October 2, 2019

RavenQuest BioMed Inc (CNSX:RQB) Industry Leading Grow Technology & Formalizing European Operations

Midas Letter
Midas Letter
RavenQuest BioMed Inc (CNSX:RQB) Industry Leading Grow Technology & Formalizing European Operations

RavenQuest BioMed Inc (CNSX:RQB) (OTCMKTS:RVVQF) (FRA:1IT) CEO George Robinson joins Midas Letter in-studio to discuss the company’s formal definitive agreement with Biocare partners for all RavenQuest’s joint venture operations located in Europe. The companies will construct cannabis cultivation facilities with planned capacity to produce 35,000 kilograms of medical cannabis initially in Portugal. The CEO also outlines the recent research partner announcement with McGill University. The license obtained from Health Canada allows for the possession and production of cannabis for research purposes. The CEO also explains the economics of the company’s trademark Orbital Garden technology, stating the company is in position to take a run at anyone in terms of cost and efficiency.

So I think what you’re going to see over the next six months is really, really good. Hitting our targets for our deliverables on cannabis sales, hitting our numbers on the consulting side as we look outside of Canada, and then you take a lot at more prospectively on what we’re going to do to actually make a very interesting company and take that technology and leverage it on a worldwide basis. That’s what’s really exciting right now, and I think most of the world has woken up to orbital gardening strategies versus a flat table environment. – George Robinson, RavenQuest BioMed CEO

Midas Letter
Midas Letter
RavenQuest BioMed Inc (CNSX:RQB) Industry Leading Grow Technology & Formalizing European Operations

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Narrator: Ravenquest BioMed is a diversified cannabis company with divisions focused upon cannabis production, management services and consulting, and specialized research and development.

Ravenquest maintains a research partnership with McGill University, focused on cultivar strain recognition, plant stabilization, and yield maximization of the cannabis plant.

The company focuses on partnerships with indigenous communities.

Ravenquest BioMed trades on the CSE under the symbol RQB.

James West: George Robinson joins me now, CEO of Ravenquest Bio. George, welcome back.

George Robinson: Thanks for having me again, James.

James West: Sure. George, let’s have an update: what’s the latest on Ravenquest?

George Robinson: Well, lots of really good news since the last time we got together. Obviously, the formal definitive agreement with our Biocare partners for all of our joint ventures out in Europe is moving along perfectly now; really excited to see that moving forward. That’s probably one of the most significant events that sees us in our movement out of Canada and into the Europe and really formalizing.

You know, McGill University is really moving along. On October 17th, they’re going to introduce the Centre of Excellence for Cannabis. 92 researchers and a whole bunch of stuff, and we’re there as one of their players, and one of their industry partners. And we’ve helped them get their licenses. So now, on the plant sciences side, they can start doing all the rest of the research that we want them to do.

So we have this opportunity of balancing policy, which is Health Canada; we have the industry, and we have academia fully supporting us.

James West: You helped McGill University get their license?

George Robinson: Yeah, remember, we’re a consultants firm, right?

James West: [laughter] That’s, that’s just a testimony to your connectivity to the industry. That’s really interesting.

George Robinson: Thank you.

James West: So we should come out and shoot that, probably.

George Robinson: Absolutely, you should come out and see it. They have our gardens there, in fact, and now we just completed their CRA filings for them, along with their staff, there. So the CRA filings, we’ll be able to move plant material from our facility to theirs very shortly. So it’s really exciting. So now we get to push forward on all those things that we’ve wanted to do on the research side, that we’re waiting for this one license to complete.

James West: Yeah. Are they planning to mostly conduct research, or are they actually going to produce cannabis and sell it?

George Robinson: No, no, no. they have no need for that. They don’t want any of that, so they’re just going to do the research for us. And the beautiful part here is, we own the intellectual property; they get to publish, which we’ve already been doing with them – two papers already published with McGill already. So we get the IP, and they get to publish, and we’ve been funding that now for – me and my private companies and Ravenquest for three years, with a $1.6 million federal grant, also.

James West: So are they sort of up to date and immersed in the orbital garden technology?

George Robinson: Absolutely. They have been watching it very closely. Remember, we were able to take Dr. Sunderjit Carr from McGill; she was in the plant sciences side. She’s working with us, now. She’s located out of our Edmonton facility, where all of our gardens are. So that relationship back to McGill is always there. I mean, post-docs always keep in touch with post-docs.

James West: Sure.

George Robinson: So yeah, so they’re completely immersed in it. They’ve got the gardens; we actually had them build them, so they know exactly what to do. So we have a very good manual. So they’re right down into the point of actually building them and getting those things up and running right now. So, very exciting times. 

James West: Wow, that’s fantastic. I’m curious as to what are the evolutionary possibilities within the orbital garden technology? I mean, I’m going to go see them for myself tomorrow, touch and  feel, but I’m curious as to, like, is there further for this sort of technology to go? Or, is kind of like at the peak of where it can be right now?

George Robinson: No, not at all. We’ve started off with the HPS; we’ve just finalized our research and development on our LED structure for these gardens. That’ll take us from 2,400 watts on lighting down to 1,000 watts on lighting, and this is a light spectrum that we’ve designed ourselves in-house. We’re having this manufactured, and the first lighting test R&D unit will be coming out to our facility in about four weeks. So that’s the next set of evolution, because as we look at the market, we want to have a high-grade cannabis with the lowest possible cost.

So if we can take another sort of 60 percent out of the electrical costs on the lighting side, which, as we’ve discussed before, you know, you have people, you have electrical, water, and nutrients as your four biggest cost of goods sold line items. We’re going to take another shot at that. We’re already 65 percent less lower; we’re going to take another big chunk out of that.

Then I think second to that, what we’re starting to see is that there is no cultivar or strain that we can’t grow in it. We’ve had everything from hybrids to high indica and high sativas in there. The test results from Health Canada, we did from our own reporting and our inspection and audit from Health Canada, went extremely well. They loved what they seen; we had no issues there after the audit. And I can tell you, the CFAs coming out of these gardens are 100 percent clean. Like, no detectable pesticides, herbicides and fungicides, and the lowest levels that Health Canada has seen in the aflatoxins and mold and yeast.

And these are the areas – those last three pieces are the big pieces to make a really good medical product. And what I’ve said before, and I’ll continue to say: if you start off with good plant material, you can make something better, such as good grapes makes great wine. So we’re really concerned about that, that you make a great product, that you can turn it into anything from dried flower to consume, to maybe a very good alternative or derived product, and it all has to come from great flower.

But more importantly, what you’re going to see is big buds the size of your hands, dried.

James West: Wow.

George Robinson: Yeah. So just those big buds, and the tops are just turning out awesome.

James West: Wow. And will there be a crop ready to harvest tomorrow?

George Robinson: I’m not sure. They were in the middle of a harvest, so we’re going to see some of that going on. It’s really actually uneventful, because the plants are so small, you pull the trail, go clip, clip, clip, clip, clip, take off a couple of fan leaves, and it’s done; but you’ll be there.

James West: Uneventful for you, maybe, but that’s an eventful – 

George Robinson: Well, for the industry-wise, because we have no waste.

James West: Right.

George Robinson: It’s really beautiful. Where people are throwing pounds and pounds or kilograms and kilograms of trimmed-off material, we don’t have any of that. In fact, anything that we trim off because trim package for us that would go into an extraction process. So it’s nice not to have any waste, and we don’t have a busy destruction room trying to get rid of waste material.

James West: Sure. How does Ravenquest view the advent of mass outdoor growing in terms of a competitive sort of situation?

George Robinson: Well, you know, countries have been doing agriculture for a long time. It’s another agricultural product, and there’s obviously some very good upsides to it. And there’s some risks. You still have a lot of crop that’s sitting out there right across Canada, Western Canada, Central Canada. Look at the temperature changes we’ve had. We’ve had high amounts of moisture and rain happening in Winnipeg; we’ve got snow in Calgary. What’s going to happen to these crops that are not really resistant to all this other stuff, and if they do get a bad weather pattern, you can have mold and other issues come up with that.

So I think there’s a place for it; agriculturally, anything outside is going to be a position. But if you take a look at the US price spot market for cannabis, they’ve already differentiated that for everyone. If you take a look at the indoor, it’s getting about $1,500 a pound; greenhouse about 1,000, and outdoor about 750.

James West: Just like the old days.

George Robinson: Just like the old days! We know exactly what it is. So we’re going to continue to stay focused on that indoor grown. We see that as the market sifts itself out, you take away the hype, you take away everything else, people are going to pay high value for an indoor-grown quality crop. And the orbital gardens deliver that.

But I think more broadly, you know what has really been interesting lately is that we’ve been having interesting phone calls coming from investment funds in other countries saying, George, if we got into cannabis, is there anything else that we can do with that? And the obvious answer is, yes. There’s perishable stuff that can be grown in them that we can also do. So the product is not necessarily stop. Like, we talk to people like yourself who get it: we’re a technology company who grows cannabis. So with that, we can move that technology in a bunch of different ways. But right now, we’re focused on the cannabis space.

James West: Right. Well, that’s why we refer to you as our top technology cannabis technology stock.

George Robinson: Thank you.

James West: Yeah. Okay, so then, what are the big sort of milestones still laying out here for the rest of 2019, and what can we look forward to in 2020 for Ravenquest?

George Robinson: Yeah, I think everything is executing to plan. So now, in the remainder of this calendar year, we’re going to be ramping up all of our cultivation spaces. We’ll be coming online, which I think is really good. You’re going to see now forward movement with architectural engineering lease-based assets in Portugal. You’re going to see the movement on our intellectual property on our live microbes and our own contributions to the gardens that we’ve made; we’ve got a firm already working on that.

So I think what you’re going to see over the next six months is really, really good. Hitting our targets for our deliverables on cannabis sales, hitting our numbers on the consulting side as we look outside of Canada, and then you take a lot at more prospectively on what we’re going to do to actually make a very interesting company and take that technology and leverage it on a worldwide basis. That’s what’s really exciting right now, and I think most of the world has woken up to orbital gardening strategies versus a flat table environment.

James West: Yeah, you bet. Run me through the economics one more time, because the cost inputs of the orbital garden system, to me, are the most remarkable thing at this point. And you say you’re going to shave another 60 percent off of energy costs.

George Robinson: Yeah. So you kind of have to look at four things, and we did that when we started developing the business model for Ravenquest. There’s four big pieces to the COGS: remember, being a consultant, I’ve seen the good, the bad, and the ugly about the early licensed producers. If you don’t have a good handle on how many people you need to harvest and work with your cost base; if you don’t have a good handle on electricity and then water, if you have to pay for nutrients, you’re going to have a higher-cost product.

So first off, in our facility, 7,000-8,000 kilos off the get-go, and then we can expand by optimizing that out. We only use 16 people as harvesters in gardens, and five people for administrative and maintenance work. So all of a sudden, veruss anyone else who’s in the flat-table environment, that would be 40 to 60, maybe even 80, people, in that environment. So we’ve already hit the COGS space, number one, on the human resource side.

The electricity side: remember, we’re only dealing with 228 to 280 plants around that light source, and it’s one light source that’s very close, so we can reduce the power side. Going to the LED, that’s great.

You take a look at the other two: we only feed the plants once a day, so now we’re at 90 percent less nutrient cost.

So what does that mean in dollars and cents? $0.69 to $0.75 a gram, without introducing the LED lights. So we think we’re going to knock that off, today.

So I think those numbers are now in place to say that we’ll take a run at anyone, be it indoor, greenhouse…we don’t know what the costs are going to be to harvest an outdoor crop with all those people having to go outside and cut down those big, big plants, and shave them back. So, but I think that we’re going to be in a nice place with a very good quality product that’s meeting all the C of As for the lowest indoor cost around.

James West: Right. George, that’s a fantastic update. Let’s leave it there. Thanks very much for joining me today.

George Robinson: Thanks again.


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