ICC International Cannabis Corp (CNSX:WLRD.U) Prep to be Player in European Cannabis Market

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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.

ICC International Cannabis Corp (CNSX:WLRD.U) (FRA:8K51) (OTCMKTS:WLDCF) CEO David Shpilt joins Midas Letter to discuss the differentiating factors of the business within the competitive cannabis marketplace. ICC, through its subsidiaries, has operating assets and is developing platforms for cultivation, extraction, formulation and distribution across the globe and primarily in Europe. The main focus of the company will be the the medical European market as nations within the continent are regulated to medical standards only. The company is currently in the process of developing business units to become fully vertically integrated within that European market. Currently, ICC export dried flower out of Canada and import into Germany under compliance with EU GMP standards. Mr. Shpilt states the company will “be selling in Denmark, and then shortly in the UK.” Further to ICC’s European focus, the company will supply New Zealand’s NUBU Pharmaceuticals with a portfolio of full-spectrum pharmaceutical THC/CBD products. Watch the full interview to learn about all the company’s plans in the near-future as they look to become revenue-positive.

Transcript

James West: I’m joined now by David Schpilt. He’s the CEO of International Cannabis Corp. David, welcome.

David Schpilt: Thank you very much for having me.

James West: David, in the world of cannabis, how does the International Cannabis Corp differentiate itself?

David Schpilt: I think by virtue of our name. We’ve decided to step outside the North American, particularly Canadian marketplace, and to differentiate ourselves in the high-value international emerging markets, primarily Europe, to start with.

James West: Okay. And so your website says you’re vertically integrated on an international scale; so, do you actually do everything from cultivation, extraction to formulation and product sales?

David Schpilt: Absolutely. Let me qualify that: we are in the process, in a heavily regulated market, of standing up the business units so that we can be fully vertically integrated. The European market is regulated to medical standards and a medical marketplace only, so we have all of the necessary elements of vertical integration through our portfolio of assets. Now the idea is to hyper-focus them onto the medical markets in Europe.

James West: Okay, so then you’re strictly focused on medical cannabis only?

David Schpilt: Internationally, right now, there’s no adult use or recreational market like we have in Canada, so we are definitely focused on the production of pharmaceutically standardized premium cannabis for sale in medical markets only.

James West: Okay, and where do you produce cannabis?

David Schpilt: So our trading vision, or our export out of Canada and import into the EU, is reliant on our ecosystem and syndicate of Canadian licensed producers that we qualify in the product under compliance with EU GMP standards, and we sell it in Germany right now. We’ll be selling in Denmark, and then shortly in the UK.

James West: Oh, so you export Canadian cannabis and turn it into medicine for import into Europe?

David Schpilt: That’s right. Europe is where Canada was in 2013.

James West: Sure.

David Schpilt: And there’s no infrastructure of cultivation in Europe to support that market, so it’s relying on international product, and at the moment that’s coming either from the Netherlands or from Canada. And until such time as there’s enough infrastructure in Europe to support the domestic market, and there will be a protectionist and separationist attitude and some price control. So until that time comes, we’ll be importing from Canada for the next three to five years, we think.

James West: Okay, so are you selling cannabis flower products or extracted products, or a combination of everything?

David Schpilt: That’s a good question. Right now we’re in dried flower markets only; they’re fairly nascent, and the regulations around product standards and safety are coming into place. So we will have a derivative market consisting of medical cannabis oils, capsules, and so forth.

James West: Cool. And so which countries in Europe – I mean, is the medical regime uniform across the whole European Union, or is it kind of like country by country, there are slightly different variations?

David Schpilt: That’s a good question, as well. the European market is divided. The entire EU, 28 member states, has different regulations on a per-country basis. The – I’m going to start again: the EU has a country by country framework for medical cannabis, and all regulations differ and are in different stages of development. Most frameworks are for physician oversight, who physicians manage the clinical and medical management of cannabinoid therapy, and pharmacists are the distributors or dispensing end points to the patients.

James West: Okay, cool. So do you have to, do you have a pre-existing sales agreement with Canadian LPs who provide your dried flower, or do you sort of buy it on a spot market basis?

David Schpilt: We can’t buy it on the spot market in that Canadian cultivated cannabis has to meet the European monograph for different standards, and our offtake agreements and long term supply agreements, in addition to our own IP that’s licensed and allows us to stream product out of Canadian licensed producers, is what we’re using to sell into the European market.

James West: Cool. So do you anticipate selling – I mean, you’ve got a project in New Zealand with NUBU Pharmaceuticals that you announced yesterday, I guess it was, and tell me about that arrangement, and is that arrangement sort of a typical part of your business model?

David Schpilt: I think that was important and it gave us an opportunity to enter into an emerging market with a good distribution partner that was focused on advancing the medical development of that market, and our supply chain there starts in Europe using CBD finished good products. And until such time as New Zealand, the market has matured and warrants us making an investment into infrastructure, and then we’ll start production and processing in New Zealand, we’ll continue to expand on that international strategy of looking at good, responsible and competent downstream distribution partners.

James West: Okay, so is International Cannabis Corp. currently making money in the cannabis space, or are you revenue positive? Where are you at in the developmental -?

David Schpilt: We’re, like, this close.

James West: Yeah?

David Schpilt: Yeah, we can taste it. We’re pre-revenue right now, but we’re just putting the right things into place so that when we execute our first import into Germany and followed by the UK, we’ll have a continuous, consistent supply of product. It’s important to note that in a supply-constrained market like Europe, like we’ve had in Canada now in an adult use market, and with different failures and regulatory hurdles on the cultivation and the grow aspect, we believe if we can’t deliver a consistent and safe, continuous product into the marketplace, we’re going to do that brand a disservice and we’ll lose credibility with the stakeholders like physicians and pharmacists.

So we are waiting it out until we ensure that continuity of supply chain and all regulatory approvals are in place.

James West: Do you have any concern that you are going to be competing head to head with, like, Canopy and Aurora and Aphria? I mean, all these guys are in Europe; they’re all running around getting market share. How do you break into that sort of space?

David Schpilt: Steel sharpens steel, so…

James West: [laughter]

David Schpilt: We wake up real early in the morning. We understand that we are in a quickly saturating environment with very sophisticated and well-capitalized operators. At the same time, we are very confident and we are certain that our IP, our know-how and our ability to execute is just as proficient as theirs, and this is an opportunity for us to level up into that Tier 1 status and truly be an international operator, and island ourselves away from the commoditization that’s going to occur in the mass production of cannabinoids, and any disruption from things like biosynthesis. We own a very specific aspect of cultivation, and a facility designed and built, as well.

James West: Cool. All right, David, let’s leave it there for now; that’s a great introduction to the company. We’ll have you back soon. Thanks for joining me.

David Schpilt: Thank you very much, James. 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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