VIDEO: Supreme Pharmaceuticals 7 Acres Cannabis Grow Operation in Kincardine, Ontario

Midas Letter visits Supreme Pharmaceuticals (CVE:FIRE) CEO John Fowler at the company’s 7Acres Facility in Kincardine, Ontario, where the company was getting ready to harvest a crop of Wappa 21.



John Fowler:   Welcome to Seven Acres!

James West:    John, I can’t believe what’s grown up around here since I was here last – this is incredible! What’s going on?

John Fowler:   Absolutely. So you’re looking at our most recent crop of Wappa 21.

James West:    Wappa?

John Fowler:   this is one of our favourite strains. We expect somewhere in the 18-20 percent range for THC, but more exciting, we expect 2 percent or more of terpenes, and that’s why this room smells so fantastic.

James West:    What is it about these that makes them so much bigger than other ones I’ve seen?

John Fowler:   James, to be honest, I wish you weren’t the first person ever to ask me that question. Really, this comes down to our commitment to be a premium flower cultivator. This is our finished product; this is not an ingredient, this is cannabis, and we think that that’s what’s going to make us successful, particularly as we move into the recreational market next summer.

James West:    Your focus is on cannabis flower, but the industry, the movement, is towards extracts and resins and edibles. What do you say to that?

John Fowler:   If you look at US data, the percentage of the pie for dried flower is shrinking, but the aggregate dollar spend is still increasing, meaning it is a growing segment. And number two, we have to remember in Canada, we don’t have access to a lot of the non-flower products that they have in the US, so by law, we’re going to be focused towards flower. And third, and perhaps most importantly, people have been smoking dried cannabis flowers for about 10,000 years, and I don’t see that ending anytime soon.

James West:    John, what the hell are you doing?

John Fowler:   So every bud that’s grown here at Seven Acres, we make sure that we hand-polish it at the end. We’ve got eight weeks of flowering, got about two weeks of drying, and we have a curing process, but also the team here is going over and polishing the buds. So that means they’re taking off any extra leaf, any extra stem, anything that just shouldn’t be there, to make sure the final product really is as good as it looks.

So right now, everything that we’ve been producing for the last few months at Seven Acres has been for the Premium category. One thing that we hear a lot about in the media right now is that legalization is going to be a race to the bottom on pricing, and the only way that we’re going to beat the black market is through lower pricing.

I think that’s abjectly untrue. First of all, the black markets in Canada, including dispensaries and things like that, that’s a fully supplied market, and prices are actually quite strong.

Second to that, if you go to California, which is probably the most mature retail cannabis market in the world, you can actually go into high-end dispensaries and pay $25, $30 and even $35 per gram for really high-end flower. So for us, I think it’s a little bit like when you go to buy a bottle of wine: saying that everything has to be $8 if we want to beat the black market is like saying every bottle of wine has to be $10 or we’re going to have bootleggers.

So James, you’re looking at our genetic inventory. So we’ve actually just pulled a number of seeds out of here to start some new strains. What’s interesting, the couple hundred seeds sitting in here, in many ways, have more value than the couple hundred kilos of dried cannabis behind you.

Whenever you plant the seed, you know the strain but you don’t really know what you’re going to get. And that’s why we do a process called phenotyping. Phenotyping is where we pop 50-100 seeds of the same variety, looking for that one fantastic plant that’s going to be a game-changer for the business.

James West:    Tell me a bit about these plants in here. When were they born, when were they cloned?

John Fowler:   Absolutely. So these plants would have been cloned in late September/early October; similar life cycle to the flowering plants we saw. This is actually the exact same phenotype, so this is another 10,000 square foot room full of our Wappa 21, one of our favourites. They’re finishing up their veg; they’re going to flip the flower very soon, and they’re going to spend 8 weeks in flower.

Over the next couple of years, we’re going to take this from the 30,000 square feet we’ve got licensed, up to our full capacity here, doing 50,000 kilos a year. For that scale, it’s very important to us; we spent the last year perfecting treating one of these grow rooms as a single unit. Everybody else is focused on kind of oils and low-quality product because the oddity of pricing in the ACMPR today is, many growers actually get a better return growing low-grade product and turning that into oil, than actually taking the time to produce high-grade product. For us, that creates a great opportunity to produce premium flower for the smoke market and medical, but particularly that market in recreational. Cannabis in Canada, $10 billion of it a year, is sold at a very simple question: who’s got the good stuff? And as long as Seven Acres and as long as Supreme give you the answer to ‘who’s got the good stuff’, we’re going to do okay.

And one question I’ve never heard in 15 years working with cannabis, is somebody walking into a room full of cannabis users and saying “hey guys, who’s got the cheap stuff”.

James West

Editor and Publisher

James West founded Midas Letter in 2008 and has since been covering the best of Canadian and US small cap companies. He covers global economics, monetary policy, geopolitical evolution, political corruption, commodities, cannabis and cryptocurrencies. As an active market participant, James is not a journalist and is invariably discussing markets...
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