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48North Cannabis Corp (CVE:NRTH) Canada’s Largest Outdoor Organic Cannabis Operation

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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.

48North Cannabis Corp (CVE:NRTH) (OTCMKTS:NCNNF) Co-CEO Alison Gordon joins Midas Letter to discuss completing the planting of its first outdoor cannabis crop at its Good:Farm facility. With over 3.7 million sq. ft. of cultivation space, Good:Farm is Canada’s largest outdoor organic cannabis cultivation facility. The cannabis culturist CEO rebuttals misconceptions of growing marijuana outdoors in Canada, stating the farms premium dried flower would pass Health Canada’s rigid inspections and that roughly 80 to 90 percent of the farm will be used for extraction and isolate purposes. The outdoor farm provides 48North with a huge opportunity within the cannabis market – in terms of a vastly greater cultivation space and lower costs. As 48North moves into harvesting its outdoor crop in a couple of weeks, the company have also made a strategic investment in Friendly Stranger – a cannabis accessories retailer in Ontario with operating retail experience of over 25 years. The investment marks the first retail investment made by 48North with the aim to dominate the retail cannabis market.

Be sure to check back in early September after Midas Letter visits 48North’s Good:Farm to see the massive outdoor grow in its entirety.

Transcript

James West, Midas Letter CEO: Alison Gordon joins me now. She’s the CEO of 48North Cannabis Corp. Alison welcome back.

Alison Gordon, 48North Cannabis Co-CEO: Thanks for having me James.

James West: You bet. Alison, you’ve got a big outdoor crop growing…

Alison Gordon: Yes, we do…

James West: Somewhere near Bradford Ontario. Tell me about that.

Alison Gordon: Okay, it is incredible. You would absolutely die if you saw it because it is 3.5 million square feet of cannabis growing outdoors. So, when you pull up to the farm, it’s just like as far as your eye can see. There’s just cannabis and weed growing everywhere. It’s beautiful.

James West: It’s not hemp? It’s the real deal?

Alison Gordon: It is cannabis. It is the real deal.

James West: So, is this is for recreational product?

Alison Gordon: It will be for recreational product. Yes, but obviously it could also be for a medical product in the future.

James West: Okay. So now let’s correct the broadly held misconception that you can’t grow good weed outdoors in Canada.

Alison Gordon: Okay. Well that is crazy. We grow a lot of things outdoors. Do we not? Many, many things in the world? Right? We grow grapes for wine. We grow all these things outdoors. So, people are going to see that misconception when we start harvesting. I think now as people drive-by… It’s funny to watch cars drive-by because they sort of slow down as they’re going, there’s fencing and security obviously. An immense amount of it, but it’s not barricaded. So, people I think are like, oh wow that we do grow outdoors and it grows tall.

James West: Cool. So are you growing Indica? Sativa?

Alison Gordon: There is a mix of Indica’s and Sativa’s.

James West: Very good. That’s as much as we need to know about the particular flavors.

Alison Gordon: And we have some 2:1 on CBD because CBDs is in high, high demand in Canada. So, we’re growing some high CBD strains.

James West: So, are you going to make extracts and isolates?

Alison Gordon: Yes. So, probably at least 80 to 90 percent of the farm will be used for extraction and some of it will be used for dried flower. The rest of it, the bulk of it is for extraction because that’s the nature of the outdoor beast in some ways, but it’s also where the markets going. But it’s beautiful to see. I can’t wait for you to see it.

James West: So, does the ability for you to grow outdoors represent a huge Improvement in your whole opportunity?

Alison Gordon: Yes. Think about it. So, we had our two indoor facilities that could do about 2,500 kilos each and we’ve now converted one of those facilities, the one that’s 10 minutes from the farm, to be our post-harvest. So, the extraction and manufacturing of all the products. It’s a lot of infrastructure for growing that amount of cannabis at the end of the day. The costs, obviously, are significantly more to grow indoor in a greenhouse. Now, you take it outside and you’re looking at 3.5 million square feet on a farm that cost one and a half million dollars. Obviously, there’s some other costs, but in no ways does it count like an indoor or Greenhouse.

James West: Sure, so then what about… I mean I’m just going to run through the misconceptions that people have brought to me… So, there’s this idea that you will never sell medical cannabis from weed grown outside because birds poo on it?

Alison Gordon: I have never heard that one.

James West: (Laughter)

Alison Gordon: As I said, the bulk of the product is for extraction. So, you can remediate, you can do what you need to do if you so choose. Everything’s obviously lab tested. I don’t really understand that. That’s an interesting one. I haven’t heard that one before.

James West: But could you sell premium dried flower? a cola off of an outdoor crop? Would it pass Health Canada’s rigid inspections?

Alison Gordon: I believe yes it would. I mean we are growing organically. Which is the other cool thing about our farm is that it’s all organic. So, obviously we have to lab tests in the same way that you would and you’re looking for the same factors as you would indoor, so it will be awesome.

James West: Wow, so this will be available in Cannabis stores across Canada on a recreational basis?

Alison Gordon: Well, we’ve already supplied signed supply agreements for the outdoor flower with Quebec, Ontario and Alberta. So, you will be having the outdoor flower in those provinces. Which is super exciting.

James West: Yeah, no doubt

Alison Gordon: They are very excited to have it.

James West: So, do you think that Canada is going to end up being a place where nobody grows indoors? Because we grow so much great marijuana outside? We’ve got so much land.

Alison Gordon: No, I think that the indoor product is a different style of product. I mean because you’re controlling all the variables: the way it looks, the cannabinoid content. It’s a more, I hate to say premium. It has shelf appeal. You can play around with it in a different way. So, I believe there will be an indoor market for sure because it’s just like there’s craft anything right? But in terms of, the fact that you see in California 70% of sales being the extractable products like vapes, edibles, topicals, supplements, I mean all of those things. That needs to come from outdoor for it to be cost efficient, for everybody to win, including the consumer and that’s where I believe it will go. There’s been a few more outdoor licenses in Canada. I think by next year, they’ll be some more. It will go in that direction. It’s the only thing that makes sense.

James West: So, do you expect to sell everything that you produce on this outdoor project?

Alison Gordon: 100 percent. I do expect to do that because we’re still under supplied in Canada. Right?

James West: Right. At what point do you see the undersupply becoming oversupply?

Alison Gordon: Well, that’s an interesting question. I change my mind every day on that. But I definitely think you will see more outdoor next summer, and maybe post that harvest is where you might see the supply catch up with the demand. I mean, obviously there’s other factors like how well is the industry doing at bringing people into the legal market, right? And if we have a lot more uptake in the legal market, then the supply will continue to go lower, right? Meaning that we still need to catch up to that. So, it’s all a big puzzle.

James West: Yeah. Okay. So, 48North Cannabis has been growing both organically, figuratively and metaphorically, as well as through acquisitions. So you just recently completed a Strategic investment in Friendly Stranger. Tell me about the thinking behind that? What’s that going to achieve for the company as a whole?

Alison Gordon: So, retail’s obviously a big part of this business and its uncertain what retail looks like in all these provinces. As you well know. And the other challenge that we have is that you have very large companies. Who have a lot of cash on hand. Who want to own every inch of the vertical. For us, we really want the opportunity to be able to show up for consumers in the way that we are, as 48North, as you would in a grocery store. They buy shelf space, or they can do pop-ups, or do these things. It’s very difficult in our world to do that. So, we believe in The Friendly Stranger, in Greenacres Brands. Who’s the large shareholder in that company. They’ve been in business forever. They know how to run retail. I think that’s one of the big challenges of retail in Canada, especially in Ontario: it was a lottery. Everybody could put in and you could be someone who’s never had a job and you won the lottery, right? So, retail’s not necessarily running as we would like to see it for consumers. But looking at a company like Friendly Stranger, with significant retail experience and their plans for expansion and how they plan to engage the consumer, was very aligned with us and just authentic, real and for us that’s where we want to show up. So, we’re like, let’s do it. Let’s get in there. Let’s be part of the Friendly Stranger family.

James West: Interesting, the whole rollout of the recreational Cannabis regime in Canada was fraught with criticism of infrastructure and logistics. I’m just curious from your perspective as a CEO of a cannabis supplier to that network, have those problems largely ironed themselves out?

Alison Gordon: Are you talking about at the provincial level for retail distribution? No, not 100 percent. Like there’s no criticism. I’ve said this before to you. It’s not just kissing ass of government. But it is a monumental task. Like think about it. Moving into legalization. Then at the provincial level it’s also difficult. So, we had a change in government. Obviously, last year with Doug Ford coming in. We were originally going to be government-run like the LCBO. Then you get a change in government and no it’s not going to be that. Which we’d all been meeting and working towards. Yes, we’ll do that online. We’re going to go private, and first we’re going to give 25 licenses. Well 25 licenses is a small amount for the province of Ontario. I mean we have five in the GTA. I can’t even begin to imagine how many Liquor stores we have in the GTA. So, of course, that creates all sorts of ripple effects for us as suppliers, for the consumer which then impacts us. So, we know that they’re going to do another chunk soon. And then there’s rumors about what will happen in 2020. Whether it becomes like Alberta; where it’s a complete free market. Which would be quite interesting. Where if you meet the parameters. This hasn’t been announced, but this is the rumor… You could get the license, and then it’s up to you to make a success of it. So, distribution and Retail needs to grow.

James West: You finished planting your 3.5 million square feet in July?

Alison Gordon: Yes

James West: And so is that like you got half a growing season?

Alison Gordon: No, no, not at all. First of all, the season was late this year because there was record rain in the spring, right? So, many farmers and crops were planting at the same time as us and we’ve got the auto flowers. Like a percentage of the farm is auto’s. Those will harvest in the next two weeks and then the rest will come out in early October. So, that was always our plan. It’s just the veg time maybe was shorter than we had originally anticipated.

James West: Wow, I can’t wait to see this place.

Alison Gordon: I know. It’s really, really exciting. It changes the whole vibe. You’ve been to facilities and ours. It’s just a crop, right? and it’s just feels like vindication for those of us who’ve been using cannabis for a long time. It’s like, okay, it’s just natural. It’s just here.

James West: Finally, it’s free.

Alison Gordon: The little plants are like “I’m free”.

James West: I mean if they could only talk. No wait, it’s probably good thing they can’t.

Alison Gordon: (Laughter)

James West: Alright Alison, that’s a great update. We’re going to leave it there for now. I’ll come back to you soon. Thank you very much.

Alison Gordon: Come to the farm.

James West: We will be there September 5.

Alison Gordon: Yes. I knew that. See you there on September 5th.

James West: Sounds great. Thanks for joining.

Alison Gordon: Thanks for having me.

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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