VIDEO: CannTrust Holdings Inc’s (TSE:TRST) Zero-Profile THC Beverage

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Midas Letter
VIDEO: CannTrust Holdings Inc’s (TSE:TRST) Zero-Profile THC Beverage

CannTrust Holdings Inc (TSE:TRST) (OTCMKTS:OCTFF) (FRAC95) COO Brad Rogers stops by to discuss incredible Q2 earnings and reaching a 45,000 patient base. CannTrust is the second-most funded to capacity producer going into recreational markets on October 17 with 50,000 kilograms. Rogers explains that CannTrust has raised $100 million to finish an additional 600,000 square foot facility in the Niagara region. CannTrust has developed a zero-profile THC beverage, a potential “phenomenal base material for any other beverage in the market.”  Rogers mentions CannTrust will accelerate its partnership with Apotex as part its international development plan.


James West:   Welcome back to Midas Letter Live, everybody! Guess who’s here? Brad Rogers, Chief Operating Officer and President of CannTrust Holdings Inc., TSX TRST. I will point out, before we cut to Brad, one of the few up-performers on the market today. Brad, welcome back.

Brad Rogers:  Thank you, thank you for having me. Great day to have me back.

[stock_chart symbol=”TRST:TSX” align=”left” range=“5D”]

James West:   Awesome to see you. Yeah, well, I couldn’t believe this.

Brad Rogers:  It’s perfect timing.

James West:   I know, like, that’s incredible – a 99 percent increase in revenue over last year? Over the same period last year, we’re talking Q2 here, $9 million positive net income.

Brad Rogers:  Yes sir. 9 point 1.

James West:   9 point 1, was it? Sorry, I’m rounding it off here for me.

Brad Rogers:  Every hundred thousand counts.

James West:   45,000 patients now; a 117 percent increase. Like, you’re quietly knocking it out of the park here while the rest of the market sort of does this kind of thing.

Brad Rogers:  Yes, we are. Yeah, yeah.

James West:   And that’s great.

Brad Rogers:  Heads down and we’re executing, that’s our mandate. We’re not looking over anybody’s fence, and that’s what we do. Like I said, we go and execute on what we say we’re going to do. That’s what we do.

James West:   Yeah. Now, there’s a few metrics about your company that I’ve been looking at that make me think that I might start buying it again. And that’s –

Brad Rogers:  Didn’t know you stopped.

James West:   Well, I did stop when it went up, and then it started coming back, and I thought, well, I’m going to be buying it again, but I’m going to look for the bottom.

Brad Rogers:  Entry point, yeah.

James West:   And so I’ve been looking for the bottom, and I wish I had bought it earlier today. Because – or actually, end of day yesterday would have been perfect.

Brad Rogers:  End of day yesterday would have been probably pretty good, yeah.

James West:   So, correct me if I’m wrong, but you are the second-most funded to capacity producer going into rec markets on October 17th.

Brad Rogers:  Yes.

James West:   You got 50,000 kilograms?

Brad Rogers:  50,000 keys. We are well on our way. It’s a phenomenal experience going down to Niagara; every day it changes, because we get more rooms, and everything is growing and, you know, metaphorically and literally. It’s an incredible experience. Our bud has never been better; it’s a funny thing, you grow it under sun, like photosynthesis happens, it actually performs better than actual indoors.

James West:   Really?

Brad Rogers:  Yeah. And so we’ve just standardized our gold kush to 27 percent. So that is a phenomenal product in the market right now, it is second to none. The bud structure, the quality, I would put it up against anybody’s premium product, indoor, outdoor, from Mars, and anywhere else in the universe. It’s phenomenal.

James West:   Wow, incredible. And you also raised $100 million?

Brad Rogers:  We did.

James West:   Wow, that’s incredible too. So where are you going from here?

Brad Rogers:  Well, the use of funds for the $100 million is to finish up what’s going on down in Niagara; we’re doing another 600,000 square foot buildout down there. We’ve got some strategic property acquisitions that we’re doing as well. We’ve got some stealthful science projects, I would call it. We’re doing some seed technology. And so when you look at what’s going on with respect to daylight-neutral seeds and such, we’ve got some really cool genetics happening right now that we hope to commoditize the market with, and we want to see that happen faster because we know what we’re doing on the post-grow process.

And so that’s another focus that we’re into right now, and so we’ve developed a zero-profile beverage – zero-profile taste beverage.

James West:   Oh, okay.

Brad Rogers:  So there’s no taste to it, it’s like drinking water, and you would never know there’s THC in it, and it’s a phenomenal base material for any other beverage in the market. And so we’ve got that, and we’ve got that at scale, and it’s patent-pending right now, and that’s a really cool piece –

James West:   Something you guys developed?

Brad Rogers:  Yeah, something that we developed inside.

James West:   Okay, so is the cannabinoid – are the cannabinoids actually in solution in this product?

Brad Rogers:  Yes, they are stable in solution, which is phenomenal. It’s very much like alcohol.

James West:   So they’re not just miscible?

Brad Rogers:  No, there’s not an oil that’s going to sit on top of your beverage or anything like that; it’s in solution, and so it’s stays in solution.

James West:   Dissolved?

Brad Rogers:  It’s dissolved, and it’s part of the water, part of whatever beverage you want.

James West:   No kidding?

Brad Rogers:  Oh yeah. So that’s – I can’t wait to get it to market. I’m so excited.

James West:   Just add laughter, that’s great!

Brad Rogers:  Just add laughter, that’s right. And so that’s really, really cool for us, and again, I never thought I’d be hiring a Director of Nanotechnology, I didn’t even know what the hell it was, but now here we are, and we’ve got nanotechnology as part of our core asset development, and it’s a really cool value proposition for CannTrust going forward. And when we look at partnerships and we look at what we’re doing down the road with respect to brand extensions and product portfolio, this lends itself to an incredible array, not just on the recreational side, but on the medical side as well. So, very, very cool, very exciting, and lots going on under the CannTrust hood, so to speak.

James West:   Yeah. The recreational products that you’ve got: what is the branding sort of strategy you’ve got there?

Brad Rogers:  Well, we’ve got three core brands right now: we’ve got Live, we’ve got Synergy, and we’ve got Escape. And so Live is for the everyday, and that’s –

James West:   Because every day is a good day to get high! [laughter]

Brad Rogers:  I think so. So we’re going to sell that every day, and so that’s one of the bulk products that we’re putting out right now. So we’ve got seven product lines within that, so that’s appealing to the everyday connoisseur user who understands what a kush is, what a sativa is, what an indica is. And then we’ve got our Synergy brand, which is a social brand, and that’s appealing to more of the taste profile. So we’ve got the blueberries, the strawberries, the lemons, etcetera. And so that’s a real social kind of position brand. And then we’ve got Escape. So Escape is very unique unto itself in that we are branding our strains to the experience. So for instance, we’ve got a strain called Walk The Dog, and we’ve got a strain called Tailgate Party.

James West:   [laughter] Tailgate Party?

Brad Rogers:  And we’ve got a strain called Flicks and Chill. So I wonder what that develops. It’s delivering on an experience. [laughter]

James West:   I might have to go use the washroom. [laughter] So this is awesome. Well, then, so where are we going to see CannTrust products on October 17th?

Brad Rogers:  Well, we’ve got Western provinces are taken care of. As we announced, we have 17,000 kilograms of demand, and so that’s underway, and so that piece of our production is spoken for, for the recreational; that’s Manitoba West, that’s three provinces with 17,000 keys.

Just got off the phone with the OCS as I was on my way down here as a matter of fact, and I think we’ll be seeing POs from them in the following week. And so we’ll know our Ontario numbers very, very shortly, and we’ll publish those as a global number with respect to what we’ve got nationally. And so we’re going to release that into the market hopefully within the next week or two, and so we’ll understand where we stand in the landscape of demand for Canada. And so we’re looking forward to those numbers; they’re, you know, very, very communicative now that they understand their framework and how they’re going to be operating. So that was set clear to me on the way down here, as a matter of fact. So first to news here.

James West:   Wow, cool. Wow, they say, tune in to find out! That’s all I have to say.

Brad Rogers:  Breaking news.

James West:   Exactly! Live from Saturday night…I’m curious about the Apotex partnership. It mentions on August 8th of last week, you put out a press release saying that you were going to accelerate the partnership.

Brad Rogers:  That’s right.

James West:   And to me, that strikes me as like a ‘whoa’, because Apotex is in 155 countries, if I’m not mistaken.

Brad Rogers:  115. 115 countries around the world.

James West:   115 countries, which probably is like most of the population on the planet.

Brad Rogers:  That’s almost the globe.

James West:   So does this mean that Apotex is getting ready to insert cannabis products into the global –

Brad Rogers:  Absolutely. And so what they’ve got is, they’ve got IP. And so what we’re developing with them are products to expand their portfolio of products. Very timely that Epidiolex got approved in the United States, and so, you know, that’s a cannabis-based medicine that has now been approved by the FDA. So it’s very, very interesting for Apotex as a drug development country, so we’re looking at putting that on a pathway to DIN, which is a Drug Identification Number. Once it’s classified as a drug – well, you have to do clinicals, etcetera, to be able to get indication-specific drug status, but once that happens, you can distribute that globally around the globe.

And so that’s really, really cool for CannTrust and for Apotex, as a matter of fact. They see this as a very, very big business opportunity for them. Just in the United States, the Epidiolex demand is somewhere in around $1.5 billion. And so, you know, you look at that opportunity and you extrapolate that with what can be done with cannabis in drug formulation, and put that around the world – it’s incredibly exciting for us, and I think it’s incredibly exciting for Apotex as well.

James West:   Yeah, no doubt.

Brad Rogers:  So we’re expediting that relationship and that drug development process as fast as we can possibly make it, and get to market.

James West:   Yeah, interesting. And so how much – when you finish the 600,000 square foot expansion in Niagara – how much are you going to be producing?

Brad Rogers:  We’ll be doing about 100,000 keys out of that site.

James West:   Just 100,000 keys?

Brad Rogers:  Just 100,000.

James West:   Ha!

Brad Rogers:  You know what’s important, though, James? And I want to point this out: everybody is concerned about weight, right? Weight is only one factor, right? So you get weight, but what is your cannabinoid content in that weight, is the question everybody should be asking. Because when we’re delivering 24 to 30 percent cannabinoid content per gram, right, weight per volume, active per volume, that is a metric of efficiency and really what you’re getting out of it. My analogy is, you know, if you’re growing oranges with no juice in it, what use is it to the juicer? Not much.

James West:   Sure. So is it your experience, then, on the balance sheet, that higher potency cannabis products get a higher per-volume price?

Brad Rogers:  No, it’s more efficiency than anything else. So your yield creates efficiency, and so if I get more juice out of my oranges, I have to squeeze less oranges to get more juice out of them.

James West:   Oh, I see, right, because you’re using it as more of an ingredient.

Brad Rogers:  It’s more of an input, because we’re 60 percent extracts right now. So that’s a phenomenal number; it’s the antithesis of the market, really. Most of the market is 30 percent, 25 to 30; we’re 60 percent extracts.

James West:   Why is that?

Brad Rogers:  Well, I think it’s the way we profiled ourselves. You know, the only revenue stream that anybody was allowed to generate was medical, and so we did just that, and we were very disciplined to medical. And so, you know, we detailed doctors appropriately, and once extracts came into play, we actually went out and standardized, of course, because every product that we put out is standardized, which is table stakes for us, and not very many other players in the market are doing that. But when you’re able to dose and titrate on milligrams per mL, doctors are very, very amenable to that type of philosophy of really dosing and titrating effectively on milligrams per mL. so that’s a format that they know and love, and we’re putting another format such as our vegan gel caps. So we’ve got a 10 mg CBD/THC-N 1:1, and we’re coming out with a fortified CBD, a 25 mg CBD vegan capsule as well. So that’s pretty exciting. It hasn’t hit the market yet, but we’re soon to be releasing that very, very soon.

James West:   Wow, that’s awesome. Okay, so, I mean, what else is there in the future for CannTrust? Its like, there’s so many milestones coming.

Brad Rogers:  Oh geez, I can’t even tell you. It’s so exciting. We’ve got the rec, we’ve got medical, and we’ve got the companion pet market, which I talked to last time, but, you know, I mean, we’re going into formulation right now of products with them as well. And so we’re looking at the preventative, which is kind of like the everyday CBD in your pet’s water to keep them, you know, pain in check and anxiety in check, and keep them regular within their endocannabinoid system. And then of course they’ve got anxiety, they’ve got pain, and they’ve got other indications that we suffer, as well. And so we’re developing dose forms for the pets, for your companion pets, for your cat and your dog, to be able to cope with whatever ails them. So we’re keeping everybody in check in the family.

James West:   Little pets. Well, that’s, I mean, I’ve just started dosing my dog with CBD, because she’s got a skin condition she gets in the summer, and so – it really works.

Brad Rogers:  So, see what happens. Oh, good.

James West:   It’s working, because usually by now she’s bald and stinks.

Brad Rogers:  Is that right?

James West:   And this year she’s still got her fur and she doesn’t stink.

Brad Rogers:  Okay, well, that’s good.

James West:   [laughter] It’s great!

Brad Rogers:  We like that, it’s a case study. Use it as a testimonial.

James West:   Okay, Brad, let’s leave it there. That’s a fantastic update, and I’m sure we’re going to see so much more of you. Congratulations on your quarter, that is outstanding.

Brad Rogers:  Thank you very much.

James West:   And, I think, pretty much best in the industry.

Brad Rogers:  Best in class, for sure. You know what? I’ll put our fundamentals up against anybody. I implore anybody to go look at our fundamentals and say, hey, you know what? Look at CannTrust, look at anybody else – we’re a very sound operation, from seed all the way to customer.

James West:   Fantastic. Brad, thanks. We’re going to leave it there for now. We’ll come back to you soon.

Brad Rogers:  Thank you, James.

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