TGOD (TGOD.T) prepares for large scale commercial production

On January 3, 2019 The Green Organic Dutchman (TGOD.T) announced it has signed a royalty-bearing commercial sublicense with EnWave (ENW.V) and Tilray (TLRY.NASDAQ).

What – you may ask – is a “royalty-baring commercial sublicense”?

It’s an on-going fee payed to a vendor for the use of its equipment or technology.

Example: if I need to squeeze oranges, and you have a very fancy orange squeezer, I can agree to pay you a royalty for the use of the squeezer.  A lump royalty would be $3 a year, and a running royal would be based on the sales of my orange juice.

The “sublicense” indicates that someone else owns the patent on the orange squeezer, and my squeezer-contact has purchased the right to negotiate royalty deals.  That right maybe constrained by geography, product-type, volume quotas or other factors.

In this case, the original patent holder is Enwave – a company that developed Radiant Energy Vacuum (REV) technology – to dehydrate and decontaminate organic materials – shortening the time from harvest to marketable cannabis products.

REV features:

  • Fast controllable process to dry and decontaminate cannabis for smoking and extraction markets
  • Drying time shortened from 4-6 days (air drying) to about 1 hour
  • Prevents microbial contamination
  • Prevents need for sterilization with expensive ionizing radiation
  • Eliminates inventory losses due to microbial growth.
  • Major reduction in capital cost with smaller dying facility space requirements
  • Uniformity between batches
  • Highly scalable.

Here’s one of EnWave’s many REV machines drying fruit:

In October, 2017 EnWave named Tilray as its licensed partner – giving Tilray an exclusive right to use and sub-license EnWave’s proprietary REV dehydration technology in Canada.

Under the terms of the license, EnWave and Tilray will share royalties from TGOD’s use of EnWave’s REV technology on an undisclosed basis.

Tilray cultivates indicas, sativas, hybrids, and CBD-rich varieties – using formulations and delivery formats that are intended to allow for consistent and measured dosing.

Tilray has a market cap of about $6.5 billion.

My suspicion is that – because of the size of its global weed business – Tilray was able to negotiate terms with EnWave that were so favorable – EnWave doesn’t want them to be public.

The agreement announced on January 3, 2019 grants TGOD the right to use EnWave’s REV dehydration technology to dry organic cannabis in its Canadian operations.

TGOD has also submitted a purchase order for EnWave for a large-scale 60kW commercial REV machine to initiate commercial production.

“We are incredibly excited to utilize this proprietary and advanced dehydration technology, which will promote consistency in the manufacturing of our premium organic products,” stated Brian Athaide, TGOD’s CEO.

On December 13, 2018 TGOD announced that it will begin selling premium, certified-organic cannabis to medical patients in late January 2019, through integration with HelloMD’s online clinic services.

HelloMD helps patients access medical cannabis in Canada online. The company has four big things going on:

  1. Access to weed-friendly doctors
  2. Educational material
  3. Deep product line
  4. Safe delivery of product

Prospective patients can connect online with a licensed practitioner seven days a week from the comfort of home. Patients who obtain appropriate documentation can purchase from TGOD’s broad range of premium medical cannabis products.

The joint effort between TGOD and HelloMD, is designed to remove friction for new medical patients wanting access to premium organic related products.

HelloMD’s website features a community blog, Q&A, Talk-to-a-practitioner link, and a lot of cannabis and CBD-related product.

One month ago, TGOD reported Q3, 2018 fiscal and operational results.

TGOD Q3, 2018 Highlights:

  • Deployed $33 million on construction facilities in Hamilton, Ontario and Valleyfield, Quebec
  • Commercial production in both facilities anticipated the first half of 2019.
  • Developing five new strains for medical and recreational markets
  • Commercial crop allocated to TGOD’s “Grower’s Circle” in January 2019.
  • Filed appeal with Hamilton planning department regarding a zoning amendment required to produce cannabis in its new 123,000sq ft hybrid facility.
  • Secured approvals from the City’s Agricultural and Rural Affairs Committee, the Planning Committee, the Ontario Federation of Agriculture.
  • Hamilton’s 2 existing facilities (total 27,000sq ft), already zoned to produce medical cannabis.
  • Invested in Jamaica, through Epican Medicinals. Existing retail sales in its Kingston store.  Planned expansion into four more retail stores. Expanding production capacity to 14,000 kgs.
  • HemPoland booked sales of CBD oil and other industrial hemp products across Europe
  • Anticipates 170,000 kgs of annual cannabis capacity across Canada and Jamaica.
  • Has developed both THC and CBD beverage formulations
  • JV’d with one of largest pharmaceutical distributors in Mexico.
  • Radically expanded operations, administration and marketing infrastructure.

“The REV technology improves space efficiency by reducing the need for drying rooms and quicken TGOD’s time from harvest to sale,” stated Athaide.

Full Disclosure:  TGOD is an Equity Guru marketing client, and we own the stock.

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.

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