VIDEO: Liberty Health Sciences Inc (CNSX:LHS) New Ohio Licenses

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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.

Liberty Health Sciences Inc (CNSX:LHS) (OTCMKTS:LHSIF) (FRA:S6UQ) CEO George Scorsis shares details of the company’s new partnership with AdaVIv Inc, a technology company, to develop new cultivation techniques. Liberty Health recently obtained extraction and processing licenses in Ohio and Scorsis believes the Ohio operations will be a revenue source within six months. Scorsis is confident Florida will legalize recreational cannabis by 2020. Liberty Health is overbuilding in the state, in anticipation of recreational cannabis legalization, and currently serves 130,000 patients in Florida. Scorsis does not see US federal de-prohibition as a threat, rather as an opportunity for Canadian LPs to access more capital.

Transcript

James West:   Hey, ho and a ding ding do. Look who’s here: it’s George Scorsis, CEO and Director of Liberty Health Sciences Inc., trading on the CSE under the symbol LHS. George, welcome back!

George Scorsis:    Happy to be here.

James West:   What the hell is going on with Liberty Health? Your stock is climbing, you’re knocking out press releases, it looks like you’re trying to take over the world down there in Florida.

George Scorsis:    Yeah, you know, we’ve been focused on Florida and continuously being the best in that state.

James West:   Now that November is here, I’m going to be a regular guest.

George Scorsis:    Well, thanks, I know you enjoy golf. So if that – I would love to have you down there. But we have really had some great developments. We’ve partnered with AdaViv, which is a technology platform to really pursue what I would call the next level of cultivation. We have also expanded our footprint; we just received word in Ohio that we have received a provisional license for extraction and processing, so another state to knock off –

James West:   Class 1 or 2 in Ohio?

George Scorsis:    It’s actually the extraction and processing that we received.

James West:   Oh, perfect. Better yet. Awesome, okay. So things are moving forward; what’s happening in the State of Florida as regards recreational cannabis versus medical, at this point?

George Scorsis:    It’s still completely medical, so we’re building out our medical platform and trying to be the best medical provider of cannabis. We’re fairly confident in 2020 that the state will pursue adult use, so it’s really about operational excellence: building, what I would say, the back of the house to be able to support that; increasing our retail footprint.

In the next month, we have another three dispensaries opening.

James West:   In Florida?

George Scorsis:    In Florida, which is going to be great. We’ll be up to seven, 10 by the end of this year, we’ll have 12 by the end of February. So we’re really ramping up.

James West:   Cool. And how soon till Ohio comes onstream as a revenue source?

George Scorsis:    Ohio, we will have extraction done within the next six months. We also have a dispensary that we’re building out. We have a great partnership with the Schottenstein family in that state, which is a juggernaut in the state and really is going to help support us to navigate within the state.

James West:   Sure. Well, that’s just right across the lake from Leamington, isn’t it? [laughter]

George Scorsis:    What a coincidence.

James West:   What a happy coincidence that is! So you’re building out Florida; what’s the capacity of Florida at this point, in terms of production?

George Scorsis:    We will have 13,000 kilograms capacity annualized.

James West:   That’s more than I can smoke in a year.

George Scorsis:    Well, I think you’ve gone there. So we be close to 13,000 kilograms and that’ll be able to service roughly 131,000 patients. So we’re overbuilding because we’re anticipating adult use to come into the market. You do it once and you do it right, and we’re really focused on expanding our cultivation footprint there.

James West:   That’s great. I know that I will spend a lot more time in Miami when I can buy recreational cannabis there during my winter visits. I’ll never leave that beach again.

So you’ve got Ohio, you’ve got Florida…what other sort of states are you looking at? You mentioned a couple, but you weren’t really in a position where you could talk about them yet. Has any of that moved forward into solidification?

George Scorsis:    Yep, so Massachusetts we still haven’t closed on, but we are very bullish on that market. New Jersey we have an application in lace; hopefully that pans out really well, and we are looking at other states. And I would say where we were focused exclusively on the northeast, we’re more open to other states, other states that really are commercially feasible, that really our skill set could be applied and be successful in the region, or be one of the dominant players. So I think you’ll see some news coming up.

James West:   Okay, well, that’s – I’m excited, I’m excited. What are the big catalysts coming up in the next year?

George Scorsis:    It’s really about keeping our head down and focusing. And you know, I do believe that there’s going to be regulatory changes that are going to support what all of us are doing in the United States. I think investor interest is definitely shifting; we’re seeing some interesting plays in the US where there’s not just rollups, there’s not just multi-state, what I would say, producers, but you’re seeing multi-state producers acquiring other multi-state producers. So it is a land grab.

We take a little bit of a different approach, where we’re really focusing on making sure we have the best operation, being more methodical, disciplined with our approach. We may not be the biggest in our footprint, but we are going to be the most disciplined in making sure we have the best operation within every state that we go into.

James West:   Sure. I saw a somewhat, I’m going to say, under-researched piece in Bloomberg that suggested that the Canadian cannabis market will only enjoy this time of dominance in the sun temporarily, because once America comes on, Canada will not be able to withstand the awful onslaught of the American brand machine. And I thought, boy, that strikes me as awfully naïve, because the best defense against competition is market share, which Canadians certainly do. Case in point: Liberty Health Sciences in Florida, now Ohio, soon to be Massachusetts and these other places.

So are you concerned at all that Federal de-prohibition in the US, should it ever arrive, is going to constitute an imminent threat to what you’re doing right now?

George Scorsis:    No, I think it’s going to be more access to capital, and there’s going to be more interest and eyes from the Canadian LPs to come down to the US. We’re already seeing it; we’re seeing it with Canopy, we’re seeing it with Aphria, when we initially launched with Liberty Health Sciences. Aurora…I do believe that opening up those boundaries is actually going to be beneficial to all of us. There’s going to be more consolidation. I also do believe you’re going to see consolidation the other way. You’re going to see American producers acquiring Canadian, potentially, and I think that will be the first time that we’ve ever seen the Canadians lose a dominant position within the space.

James West:   Really. So do you think, then, that de-prohibition is going to constitute an amp-up in valuations of the whole sector?

George Scorsis:    Absolutely. That’s why we’re jumping in now.

James West:   Right. Well that’s great. So you’re obviously in the camp that doesn’t believe that, as some of the naysayers are, that the proliferation of cannabis companies both sides of the border now is going to make it tougher to find quality experiences for investors. You’re more of the impression that this is a big market, we’re an inch into a marathon as Sean McNulty said the other day – I love that expression – and it’s early days.

George Scorsis:    Yep, it’s early days. That’s why all of us are jumping in right now, all of us.

The US will be the biggest market in the world. Although there’s been a lot of discussion about Latin America, Europe and Canada, for obvious reasons, the US will be the biggest market. I come from beverage alcohol, and whether it be beverage, whether it be cigarettes, whether it be anything else pharmaceutical – the US is where you want to win. And that’s why we’re all jumping in to that space.

James West:   Okay. Do you have any sort of preparations underway for the advent of beverages, edibles in Florida, be the medical or, eventually, recreational?

George Scorsis:    Yeah, we’re focusing heavily on technology and innovation. We have water-soluble technologies; we also have new cultivation processes that we’ve brought in to be able to ultimately make us one of the lowest-cost producers, but also to ensure that if anyone were to come into the space and want to partner with us, they’d be satisfied with our processes. So we do have technologies that we’re going to be releasing in the next while within Florida, because that’ll be our test market, and I think that will really demonstrate how far ahead we’re looking within the innovation space.

James West:   Sure. Do you think that the advent of biosynthesis in terms of growing cannabinoids from genetically modified yeasts represents any kind of threat to the cultivator market?

George Scorsis:    No, I think you got to look at it. You know, I think that we all need to acknowledge there is going to be different ways for cannabinoids to be developed and created. You know, I think it’s going to come down to a cost structure at the end of the day. I think it will be just an input material. You’re going to see massive, massive compression on anyone who’s simply a cultivator, and I think those that are looking at verticals or retail or processing will be the ones that win in the long term. But I think right now you need to be a completely vertical engine, and that’s how we really work within the business. Retail will never go away; everyone thought the internet was going to crush retail, it’s still here, it’s still vibrant, dispensaries are still doing well.

So it may be a different input material, but if you own that license at retail, there is still plenty of room to play.

James West:   CBDs are legal in some way, shape or form in almost every state, ex of cannabis. How is that consolidated? How is that sort of reconciled in the legal structure that says cannabis is Federally prohibited?

George Scorsis:    Yeah, every state has different policy. Many of them, although they acknowledge or allow for CBD to be sold, it generally is not within the same framework as what I would call the MMJ policies that are in the state. So they’re actually not working together cohesively. I think ultimately that’s what we need to see really work, because right now they’re not working to benefit, ultimately, the patient.

If hemp was permitted to work alongside many of these MMJ systems, then it would be great, because you would get what would be a cheaper input material, potentially, and also you’ve got to keep in mind: most of the medical marijuana frameworks that are put in place are highly regulated. I don’t want to diminish what hemp has done, but it is not highly regulated at this point.

In order for you to give something to a patient, to a consumer, you need to have highly regulated marketplaces to protect them. So we would like for them to work in concert with each other, and we’re not seeing that right now in the US.

James West:   All right, so, we’re going to leave it there for now, George. That’s a great update. Thanks for joining me today.

George Scorsis:    Thank you.

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.

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