World Class Extractions Inc (CNSX:PUMP) and Quadron Cannatech Corp (CNSX:QCC) Merger Details
World Class Extractions Inc (CSE:PUMP) co-founder Anthony Durkacz and Quadron Cannatech Corp (CSE: QCC) CEO Rosy Mondin join James in studio. Earlier this week, the two companies announced a merger. Durkacz describes Quadron as the perfect fit for World Class being that both companies focus on extractions and together they can remain at the forefront of technology. As a combined entity, the business plan will be to produce a high volume of high quality concentrated extract to be used as ingredients in the food and medicine industries.
James West: I’m joined now in studio by Anthony Durkacz, co-founder of World Class Extractions, trading on the CSE under the symbol PUMP. And, Rosy Mondin of Quadron Cannatech, CSE-listed QCC. Welcome.
Rosy Mondin: Thank you for having us.
Anthony Durkacz: Thank you.
James West: Rosy, let’s start with you.
Rosy Mondin: Sure.
James West: Tell me: what does Quadron Cannatech do?
Rosy Mondin: Well, Quadron Cannatech, we started around 2016 – well, actually, 2015, getting into the extraction space. We knew early on we didn’t want to be in cultivation, and extraction was just where it was all starting to go. We saw that that’s where the future was going to go, actually, because if you look at all the derivative products, the extractions – extracts, sorry, extracts form the base ingredients for all derivative products in cannabis.
So back in 2015, we started putting together some extraction laboratories. We built our first extraction machine arising out of that, because the equipment that we were working with was really onerous, hard to deal with, so we decided to develop our own. That’s the BOSS, that we came out with. And then from there, we’ve put together the extraction facilities that allowed us to work out all the bottlenecks in the extraction processes, figure out the ancillary equipment that would be needed to make a really nice oil at the end, and we were focusing on making vape pens for patients.
James West: Okay. And is this a supercritical CO2 type of extraction?
Rosy Mondin: Supercritical and subcritical as well.
James West: Oh, okay.
Rosy Mondin: Yes, it’s a low-temp, low pressure system. So that was the first that we came out with.
James West: Sure. And Anthony, give us a quick update on what does World Class Extractions do?
Anthony Durkacz: Sure. So World Class founded a technology which is a continuous flow for industrial scale, which was very large scale, where we could process wet or dry flower, which made it very unique. And so, you know, one of the announcements that we made yesterday is that Quadron and World Class have merged, so legally, the vote has passed.
James West: Okay.
Anthony Durkacz: Which we’re extremely excited about.
James West: So what’s the symbol going to be? QCC, or PUMP?
Rosy Mondin: PUMP.
Anthony Durkacz: See the shirt? [laughter]
James West: Okay. So tell me: what’s the compelling business logic for two extractors combining?
Anthony Durkacz: Sure. So we were looking around – we’re always looking around – and so the world of extraction is going to go through a lot of changes, and fast changes, because that’s really where a lot of the action is happening in the industry today. And you know, the concentrates, edibles, things that are made from the extractors are what, you know, is gaining ground.
So the dried flower is losing ground, and the consumers are consuming more extractor-concentrate products. And so you’re seeing a lot of action. You’re seeing, in terms of performance in the stock market, you know, the extractors have outperformed the rest of the industry over the past six months. So that trend, we believe, is probably going to continue. So there’s so many exciting opportunities.
With PUMP, we realized that, you know, we have to remain on the forefront of technology, and so we’ve been looking around the globe, and Quadron was a perfect fit. They have a technology which, you know, I would say is leading edge today, and their knowledge base and their operators, like Rosy, are amazing. And they are top in class, from what we’ve been able to see. And so, you know, for the price, ultimately we think this is, you know, really a steal in so many ways.
James West: Okay. And where is Quadron based, Rosy?
Rosy Mondin: We’re in Vancouver; actually, our offices are in Burnaby and our manufacturing is in Langley, British Columbia.
James West: Uh-huh. So as extractors, you’re obviously not in the business of cultivating cannabis; where are you going to get your feedstock?
Rosy Mondin: So what we are doing is actually setting up relationships with partners, joint venture partners, strategic partners, to actually set up these processing facilities in tandem with them, rather than taking on the licensing risk ourselves – you know, especially now having to build out the facility in full, we work with those who are already late-stage applicants or who are already licensed, and our part in it is that we finance the project by putting up the extraction side of the facility. And for that, depending on the deal, we take a portion of what comes out.
James West: Very cool. So it’s not exactly a toll-milling situation, more of a joint venture…
Rosy Mondin: Contract manufacturing.
James West: Contract manufacturing.
Rosy Mondin: So what we’re doing is setting up with, like, to see about six to eight facilities that we have our hands in in Canada alone, and that allows us actually to continue making products. You know, that was under the medical model before, but now going forward, and you’ve got to think about it: this whole legalization of extracts, edibles and topicals hasn’t even started yet. So we think we’re really, really well-positioned considering the experience that we have, the machinery that we have, and setting up these partnerships. I’m really excited to get going on this now.
That’s in Canada, and then we’re going to be working on – right now I’ve got lines on three deals that we’ll be doing down in the US for contract manufacturing of the CBD oils from hemp.
James West: Okay. And you also made an acquisition in North Carolina of a hemp growing operation?
Anthony Durkacz: We did a deal with a farmers’ co-op in North Carolina, and that’ll be the first step. You know, legally, Quadron and PUMP had to merge, and so yesterday, well, Friday was the actual vote; yesterday it was announced. So now we can operate as one company where, you know, legally we couldn’t before. So the mandate is for Rosy and the entire management team to now begin to ink contracts.
We’ve stated capacity that we can, you know, that we can manufacture by the end of the year with our machinery, so now it’s time to fill that capacity with contracts.
James West: Okay. And what is the capacity?
Rosy Mondin: Well, we have four machines right now that we’ll be having the – like I mentioned, the BOSS, that’s 50,000 kilos per year that it does in CO2; we also, there’s also a lot that we do in pre-processing, as well, so, to prepare the materials.
The actual weight of the biomass might be different than what actually goes in because we palletize and crush.
James West: Okay. So when you say 50,000 kilograms –
Rosy Mondin: Kilos per year, annually. Annual capacity.
James West: Is that dried flower?
Rosy Mondin: Going in. Dried, crushed capacity that’s going into the vessel. So that would be for the BOSS CO2. Then we have the co-solvent Big BOSS that will be doing 500,000 kilos per year, and then we’ve got the BEAST, which is an ethanol extraction system; that one does 1 million kilos capacity per year. Then we have the BIG BEAST. So it’s part of the BEAST family. So we have the BOSS family and the BEAST family.
James West: Ooh, the BOSS and the BEAST.
Rosy Mondin: Yeah. And actually we had staff, our team is really engaged and excited about all of this. So the, actually, we had them vote on the name of the BEAST.
James West: Oh, okay, that’s cool.
Rosy Mondin: Yeah. And so the BIG BEAST is going to be 5 million kilos per year.
James West: And what is the, what products does ethanol extraction result in relative to critical and subcritical CO2?
Rosy Mondin: Well, the ethanol we’ll be using mostly for hemp extraction. You can use it for smaller cannabis farms as well, but primarily the big ethanol extractors will be for the hemp side, and then we’ll be utilizing the CO2 primarily for cannabis.
To note, when we go into the US, we are only going to be doing CBD extraction. We’re not going to touch the THC extraction just quite yet, just because it’s not worth the risk as far as the non-legalization nationally of recreational cannabis.
James West: Right. You don’t want to break out in handcuff.
Rosy Mondin: No, there’s no point in that. But we’re going to have enough business, I think, to keep us busy just on the CBD, because if you think about it, the CBD side is really what every human can turn towards, right? Versus the THC, which is going to be more user-based on what they want to get out of a psychotropic kind of a high. CBD doesn’t give you that, so it’s accessible to pretty much every human who wants to use it.
James West: And don’t forget dogs.
Rosy Mondin: Oh, the pet therapy side of it is huge. It’s a multi-billion-dollar market. So it’s not only dogs; every mammal has an endocannabinoid system in it, so if you’ve even been musing on how it might be helpful to horse racing, right? Because they use a lot of pharmaceutical-type of products. So I mean there’s joint rehabilitation and just general health and well-being. I think the great thing about legalization is the research that’s going to come out of all of this. So I don’t even think we can fathom where this is going to be in 10 years. There’s going to be a phenomenal amount of research, and a phenomenal amount of applications for those products.
James West: You bet. So your goal as a combined entity is to produce a high volume of highest quality concentrated extract to be used as ingredients in the food and medicine industries?
Rosy Mondin: Correct.
Anthony Durkacz: Yes. Also, you know, once we’ve got it and we’ve built, you know, what I would refer to as almost like a cannabis elevator, then it’s there, and when they do eventually legalize cannabis probably definitely for medicinal purposes is coming in the USA; you know, that’ll open up whole other doors and many other opportunities. But I think you have to be established in the USA. I mean, you know, the market for CBD is just, it is amazingly large, and it looks like more and more, you know, I think every sort of five years or so, you get some sort of, like, vitamin or supplement that everybody all of a sudden begins taking, you know, for health reasons. And I see CBD, and it’s my personal value is, you know, something that you’ll start to see in even corn flakes in the next sort of two to three years.
Rosy Mondin: We are actually aligned in that, because I’ve been saying that as well, when I’ve been speaking, that I can see things being fortified with CBD. I mean, we fortify with niacin, which is an egg extract, right?
James West: I do 48 milligrams of CBD every morning after my corn flakes, so if it was in the cornflakes, I’d be a buyer.
Rosy Mondin: There you go, it’d be so much easier. It could be in our sugars, it could be in our baking flour.
James West: You bet.
Rosy Mondin: Yeah. We just don’t know where it’s going to go, but I think the opportunities are huge. Wait till the food processors start getting into this.
James West: Yeah, no doubt. Well, that’s amazing. It sounds like the combined entity is more than the sum of two parts, so I wish you both very well. We’ll leave it there for now and come back to you soon. Thanks for joining me today.
Anthony Durkacz: Thank you. Thanks, James.