VIDEO: Wayland Group Corp (CNSX:WAYL) Supply Agreements with Legalization
Wayland Group Corp (CNSX:WAYL) CEO Ben Ward shares details of Wayland’s international operations and Canadian expansion. Wayland has currently completed Phase I of an over 900,000 square foot expansion in Canada. Internationally, Wayland is one of six companies with EUGMP certification for Canada, which allows it to export Canadian production to European markets. This week the company announced a supply agreement with Cannamedical for 9,000 kilos of cannabis flowers over three years. The company recently filed a prospectus for a $50 million bought deal led by Canaccord Genuity Corp, with the intent of using the capital raised for future acquisitions. Ward also discusses the company’s supply agreements with provincial governments, newly launched recreational brands, and Wayland’s recent name change.
James West: Hey, welcome back! My guest this segment is Ben Ward, CEO of Wayland Group Corp. Ben, welcome back.
Ben Ward: Thanks, glad to be here, James.
James West: Yeah. So Ben, you guys just keep knocking it out of the park, here. You’ve got the production facility in Langton, amping up Germany and Switzerland, amping up, you’re doing an expansion at all facilities in Canada – 942,000 square feet?
Ben Ward: Yeah, that’s what we’ll be when we’re fully built out. So we now have Phase I near completion, and Phase II, all the foundations are in. greenhouse is going to start going up, and then we’ll build out Phase III.
James West: Wow, okay. So you’re essentially approaching the same footprint as Aurora, here, globally, it seems. What is your international game plan, cohesively?
Ben Ward: Our international game plan is to take our initial production from our EU GMP-certified facilities here in Canada, and then take that product and penetrate the European market while there’s no domestic production in those countries. So we have one of six companies with GMP EU certification for cannabis flowers, so we can export that product. We just signed a major agreement last week, which we announced this morning, for 9000 kilos over three years with Cannamedical Group, for export of flower. It’s the biggest agreement of that type in the space so far.
James West: Sure.
Ben Ward: So that’s our near-term strategy, and then we’ll be developing domestic content in both Germany and Switzerland, and then we’ve announced that we’ll be moving ahead in Italy, as well.
James West: Okay. So that’s like, as you said earlier, that’s like a $30 million return on a $2 million investment.
Ben Ward: Yeah, essentially that’s what we’ll be able to do. And then with our CBD operation in Germany as well, we’ll be able to gain a very high margin on that.
James West: Do you guys consciously target return on equity like that, so that you look at a deal and say, Well, if we can get 15 times, you know, return in the course of a year or less, that’s a good benchmark to establish for acquisitions going forward; is that part of the thinking?
Ben Ward: I think acquisitions, they come down to who are we going to partner within the country, who’s the management group we can work with there, what’s their track record, and then, does the market make opportunity. For instance, is there a payer market for it? So there’s many countries who are legalizing cannabis around the world; they could be future production sites of bulk material, but what we look at is, where is it rational for us to invest? Where is the partner, and then, is there a payer system where the disposable income for people to be able to afford that product.
So when we look at Germany, Switzerland, Italy, there’s high disposable income, and then there’s national health payer services, so the product can be covered for medical. And then, when the rec market grows, people have disposable income. So I think it’s a mix, and we have to look at, if there’s a near-term arbitrage opportunity, we’ll move ahead very aggressively.
James West: Sure. And you guys just filed a prospectus for this $50 million bought deal financing, and that’s being led by Haywood?
Ben Ward: It’s being led by Canaccord, and Haywood is 30 percent of the syndicate. And the shoe is filled, and we’re over-subscribed.
James West: Is that right? Just like that! [laughter].
Ben Ward: Just like that.
James West: Okay! Good to see things are progressing so well. Now, you guys also have ambitions for other jurisdictions in the world. Is there anything that you can talk about development-wise that way, to us, now?
Ben Ward: I can’t specifically say where we’re moving, but we previously stated that we’re looking at all of Western Europe; that’s a specific target for us. And then we’re looking at different jurisdictions as they come online. So I think that the reason for this capital raise is for future acquisitions, and I think you can expect to see something in the near future.
James West: Wow, that’s fantastic. You seem to be jumping ahead of a lot of the incumbent LPs in Canada who have distribution deals or the foundations of distribution deals in Europe, and why do you think that is?
Ben Ward: I think it’s because of our close attention to compliance and quality of product. As I said earlier, there’s only six of us who have EU GMP status in the world, and then whether you can continuously make your product pass test batch or make the analytical testing approved for the product, it’s not guaranteed that it’ll happen on every batch; we just have rigorous and strict production methods in place, and we continue to hit those targets.
So if other groups who have that certification or can’t get that certification, can’t deliver, we’re stepping into those contracts.
James West: So is that to suggest that the testing and the stringency of the rules are much tougher in Europe than they are in Canada?
Ben Ward: Yeah. EU GMP certification is much more stringent than what’s called GPP in Canada, which is what the certification for the ACMPR is. So it’s treating the plant really as medicine right from clone all the way through to packaging. And our previous experience from some of our team in pharma really helps us to get to that point, and then it’s just adopting a way of doing business that we are going to comply and be very strict and stringent with every single one of our SOPs, and it’s just a different level of operation. So rather than just producing cannabis, we’re producing a true medical product.
James West: Interesting. So then, are you in a position where you’re going to need to raise money continuously to realize all these ambitions, or is there another capital strategy existing in your capital structure?
Ben Ward: Yeah. In the cap structure, there’s a lot of warrants that we wold like to see exercised, and we think we’ll be able to push through the levels to see those forced, and that will supply the company with additional capital that’s required that’s already baked into the capital structure. So I don’t foresee having to do continual equity raises like this.
James West: Oh, okay, great. So one might conclude, and probably a little bit forward looking to say this, but one might conclude that the rising tide that has lifted all major cannabis boats but has somewhat bypassed Wayland at this point, may yet come to bear on the company based on all of these developments?
Ben Ward: Yeah, I think that we’ll see our ship rise once investors see that it’s not just about making press releases or having sensationalistic sound bites, it’s about building a business, building a company, an I think as of the Q1 2019 numbers are produced, we’ll see who are the winners and losers are. And it’s not who everyone thinks.
James West: I’m sure. The October 17th legalization of cannabis in Canada: how does that impact Maricann, or rather, Wayland Group’s, entire profile at this moment?
Ben Ward: It’s huge for us. We have some of the biggest supply orders for Alberta, BC, Manitoba, and we’re filling product right now for Ontario, as well. So the recreational demand is there. We’ve been successful in securing large agreements, so that’ll be highly accretive for the company. And then, our products will be there on the shelves because we are producing, we have scale, and I think you’ll see us as a major player in the market.
James West: Do you think you’ll have a store in Ontario? I mean, it’s a little bit uncertain yet as to who will and who won’t.
Ben Ward: Well, we’ll see what the retail market allows, and we’ll see the structure from a regulatory standpoint. They’re saying that they’ll allow one store, so we’re opening a Davis store in the launch for flagship in Zurich, and I think that’s a really interesting test market for us because you have three cultures in Switzerland: you have the Italian, German and French cultures. And we can test and see what works there, what is an educational format that people become interested and understand cannabis, and it can help with our branding.
So we’ll learn from that experience in Zurich, and then, as of April 1st, if the Ontario government allows, we’ll see what the store would look like in Ontario.
James West: Okay, so can I ask you what made you want to change the name from Maricann to Wayland group?
Ben Ward: Maricann is a combination of marijuana cannabis; it defines us as a pot company, and as we progressing further medical markets, having Waylan group as the overall structure made more sense for us with different sub-brands and businesses underneath. So for instance we’ve bifurcated our pharmaceutical and our recreational business into really two separate commercial divisions, and Wayland was a mythical German figure who created different magical elements, and so it works well for us in the German markets, Switzerland, Austria market, and then in Canada, as well.
So a fresh start. Most of the people here at Wayland have been here for less than a year, and we wanted to have something that symbolized that.
James West: Okay, so what percentage of your business do you think going forward in 2019, 2020, will be medical versus recreational?
Ben Ward: I think in 2019 we’re looking at almost pure recreational business, other than German exports. And then in 2020 I see that evening out more as we see more concentration on the medical business in Europe, and I think we move to about a 70/30 business at that point in time.
James West: 70 medical, 30 rec?
Ben Ward: 70 rec, 30 medical.
James West: Oh, okay. Hmm. So you’ve got a bunch of brands that you announced on September 17th: White Feather, Hawk’s Bay, Nelson’s Blue, Flightless Bird – these are all recreational brands?
Ben Ward: Yes, those are rec brands under the Kiwi banner.
James West: Interesting, I like the references to the birds, and flying. That’s very cute. All right, well then, let’s leave it here for now, Ben. We’re going to be speaking to you frequently now that we’re working together. Thank you very much for joining me to today; we’ll come back to you in about a week’s time and have another conversation.
Ben Ward: Great. Thanks for the time James.
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