VIDEO: Sproutly Canada Inc (CNSX:SPR) CEO on Water-Soluble Cannabinoid Beverages
Sproutly Canada Inc (CNSX:SPR | OTCMKTS:SRUTF) CEO Keith Dolo discusses their recent milestone of listing on the Canadian Securities Exchange. Sproutly are a vertically integrated cannabis consumer products company trying position themselves to become a leader in the beverage space. The CEO outlines their development of water-based cannabinoid technologies, allowing the body to absorb THC and CBD compounds through water-solubility, rather than traditional oil based absorption. The benefit of water-soluble cannabinoids is the quickened onset and offset times of cannabinoid ingestion while providing a higher level of control pertaining to dosage and duration. Sproutly looks forward to marketing their edible and beverage products to the public in Canada next year as consumables become legal in Canada.
James West: Hey, how’s it going? Welcome back to Midas Letter Live. My guest in this segment is Keith Dolo, President and CEO of Sproutly Canada, Inc., which just began trading on the Canadian Securities Exchange under the symbol SPR. He joins us live via Skype in Vancouver. Keith, thanks for joining me today.
Keith Dolo: Yeah, good morning, James. Thanks for having me.
James West: Sure. Keith, you just listed on the TSX Venture – on the CSE, rather, and you’ve got kind of a diversified approach to the cannabis business that is not like much else we’ve seen so far. Let’s start with an overview: what exactly is the business of Sproutly?
Keith Dolo: Yeah, thanks so much, James. So Sproutly is positioning ourselves to be a leader in the beverage space. Previous to this, we were going down the path of becoming a small-batch producer; we have a 17,000 square foot property in Toronto run under the license of Toronto Herbal Remedies. We’re in the process of closing a very transformative acquisition in the cannabis space of a company named Infusion Biosciences Canada. We’ve been in the works of going through the due diligence with Infusion Biosciences Canada for about the last eight months now, and since we’re listed, we can obviously close out the transaction in a short time frame, within the next kind of five to ten business days.
And Infusion Biosciences really positions Sproutly for a bit of a pivot on our business model moving forward. They have been able to create the world’s only, truly water-soluble cannabis solution after 12 years of research into water-soluble extraction technologies. And so they’ve developed a very specified APP technology which will enable us to take the product and the supply that we’re able to produce at our THR facility, and take an ingredient that is really second to any other ones that are on the market right now, because it’s not an oil-based ingredient; it is truly water-soluble, and it allows us to be able, from a pharma remedies or bioceutical standpoint, but also allowing us to focus on the consumer foods and the beverage industry.
So, really excited to close that transaction and start working on the business model of deploying it moving forward.
James West: Yeah, okay. And so, your growing facility, it’s a wholly owned subsidiary called Toronto Herbal Remedies?
Keith Dolo: Correct.
James West: I see here your license is to cultivate, correct?
Keith Dolo: Yeah. We got our license back on June 8th, so that was a good milestone for the company after years of development of the facility. We’re looking at bringing clones in, in a very short time frame to get that facility up and producing, and obviously, as we close out the Infusion Biosciences Canada transaction, we’ll be building out our ready-built lab, which already has, you know, $1 million of lab equipment within it, to be able to house the technology that Infusion Biosciences has created with their patent-pending process. So we’ll have a ready-built facility that can not only cultivate the cannabis, but can also turn it into the infused 2-0 or the bionatural oil process that are out there.
James West: Sure. So the importance or the significance of soluble cannabinoids is really kind of something I’d like to drill down upon a bit, because I’m curious: in the context of, so GW Pharma just received FDA approval for the first FDA-approved cannabinoid drug for epilepsy based on CBDs. Is it logical to presume that the development of these kinds of drugs are going to rely on water-soluble cannabinoids in some formulations in order to be useful?
Keith Dolo: Yeah. So I think if you look at GW’s product, from what I can recall, it comes in a syrup. So it’s a refined version of the cannabinoid that they make available to fight the epilepsy, as well as a couple other different conditions. Our product is similar in the sense that it will come as a refined product, but it doesn’t start out as an oil-based product. So what APP and Infusion Biosciences has been able to do is to really look at the plant and look at, from a ground-breaking discovery, discovering that there are truly naturally water-soluble forms of the phytochemicals, including the cannabinoids and terpenes that exist within the plant.
So, being able to deliver a truly water-soluble product to the human body allows the body to ingest it in a much different manner. All the current forms of oils into beverages or oils into products still get processed within the body in the same form, whether it’s in a nano-particle or a micro-particle, or molecule; the body still takes time to break that oil-based product down or molecule, and it still takes, you know, 30 to 45 minutes, as you know from many edibles or ingestibles that are on the market, to feel the effects of it; and those effects wear off anywhere between four to six hours.
Since ours is a water-soluble form of those cannabinoids, your body ingests it like a truly water-soluble form. So, like a salt dissolving in a water or a sugar dissolving in a water, it is truly water-soluble. It’s not compatible, or it’s not miscible like an oil, and your body ingests that and feels the full effects of that cannabinoid, whether it’s THC or CBD, in around five minutes. Some patients take it as early as two to three minutes, they feel the effects of it – and that’s the full effect. It’s not a gradual, climbing scale over the next couple hours as your body continues to break down more of the oils and ingest it and feel the ongoing effects; you feel the full effects within, let’s say, five minutes or maybe under. And that full effect is what’s out of your system somewhere between 60 and 90, some patients as early as 45, they’ve given us the feedback on.
It’s really drastically shortened the onset and the offset times of ingesting those versions of those cannabinoids.
James West: Sure. So I guess that level of control gives you a higher level of control over dosage and duration?
Keith Dolo: Yeah, and because the full effects is felt within five minutes, you know, for somebody from a recreational standpoint, if it’s in a beverage, they can determine if they want to continue to ingest more, or if they want to stop after five minutes and a half of a drink or half of a dose is all they want, or they continue to take more. It’s not up to their body and their metabolism at that given day and time to continually wait for the effects to, you know, climb over the next two to three hours and sit within their system for four to six or longer, in some cases, as you’ve heard with many horror stories about the edibles that are consumed in these markets.
James West: Right, okay. So I guess in terms of the bioceutical market and foodstuffs and beverages, as you said earlier, there’s really, there’s no sort of getting around the requirement for water-soluble cannabinoids, especially in the process that you’re talking about, where it is actually, you know, scientifically water-soluble, not just superficially so.
Keith Dolo: Yeah. I think with a lot of the products out there, if you look at their patents or you look at the different products and how they explain their water-solubility, the majority of the time it’s ‘water compatible’, and I think that the term is misused within the industry quite a lot. I think if you look at it from a true biopharma standpoint, an oil will never be soluble within a beverage or within a food product. An oil can be compatible, it can be nano-encapsulated or it can be emulsified and blended in with other chemicals to make it visually appealing to the eye in terms of solubility, you know, but if your eye can’t visually see it, that doesn’t mean from a biopharma standpoint that it’s actually water soluble.
You need to have a new version of that cannabinoid that doesn’t start out in an oil-based form or is transitioned to become a truly water-soluble product, and I think that’s the difference when you see a lot of the products that are on the market versus what we’re going to be coming to market with; ours is the first one that actually fits the water-soluble definition, and it’s not a water compatible or miscible being masked or being emulsified or nano-encapsulated into a beverage.
James West: Sure. So are the other companies out there that are claiming to have water-soluble cannabinoids, are they actually more or less packaging a water-compatible sort of solution that’s not actually water soluble?
Keith Dolo: Yeah. You know, not to go into the backgrounds of all the different companies out there, because there’s some great products out there that are fitting different market segments out there. But you know, we did a freedom to operate patent search, and out of about 1,000 patents in the States that are currently registered and filed, a lot of them that are promoting on their websites say water solubility, but, in fact, if you look into their patent – which has to be 100 percent correct from a scientific standpoint or it makes that patent inadmissible – those patents say water compatible on almost every single one of them. I think there was one that said solubility; we searched about 1,000 that actually said water compatible or water miscible.
And I think our industry lacks the scientific regulatory backgrounds that a lot of the big pharma companies are, you know, they have to ensure they adhere to. And so consumer marketing, consumer product demand, drives a lot of the product initiatives of what is actually set on the market out there. So from a solubility standpoint, many of the products that are out there, like you mentioned, they are water compatible or they are water miscible; they’re not actually a true water soluble product that, from a biopharma standpoint, it has dissolved within the liquid. Just because your eyes can’t see it doesn’t mean that it’s actually dissolved within a product.
James West: Right. So, at what point do you anticipate to realize revenue from the sale or licensing of your technology?
Keith Dolo: So we’re going to, you know, I don’t believe that we’re going to license out our technology. You know, the proof is in the secret sauce and the process, and we have a patent-pending application in right now. So, to license it out kind of gives away that secret sauce. We’re going to keep it in-house and produce our own ingredients in-house initially now, that we’re going to then sell off to bigger CPGs or beverage companies or topical companies. We’re working on bringing our clones in; we obviously need to go through our cultivation phase right now. But we’re also in mid-to-late-stage discussions with either other LPs or other consumer packaged goods companies to be able to work with them in joint venture partnerships to be able to produce and touch product as soon as possible.
And if, in fact, we are able to put something together and stick strictly towards the consumables, the edible market, as we know, that’s not part of the legal market here in Canada over the short time frame. So I think as we look forward to next year and 2019 of edibles and consumables being produced, I think that’ll be our larger revenue driver at that point; I think the short term we’ve got to lock down two or three of these joint ventures so we can start working from a research standpoint on the formulations to be able to deliver to the market, when it comes available in 2019, the best available truly water-soluble beverage that can hit the marketplace and make a big punch.
James West: Sure. All right, well, that’s great, Keith. We’re going to keep watching and look for those products. This is a technology that we don’t see enough of at this point in the marketplace. So we’ll leave it there, we’ll come back to you in a very short period of time and see how things are developing. Thanks for joining me today.
Keith Dolo: Thanks for having me, James.
More Great Cannabis Content:
Midas Letter is provided as a source of information only, and is in no way to be construed as investment advice. James West, the author and publisher of the Midas Letter, is not authorized to provide investor advice, and provides this information only to readers who are interested in knowing what he is investing in and how he reaches such decisions.
Investing in emerging public companies involves a high degree of risk and investors in such companies could lose all their money. Always consult a duly accredited investment professional in your jurisdiction prior to making any investment decision.
Midas Letter occasionally accepts fees for advertising and sponsorship from public companies featured on this site. James West and/or Midas Letter may also receive compensation from companies affiliated with companies featured on this site. James West and/or Midas Letter also invests in companies on this site and so readers should view all information on this site as biased.