WeedMD Inc (CVE:WMD) (OTCMKTS:WDDMF) (FRA:4WE) CEO Keith Merker believes his company is the “best kept secret in cannabis.” Merker describes WeedMD’s relationship with BLOCKStrain Technologies (CVE:DNAX) and details how BLOCKStrain validates and protects WeedMD intellectual property. WeedMD is one of only 7 LPs with supply agreements with retail giant Shoppers Drug Mart and Merker indicates the partnership is a significant endorsement of WeedMD’s product. WeedMD covers the excise tax and shipping for its patients and Merker believes this commitment sets the company apart from its competitors. Merker highlights the company’s joint venture with Pita Pit to form Pioneer Cannabis as part of its retail strategy, should opportunities become less restrictive in Ontario.
Narrator: Today, Keith Merker, the CEO of WeedMD is in our spotlight. Merker isn’t just one of Canada’s top cannabis executives; the Mississauga native has also lived and worked all over the world, including China and Australia, where he was a dive instructor on the Great Barrier Reef. He once cycled across Canada, living on only $5 a day; it was an 8,500 kilometre trip, and it took him three months.
Merker also worked picking and selling gourmet wild mushrooms. He also hosted a radio show as ‘Bug Teeth Keith’ and he was part of a rock band in Beijing.
Folks, we cannot make this stuff up.
Benjamin A. Smith: Welcome back, everybody on the show. We’re with WeedMD CEO, Mr. Keith Merker. Keith, welcome back to the show – it’s been a while.
Keith Merker: Great to be here. Thanks.
Benjamin A. Smith: Excellent.
Ed Milewski: You’re looking well. You look good. You got a nice suit on, nice shirt – look at this guy. Money in the bank.
Keith Merker: [laughter] There’s no money in the bank other than at WeedMD, where there’s lots of money in the bank and we’re doing great things.
Ed Milewski: Yeah, you’re sitting with a lot of cash, aren’t you?
Keith Merker: Yeah, we’re doing good.
Ed Milewski: And, you know, I think the companies that sit with lots of cash and continue to do so, opportunities will come when you least expect them.
Keith Merker: Fair to say. Now, it’s not that we’re not deploying said capital, because we’re building one of the greatest production platforms in the industry today, and of course that’s not free.
Ed Milewski: No, no, but you don’t want to spend it all, right? Like, you gotta take your time.
Keith Merker: We’ve been making a name, I think, for WeedMD as one of the most responsible operators out there from an operational standpoint, from a fiscal standpoint, and I think that the proof is in the pudding. You can look at the statements, you can look at we’ve built, and if you compare it across the industry with what other folks are sitting on and the amount of money they’ve spent to get there, the proof is in the pudding.
Benjamin A. Smith: You know, it’s funny you mention that, because as a qualitative commentator and quasi-analyst, I do, I spend a lot of time, you know, reading sentiment. I’m a big sentiment fan, so that involves going on different venues to read sentiment, and it’s my impression that you have a sort of a, you know, beneath the blanket sort of hardcore fan base that really believes in your platform.
Keith Merker: Beneath the blanket?
Benjamin A. Smith: Beneath the blanket. I think I just made up that term.
Keith Merker: That’s interesting.
Benjamin A. Smith: But I think you know where I’m getting at. But it looks like, if I look at the chart in the last year, it looks like your stock didn’t really receive the attention that it deserved. It kind of, you know, wallowed a little bit along with some of the other juniors, and it’s just now that it seems like WeedMD is getting the stature, you know, it’s getting the bid, it’s getting some nice price action to it. What do you say about what’s happening with your stock right now and about the recognition that you’re receiving?
Keith Merker: Yeah, well, it’s been a long road. I mean, we’ve been very thin up top, and as a result of that, very focused, just by virtue of the bandwidth that we had at the table, on operations. And building out what we’re building, it’s a tremendously complicated thing that we’ve done in building the facilities that we have up and running, and getting them fully operational, and growing the great WeedMD product that people know and love, those folks that are under the blanket that you’re talking about.
Benjamin A. Smith: Under the blanket [laughter]
Keith Merker: And so that’s not an easy task, and it’s now that we’re having sort of call it our coming-out party, where we feel that, you know, we’re probably the best-kept secret in cannabis, and it’s my duty now to make sure that that story goes told, because it’s a great story, so I’ve got to hit the streets a little bit more and preach the gospel.
Benjamin A. Smith: You gotta come in here more.
Keith Merker: I’m happy to be here! And in doing so, I think to, you know, generate the recognition for what we’ve achieved, and the awareness amongst the investor community and beyond, of course, so that we can, you know, truly realize what it is that we’ve built, and so that other folks can realize it as well.
Benjamin A. Smith: So you have an outreach program right now, you’re starting to reach more investors to get that message out, or is it just something that –
Keith Merker: It’s a one man show right now.
Benjamin A. Smith: A one man show.
Keith Merker: We’re out there, and we’ve built out the team that I mentioned earlier was quite thin historically, we’ve built out a number of great teammates to build this business.
Ed Milewski: I know some of your associates in London, Ontario, of course: Pat Valente, and there’s a lot of people in there that are real, real supporters.
Keith Merker: That’s right. The London community and to mention, you know, I’d be remiss not to mention also the Aylmer community where we have our flagship operation, and Strathroy community, where we have the expansion site; but of course, you know, I moved to London for this business just over a couple of years ago with a hesitant wife who was eight months pregnant at the time, and the whole – that’s another story.
Benjamin A. Smith: Was she under the blanket?
Ed Milewski: Geez.
Keith Merker: [laughter] Regardless of that, the communities that we operate in, both Strathroy, Aylmer and as well, back in London have been super welcoming and are great to work with.
Ed Milewski: What’s the population in Aylmer?
Keith Merker: The population in Aylmer is about 7,500 people.
Ed Milewski: Yeah.
Keith Merker: Yeah, small.
Benjamin A. Smith: It’s in Quebec, right?
Ed Milewski: No, no, no, it’s just outside of London.
Benjamin A. Smith: Oh, okay, I actually didn’t know that.
Ed Milewski: No, the good, good, good to bring it up and clarify that. I think there’s a pretty big, formerly a tomato area, isn’t it?
Keith Merker: It’s also –
Ed Milewski: Tobacco.
Keith Merker: Primarily tobacco, and so we’re actually in a former Imperial Tobacco building.
Ed Milewski: Right.
Keith Merker: And Imperial Tobacco had a massive, million square foot facility across the road from our current site that they vacated back in 2007. And so they left a bit of a hole in the local economy, as you can imagine, so folks like us stepping into the breach and building the business that we’ve built is good, obviously. It’s a very welcoming environment for us.
Benjamin A. Smith: Of course. Now, I was wondering if you could explain a little bit about BLOCKStrain Technologies. I know you were an early investor; I believe WeedMD put about $500,000 into that before the company went public. Can you tell us a little bit about the competitive advantage that it brings in terms of cataloguing your genetics versus other LPs?
Keith Merker: Yeah, the introduction was made early on, and we really liked what the guys they were doing from a technology standpoint and trying to push the needle on the technology side of the cannabis business. And not only that, but it provided a means by which we could validate our supply chain. And so WeedMD has a wide swath of genetics that we’ve provided across the Canadian industry and now internationally as well, and BLOCKStrain has provided us with a way to track and trace all those genetics.
So we’ve locked down within the Blockchain, which they use as the backbone of their infrastructure, all of the DNA footprints, or fingerprints, sorry, of all of our strains. And so if there’s ever any question as to the need to validate our products somewhere down the line, whether it’s a dried product or a live plant, we can take it back to the source, validate it against the original DNA that we’ve locked with the BLOCKStrain platform, and thus provide validation.
Benjamin A. Smith: So that’s 100 percent immutable.
Keith Merker: Correct.
Benjamin A. Smith: So you can always, you know, protect your IP as you go along, right?
Keith Merker: Exactly.
Benjamin A. Smith: Okay.
Ed Milewski: Yeah, I wish I knew more about terms like Blockchain and, you know, because I still don’t know anything about it, but I know there’s some guys in London that are really big behind this BLOCKStrain company. And they keep telling me, you know, this is – anyway, you know these guys.
Keith Merker: Yeah, we know them, we work with them, they’re a great group of people.
Ed Milewski: So what about this announcement about the drug company that I go to, Shoppers Drug Mart? So now you can go to their website, is that right, and buy medical cannabis on their website that’s supplied by you?
Keith Merker: This is correct, as long as you are a medical patient and lodge your prescription with Shoppers Drug Mart. So this is, you know, if you think of the Canadian distribution channels available today, you’ve got the medical platform, you’ve got the recreational platform. And this is under the medical platform.
Ed Milewski: So just so I understand, so this is any store they have, like, you’re supplying that aspect to it? Or is it just the local stores of…
Keith Merker: So, neither. So today, the first iteration of Shoppers rolling out a cannabis program is through basically a licensed facility that they have. So they’ve licensed, essentially, a distribution centre. All the LPs who do business with Shoppers have shipped to Shoppers at this DC. And from there, the Shoppers patients who register with them online can then order, and it will be shipped directly to them from that site.
Ed Milewski: Okay.
Benjamin A. Smith: That’s great, and you’re only one of, what, five LPs, six LPs?
Keith Merker: I think it’s about seven today.
Benjamin A. Smith: Is it seven? Okay.
Keith Merker: And the nice thing for WeedMD is that we’re one of the smaller ones, and for us it was very meaningful from the standpoint that Shoppers has a larger reputation to uphold than anyone in the cannabis industry.
Benjamin A. Smith: Of course, of course.
Keith Merker: So they take their partners, as you can imagine, very seriously. So they came in and vetted everything we do, all of our policies and procedures and our products and processes, and they did so the same degree Health Canada would. And so then coming out and giving us the Good Housekeeping stamp of approval as a partner with them obviously is very meaningful to WeedMD.
Benjamin A. Smith: It’s a great endorsement.
Keith Merker: Absolutely.
Benjamin A. Smith: Now, we have a question from one of our viewers, and Micah –
Keith Merker: I didn’t know we did questions.
Benjamin A. Smith: We did! We did!
Keith Merker: Cool.
Benjamin A. Smith: Even with live guests.
Keith Merker: Awesome.
Benjamin A. Smith: Nika Domi asks: WeedMD, from what I remember has been covering tax and shipping, am I right? So are you still covering tax and shipping?
Keith Merker: Is it Nika Domi, is that a relation of Tie Domi, first of all?
Benjamin A. Smith: I don’t know.
Keith Merker: Max, Tie, are you out there? Love you both. [laughter]
Benjamin A. Smith: Max?
Keith Merker: Nika, yes we are. So we’re currently covering, for all of our patients, all of their excise tax as well as free shipping, and I think that that’s been a feature which all of our patients have truly enjoyed, and sets us apart from many of our peers in the space.
Benjamin A. Smith: Okay. Amazing.
Ed Milewski: Wow. Well, I’m going to say it again: I remember having dinner with you and Bruce, and we had that wild sushi night.
Keith Merker: We did.
Benjamin A. Smith: Wild sushi night? Tell me the story later. [laughter]
Ed Milewski: Wild night, and you know, we did a lot of sake, it was flowing freely, I believe, anyways certainly in my area. And we had a lot of laughs. You know, I don’t know if it’s because of my age, and maybe because I smoke too much pot, but I never caught on to the marijuana thing like I should have. Like, and you know, I say it with a little, I won’t say I’m embarrassed by it, but hey, good for you. Good for you that you – I was there, and we were talking about raising some money, and I thought it was a lot of money and I thought ‘this is going to be difficult’ and I was totally wrong! I was wrong, you were right.
Keith Merker: That was back in the dark days when it was like –
Ed Milewski: Three years ago. I think three, three and a half –
Keith Merker: Like 2015 where you couldn’t find two dimes to scrape together in the cannabis industry.
Ed Milewski: Yeah, and you threw out a number like $5 million or something.
Keith Merker: Yeah.
Ed Milewski: Was it five or ten? I think it was five, doesn’t matter. But you know what? Congratulations, okay?
Keith Merker: Thank you. Thank you.
Ed Milewski: And we gotta play golf.
Keith Merker: We do.
Benjamin A. Smith: But before Keith goes, I need to ask you one important question: this is something that I definitely wanted to ask you about, and it has to do with Hiku. And I know perhaps you don’t want – you know, without getting too…
Keith Merker: [laughter] It’s open book here.
Benjamin A. Smith: Okay, great. Without getting too in depth or, you know, just saying what you wanted to say, I wanted to ask you whether, you know, in retrospect, with the messy, you know, retail rollout in Canada, specifically in Ontario and BC, was it kind of a little bit of a blessing in disguise that the merger fell through in certain ways? Without, you know, obviously, giving whatever opinion that you want on the matter, but, and you received a little bit of a break-up fee as well. But was it a little bit of a blessing in disguise because of, you know, the way things have rolled out in terms of the retail strategy in Canada?
Keith Merker: Listen. Certainly at the time, it was sort of a difficult process to go to, because we had, you know, our eyes on that particular prize at that point in time. But in retrospect, I mean, we’ve driven on as WeedMD. It really didn’t affect our core business, which was, you know, strictly in the operations piece and cultivation and extraction and distribution, and it didn’t slow us a beat on those fronts. And that’s the most important thing, and our business has flourished since, operationally, and now as I tell the story and we’re going to watch that stock price start to realize, you know, what kind of numbers we’re going to put up throughout 2019, yeah, am I glad that we didn’t dilute by 50 percent? Sure.
Ed Milewski: So –
Benjamin A. Smith: Two great companies, it happened to work out, I guess, in this case. Now, as a follow up question to that, do you still have a strategy to go to retail if and when it becomes available in terms of the lottery in Ontario that just happened? Any plans of partnering up or doing your own thing to get onto the retail side in Ontario?
Keith Merker: Yeah, so there was a press release that came out about a month and change ago whereby WeedMD announced that we had announced with a group called Pita Pit.
Benjamin A. Smith: Okay, yep.
Keith Merker: And in conjunction with Pita Pit, who’s a well known and loved Canadian operator of, obviously, franchise operations in quick-service restaurants –
Benjamin A. Smith: And university students everywhere?
Keith Merker: Correct. And the two of us created an entity called Pioneer Cannabis Co. Pioneer Cannabis is basically a services provider as well as a potential franchisor to aspiring retailers in the cannabis space, and it’s a wonderful partnership in that Pita Pit brings their operational expertise on those fronts. They bring the network of landlords, the network of franchisees who typically want to own more than one store and operate more than one store. And WeedMD brings the cannabis piece, the supply, the compliance engine, the regulatory and all that kind of good stuff. And together we’ve created this partnership, and we have discussions going on across the nation with potential partners.
Benjamin A. Smith: Great.
Keith Merker: Yeah.
Ed Milewski: Yeah, well, just remind the viewers: what was the break-up fee on that? Can you say that? Are you – ?
Keith Merker: [laughter] Of course, it’s all public. It was $10 million less, there were some bankers kicking around that got a couple of fees out of it, but –
Ed Milewski: But you know, you just, just to contrast how hard it was to get the 5 million three years ago, versus a breakup fee for 10. You know what I mean? When it rains, it pours, and when there’s a drought on, there’s a drought on. It’s always good to remember that when things are great, maybe they’re not always going to be great. So you should be husband – I don’t know what’s the word, but embracing, hanging onto your cash.
Keith Merker: I’m a notoriously cheap guy.
Ed Milewski: We know. [laughter]
Keith Merker: This is why the WeedMD treasury has remained, this is why the company has raised less money than anyone else in the space.
Ed Milewski: And I would say, you know, your chairman’s still Michael Kraft, obviously?
Keith Merker: This is correct.
Ed Milewski: And he, you know, he throws nickels like they’re manhole covers.
Benjamin A. Smith: I’m guessing from that dialogue that you paid the sushi bill, you paid the sake bill…
Ed Milewski: No, no, no, they did. They did. Listen, they’re first-class people, they paid, but we did have a chance to drink a six-pack together.
Keith Merker: We did?
Ed Milewski: Coming back from what could have been…
Keith Merker: That’s another story. I forget the whole episode.
Ed Milewski: That’s a whole other story. For another time.
Benjamin A. Smith: Keith, we want to thank you for coming onboard, I appreciate that. It was a great interview as always.
Keith Merker: Thank you.
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