Green Organic Dutchman (TGOD.T) locks down product development tech in CBx partnership

Book it as yet another step on the march to a revenue-licious consumer products division, as The Green Organic Dutchman (TGOD.T) has announced a deal with Colorado-based CBx Enterprises to license extraction and vaporization technology for Canadian and international (non-US) markets.

The deal involves Evolab and CBx Sciences products, which TGOD says positions it for “the successful development of new products as Canadian and global product requirements and standards rapidly evolve.”

The obligatory CEO celebration statement:

“This licensing partnership for industry-leading technologies and formulations will further allow TGOD to execute on its plans of offering novel and safer delivery methods of both non-psychoactive and psychoactive cannabinoids to patients and consumers around the globe,” said Rob Anderson, co-chairman and chief executive officer of Green Organic. “The team at CBx has vast experience in researching and commercializing new and novel consumer products and cannabinoids, and we are excited to be able to offer a platform to take their cutting-edge technologies and advanced formulations worldwide using TGOD’s premium organic ingredients under TGOD’s own brand names.”

Let’s play devil’s advocate here for a second, because we’ve all heard similar announcements from companies that are certain they’re doing business with best of breed, until the details come in and everyone quietly forgets the deal was ever discussed because, actually, Barry and Agnes don’t pass due diligence and they’ve just been raided by the feds.

Remember Finore Mining (now Micron Waste Technologies (MWM.C)) announcing their Kush Soda deal that was a lights out win until it couldn’t get through DD? Or the entire ‘roll up’ that turned out to be vapourware by Abattis Bioceuticals (ATT.C) a few years back? Or Vinergy Resources (VIN.C) and their ‘we’re coming for CannaStrips’ claims before they got Change of Business’ed out of their deal? How about Nutritional High (EAT.C) and their unlicensed ‘Heisenberg Blue’?

Or, hey – Invictus MD Strategies (IMH.V) and Gene Simmons…

More often than not, these deals are tough to quantify. The licensor doesn’t have revenues to show and they’ve won some weed award somewhere that nobody has heard of and three guys on Youtube swear they’re the best and, in Canada, we kind of shrug because, blow me.

But what if this deal was legit?

What then?

Colorado is one of the most mature cannabis markets in the US, second only to California and bringing in over $1.5 billion in revenue in 2017.

Where does Evolab fit into that world?

Over a 12-month period between May 2016 and April 2017, O.penVAPE sold $34 million worth of vape pens compared to runner-up Evolab, which sold $7.5 million, according to BDS Analytics.

O.penVAPE is the big hitter, but Evolab has been competitive. In fact, the company lured the founder of Mary’s Medicinals, Nicole Smith, to be their CEO.

Smith holds the first patent issued in the country’s legal pot market, for her transdermal technology. Her expertise with consumer preferences and knowledge of the plant’s medical benefits made her an invaluable hire, Evolab said in announcing the move, which comes just before the company is expected to release a new wave of products that will include topicals.

“This is the perfect time for Nicole to become Evolab’s next CEO,” Evolab managing boardmember Jeff Giarraputo says. “We’re bringing on a proven leader at a time when Evolab is growing at the fastest rate in our history.”

The sales pitch is pretty darn refined:

Sommeliers have wine collections. Cannabis connoisseurs have FreshTerps.

FreshTerps didn’t just capture the full terpene profile of your favorite strain. It captured its soul. 

Because inside those jars are the original terpenes and cannabinoids extracted from the most sought after plants grown by the most respected horticulturists. They’re so rare because the process to extract FreshTerps oil is so exacting, only 2 or 3 percent of the plant can be used. And only Evolab knows how to do it.

CBx Labs is the other side of the same company, and works on the science side of things, dealing with white label products and extraction tech. It’s website is a master class in chemistry as it pertains to cannabis.

The therapeutic activity of beta-caryophyllene can be partially described as a CB2 agonist – suggesting its role as an anti-inflammatory agent. On top of being a CB2 agonist, beta-caryophyllene has been shown to be active on a number of receptor targets in the body – making it a good candidate for neuropathic pain and neurodegenerative diseases – as well as being an antioxidant agent and antimicrobial compound. The bioavailability and metabolism of beta-caryophyllene still needs to undergo scientific scrutiny. This is especially true in regards to smoking or vaporizing cannabis in which blood levels of beta-caryophyllene (and all terpenes) have yet to be resolved.  Obtaining this data will be useful as science tries to understand how terpenes can potentiate or attenuate the effects from both THC and CBD.

Tell it, Poindexter.

As for what all that science creates:

These are nice brands and they’re selling well in Colorado and I can tell you that grandma would toss them in her shopping basket without too much argument if they were available up north.

They won’t be – available that is – not for a while. And that’s fine.

Because they will be at some point. Maybe it’ll be when ‘adult use’ rules are announced. Maybe it’ll be later, after the hand rubbers on the conservative end of the political spectrum quit worrying that rubbing a little CBD on your temple will turn you into a vomit-breathing Mothra.

When the doors open to these products and big pharmacy chains want all of those seen above, two companies will be able to fulfill orders for all SKUs, across multiple consumer sectors, with developed products that have track records and maybe even a little name recognition; TGOD, and Cannaroyalty (CRZ.C). That’s it.

Oh sure, Wildflower will toss out some sort of vape brand and bum rub, and Canopy will have something to sell somewhere in their endless cavern of bought stuff, and Namaste will have 84 different coloured vapes and a line of t-shirts, and Cannabis Wheaton will sell some Dixie Elixirs, and Lexaria will have some old boxes of tea left floating around, and Organigram will fart about claiming it’s non-organic certified organics are great, but if you want to hit the ground running, you need a product that is road tested and works and sells hard and looks like Whole Foods barfed into a shipping container.

Added to which – it needs to actually work in a way that’s tough to match.

Evolab is a top cannabinoid vaporization brand that has gained significant market share through the creation of highly differentiated products in a very competitive and saturated market. Evolab’s proprietary technologies and industry-leading extraction efficiencies allow for the derivation of pharmaceutical-grade cannabinoid oils and strain-specific terpenes without the use of any harmful solvents or cutting agents. These technologies and formulations led to the creation of much cleaner and safer full-plant oils for vaporization without the introduction of chemicals commonly found in the e-vape industry.

By all means, look to the vape business as a revenue stream but, when you do, I’m going to ask you to think deeper. Think about pharmaceuticals and beverages and baked goods that sell in places like Wal-Mart and Shoppers Drug Mart.

Those products that sell by the shipping container, across wide expanses of the country, if they’re going to add CBD to their ingredients list, need that CBD to be as clean as possible, as consistent as possible, and developed to a point where they have shelf-life, branding that appeals, and are ‘mom-ready.’

You think this market is about people who like to smoke and get stapled to the couch? Gimme a break. That market is mature and about as big as it’s ever going to be. Smoking to get your CBD is about as effective as sucking on coffee beans to get your caffeine fix.

Sure, you can grind at home. But chances are you’re going to be in line at Starbucks getting your choco-froufrou-pumpkin spice skinny vanilla latte, at a nice mark-up.

Tinley Beverage (TNY.C), which we at Equity.Guru respect and admire, has spent a few years developing their beverage products to a place where they feel they’re *almost* ready to release into the wild.

That’s responsible, because just tossing something out into a world that demands ‘shelf fees’ to even stock a product in a Buy-Lo, means you usually get one shot at connecting with an audience, and that’s it. Product development is a filthy business and few make it work.

CBx Sciences? That’s their jam.

CBx Sciences has an industry-leading team working tirelessly on the research and development of both new and novel cannabinoids as well as authentic premium-quality consumer products. With a focus on identifying synergistic and complementary botanical ingredients to activate and engage the endocannabinoid system, the research behind each advanced CBx formulation is unmatched in the industry. This focus on research as well as a deep understanding of the commercialization of cannabinoid-based products will allow for the development of product formulations that are tailored to each individual jurisdiction’s regulatory requirements for both non-psychoactive and psychoactive cannabinoids.

Seriously, go look at their site. It’s lousy with legitimacy.

CBx Sciences is dedicated to creating the most innovative products, formulations and technology platforms to increase the global availability of cannabis-derived therapeutics. To that end, CBx offers a line of organically-derived cannabinoid extracts, terpenes, botanical cutting agents, hardware and other manufacturing solutions for our industry partners. These solutions build on our years of experience, providing differentiated approaches to cannabis, hemp, tobacco and cosmetic manufacturing.

I mean, seriously, you guys.

The big knock on TGOD right now, and it’s one that persists despite the amount of volume attracted to the stock, is that, eventually, there will be a lot of investors cashing in their free trading stock for the massive profits they’ve already made.

If you’re one of our long time readers and you bought in on the TGOD financings over the last 18 months, you’re up a quadruple or nearly a triple, depending on where you got in. And yes, when your stock is free trading, you’ll undoubtedly take some off the table because that’s wise and you shouldn’t be a homer when you can take your profits and get richer for a while.

But here’s the thing: TGOD’s IPO raised $132 million in its IPO. Aurora Cannabis (ACB.T) brought in $78 million by itself. That wasn’t ‘stupid money’, that was people with thick bank balances buying as much as they could at the IPO price, regardless of what the early guys may have got in at.

Ya see, EVERY public listing has the early guys who got in for pennies. That’s how the venture markets work.. The guys who take the risk get in early and when it hits the markets for a multiplier, you get in at that rate because there’s now less risk (ideally) and more liquidity.

Every day we see huge volume on the TGOD ticker, which yes, means some people are rolling out, but also means others are buying in – at today’s price, not at the founder’s round value.

And because a lot of that stock is locked in for six months, as opposed to the traditional four, the company has a lot longer to execute on deals big enough that it’ll make a guy like me, who got in at a buck, think about leaving some on the table.

Today’s deal was a good one, even if you’re just looking at the products they can tap into the moment laws allow it in Canada. But the ability to tap into serious extraction and product development tech? That’s the promise this group made a year before they even had a ticker symbol.

They’re going to develop product grandma will buy and use, and they’re going to have them in stores grandma has a rewards card with. And when grandma is putting TGOD products next to her ColdFX in the medicine cabinet, or next to the butter in her fridge, we won’t be talking about ‘smokers’ anymore.

We’ll be talking about ‘people.’

— Chris Parry

FULL DISCLOSURE: TGOD is an Equity.Guru marketing client, and we own stock in the thing, and we have warrants, and we sometimes wear the t-shirt and we can’t freaking wait to see where this goes.

 

Disclaimer: ALWAYS DO YOUR OWN RESEARCH and consult with a licensed investment professional before making an investment. This communication should not be used as a basis for making any investment.

The Green Organic Dutchman

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