licensed producers to ensure that only registered pesticides are utilized. And they now require all licensed producers to conduct mandatory testing of cannabis products destined for sale. Medical marijuana grower, Broken Coast Cannabis, recently had to recall three batches of dried cannabis sold during the second half of last year due to trace amounts of banned pesticides found on samples. OrganiGram made headlines as well when they had to recall 5 lots of product that tested positive for the presence of low levels of myclobutanil and or bifenazante, neither of which are on the approved list of 13 pesticides authorized for use on cannabis plants. And while Health Canada battles with how and when to begin truly regulating this space, including coming up with a nation-wide standardized testing procedures for pesticides, Abattis is ready for this tsunami of business being pushed their way.
The Amazon of Cannabis & Natural Health Products
But let’s not forget another juicy niche business in the Abattis warchest, sales and distribution. Vergence Visionary Bioceuticals (“Vergence”) is their sub with a nearly-completed, customized distribution website. The epic site will enable brands carried by Vergence to fulfill orders, manage accounts and sell top-selling products through the website. Think of Vergence as the Amazon of cannabis and natural health products. Vergence has been aggressively signing distribution agreements with some of Canada’s top brands and will soon be offering their own in-house formulated and branded products on the website.
“Vergence is poised to become a sales and distribution leader in the cannabis industry, with the ability to create its own synergistic and complementary entities. Our goal is to have Northern Vine’s CBD formulated products distributed and sold through Vergence Naturals,” commented CEO Robert Abenante.
Where is all this heading for Abattis? Abattis will replicate the success of their lab to perhaps 10 or 15 more locations across Canada and then look globally to continue to pursue the business of high quality, low cost extracts. The company has over 77 natural health product licenses to leverage and the talent and capital to forge ahead steadily. While others may enter the game, Abattis is years ahead of the curve with tech, talent and IP. Their assets are churning out into scalable units that will hedge one another against some uncertainties or bumps along the road. Groundwork cannot be overlooked in a business such as this. It takes time, intelligence, and capital to get to where Abattis is today, and they view their leading edge labs and extract products as fuel for the way forward.
Their fearless leader leaves us with this final note:
“Our Company has the ability to combine regulatory, analytical, formulation, extraction, sales, marketing and distribution expertise to become the industry leader in all downstream services to the cannabis industry.” Stated President and CEO Rob Abenante. “The move away from growing to downstream products and services is an area we feel marks the trend in the cannabis space as we move into full legalization. Hundreds of new products will need to be formulated, tested and validated with Health Canada approval, whether they are delivery devices or functional edible products.”
Abattis has a market cap of $22 million which is comparably cheap when you examine their current assets and playlist for the upcoming party. As always, please do your own due diligence.
CERTAIN STATEMENTS IN THIS ARTICLE MAY CONSTITUTE FORWARD-LOOKING INFORMATION, INCLUDING FUTURE-ORIENTED FINANCIAL INFORMATION AND FINANCIAL OUTLOOKS, WITHIN THE MEANING OF APPLICABLE SECURITIES LAWS. OFTEN BUT NOT ALWAYS, FORWARD-LOOKING INFORMATION CAN BE IDENTIFIED BY THE USE OF WORDS SUCH AS “ANTICIPATE”, “BELIEVE”, “EXPECT”, “PROJECT”, “ESTIMATE”, “LIKELY”, “INTEND”,”SHOULD”, “COULD”, “MAY”, “MIGHT”, “TARGET”, “PLAN” AND OTHER SIMILAR EXPRESSIONS OR VARIATIONS (INCLUDING NEGATIVE VARIATIONS) OF SUCH WORDS AND PHRASES. FORWARD-LOOKING INFORMATION CONTAINED IN THIS ARTICLE IS BASED ON CERTAIN ASSUMPTIONS, EXAMPLES AND STATEMENTS REGARDING: (I) FINANCIAL PROJECTIONS; (II) EXPECTED GROWTH IN CANNABIS PRODUCTION, DEMAND AND USER BASE; (Ill) EXPECTED GROWTH OF CANNABIS DERIVATIVE PRODUCTS; (IV) THAT VERGENCE IS EXPECTED TO BE THE MAIN DISTRIBUTION LINE FOR NORTHERN VINE PRODUCTS; NORTHERN VINE’S EXPECTED ABILITY TO SOON BE ABLE TO TEST FOR PESTICIDES; (VI) THIRD PARTY TESTING BECOMING STANDARD REGULATORY POLICY; (VII) THAT VERGENCE IS PROPOSED TO BE A MAIN NORTH AMERICAN AND INTERNATIONAL SALES ARM FOR CBD MANUFACTURERS OUT OF CHINA; (VIII) THE TERMS OF VERGENCE’S MOU; AND (IX) THE VALUE OF CANADIAN EXPORTS TO CHINA AND CHINESE DEMAND.
ABATTIS DISCLAIMS ANY OBLIGATION TO UPDATE ANY FORWARD-LOOKING INFORMATION, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE EXCEPT AS REQUIRED BY APPLICABLE SECURITIES LAWS. READERS SHOULD REFER TO THE RISK FACTORS OUTLINED IN ABATTIS REPORTS FILED PUBLICLY ON SEDAR AT WWW.SEDAR.COM.
This is not in any way investment advice nor any sort of stock recommendation. Please do your own due diligence and talk to a qualified investment advisor.
The contents of this article are for informational purposes only. Nothing in this article, in any way whatsoever, should be considered implicit or explicit investment advice. Nothing contained herein is a recommendation or solicitation to buy, hold or sell any security. Note the inherent risks when investing in microcap stocks. Prior to making any investment decision, we recommend that you seek outside advice from a qualified and registered investment advisor.
Abattis Bioceutical’s Corp is not a client nor an advertiser. One or more of the Stock Syndicate owners may own shares in Abattis Bioceutical’s Corp.