Market Commentary: STOCKPOOLS Q&A WITH ROSY MONDIN, CEO OF QUADRON CANNATECH CORP. (CSE:QCC) - Stockpools

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Market Commentary: STOCKPOOLS Q&A WITH ROSY MONDIN, CEO OF QUADRON CANNATECH CORP. (CSE:QCC)

Written by Anil Mall, President of Stockpools Inc.

                                                                                            

 

Quadron Cannatech Corp. (CSE:QCC) focuses on ancillary equipment, products and services for the authorized cannabis industry which includes , providing automated leading-edge extraction and processing solutions, as well as the sale of end-user delivery and consumption solutions (such as vape pens and capsules) for patients and consumers.

Led by Rosy Mondin, Executive Director of the Cannabis Trade Alliance of Canada, board member with the Canadian Association of Medical Dispensaries and over 16 years of entrepreneurial and legal experience in corporate law and regulatory affairs.

Anil Mall, President of Stockpools Inc. had the opportunity to sit down with Rosy Mondin, CEO of Quadron Cannatech Corporation to get a better understanding of the company’s business and how its positioned itself within the cannabis industry.

Anil: Hi Rosy, thanks for taking the time to give our audience and readers a better understanding of Quadron Cannatech.

Anil: Can you give me a quick overview of Quadron?

Rosy: Thanks Anil, Quadron Cannatech provides ancillary equipment, products, and services for the cannabis industry.  Through research and development, we build state-of-the-art equipment, provide automation services, and sell customized branded delivery consumption devices.

Through sales and services contracts, Quadron works with the client to determine their unique extraction and processing requirements and objectives.  We then design and set-up unique laboratory environments with the equipment and personnel they require.  Each services contract is customized to suit the client’s unique needs and end-product goals such as vape pen, capsules, suppositories, etc.  By working with Quadron’s team of experts, our clients have access to our full suite of equipment and services, enabling them to penetrate the high margin cannabis oils market.

Anil: Can you give us a rundown of how Quadron got started?

Rosy: First, it starts with my views on cannabis: the illegality of cannabis never made sense to me and I’ve supported legalization my entire adult life.  With an undergrad in criminology, a legal career in corporate law and regulatory affairs, and being a proponent for cannabis legalization turned out to be a great springboard into the cannabis industry.

In 2013, as the Canadian government was transitioning its laws governing the production and distribution and use of cannabis, I began getting calls from people looking for legal and regulatory help on the MMPR production applications- and also began receiving offers of board positions, advisory positions, in-house counsel positions, and consultancy work. I quickly realized the amazing opportunities becoming available – a new industry was being established - and I made the choice to approach a few associates who shared my views on legalization, and suggested that we consider a business venture in the cannabis space.

It was a no-brainer.

We originally looked at the path to become a licensed producer but after a solid due-diligence period, we realized that the ROI on a cultivation facility carried too many risks (regulatory ambiguity and lack of transparency in the process) and we felt that the ROI was too far out.  Thus, we looked at where the industry could best be serviced, with an eye to future legalization, and we concluded that laboratory services was the place to be. 

Coupled with my co-founders’ experience in CO2 extraction, manufacturing and botanical oil formulation in odor control solutions, we saw enormous potential to service the cannabis industry through the ancillary market.

Although ancillary businesses don’t directly handle the cannabis plant, they are the picks and shovels of the cannabis industry and are pertinent to the industry’s success, maturation, and evolution.  They are fundamental in the legal cannabis supply chain and provide opportunities for businesses engaged in this completely new sector.

Quadron is well-positioned to take advantage of these new opportunities and can provide solutions to commercial cannabis cultivators and processors.

Anil:  So who is it that Quadron provides ancillary services to?

Rosy: Quadron operates pursuant to the legalized medical cannabis production framework in Canada, relying upon production licenses held by our clients, issued from Health Canada.

The Canadian government has ramped-up the number of licensed cannabis producers under the ACMPR and the issuance of these cultivation licenses is increasing exponentially.  At the early stage of the program, the licensing process was very slow with only 5-licenses issued in 2015, and only 10 in 2016.  In the past couple of weeks alone, Health Canada has granted five additional cultivation licenses, bringing the number of licensed cannabis producers in Canada to 50, with hundreds more awaiting licensing.

In addition, there are currently thousands of ‘craft’ producers licensed in Canada as well, that under previous regulations and by order of court injunction, can continue to cultivate and create cannabis extracted products for their own personal use, or on behalf of the patients for whom they are authorized to grow.  Currently there are ~28,000 predominately small-medium scale licensed ‘craft’ growers and over 3,700 designated growers nationally, of which 2,200 are located in BC.

Quadron is a manufacturer and supplier of ancillary equipment, products and services for the cannabis industry and is not required to hold a special license. Quadron doesn’t directly “touch the weed” – we do not grow, buy, hold, or sell cannabis.

Being in the equipment manufacturing business, Quadron isn’t bound by borders: we can sell our equipment globally.  There are no rules preventing us from entering into services agreements with licensed cannabis and hemp producers worldwide to establish extraction and processing laboratories.

Anil: Why do these growers need extraction and processing systems?

Rosy: As legalization and consumer preferences evolve and shift, there is a growing need for companies that design, engineer and fabricate specialized cannabis extraction and processing equipment.  We’ve responded by developing a scalable business model focused on ancillary businesses which complement the established cannabis cultivation industry.

Growers want to be able to produce a cannabis oil product but most do not have the expertise, technology or the capital to produce a quality product - Quadron offers growers scalable, end-to-end extraction and processing solutions, requiring no upfront capital investment and no extraction expertise, enabling growers and processors to significantly upgrade their operations and become more profitable.

Anil: Why don’t they build or buy their own equipment?

Rosy:  As more and more research goes into the development of new and more efficient equipment; the cycle time of leading edge technology is getting shorter and shorter.  While some licensed producers may be well capitalized and funded to continuously acquire the latest and best equipment to turn cannabis into oils, it simply isn’t feasible for smaller to medium sized growers to stay on top of this evolution and maintain the technical know-how to properly operate these extraction and processing laboratories.  This has created a huge opportunity for companies with cutting edge extraction technologies.

Anil:  So just how big is the oils market?

Rosy:  Well in the United States the legal cannabis market is expected to reach nearly $22 billion in total annual sales by 2020.  It is also estimated that the CBD market will grow to a $2.1 billion market in consumer sales by 2020.  CBD shows tremendous medical application and therapeutic potential – it’s non-psychoactive, and in its extracted form contains no THC.

Based on trends in the US, Mackie is projecting that cannabis oil consumption in Canada will grow from 284 litres in 2015 to over 560,000 litres by 2020.  As we continue to see the wider legalization and acceptance of cannabis, both for medicinal and recreational purposes, the demand for cannabis oils and more refined products will only grow as the industry enters the mainstream.

Think about it:  cannabis extracts and concentrates serve as the base ingredients for the great majority of the new cannabis products on the market.  Cannabis extracts can be combined and formulated to any customized delivery method and there are many opportunities for the creation of many unique cannabis products - the number of products that can be made from cannabis extracts is limitless.

We’re learning more and more about the 400+ chemical elements in the cannabis plant and what they do.  With the advancements in technology and methodology we can now extract the desirable cannabis compounds from the plant to achieve very specific recreational and therapeutic effects.  From there, preparations of compounds and formulations are created to make a wide range of new products.  We’ve only just started to scratch the surface!

So, with each of these new products comes the need for supplies and unique manufacturing considerations.  This is where Quadron is positioned to supply the varied aspects of the ancillary market demand.

Anil:  Who are the competitors in the marketplace and what’s QCC’s advantage?

Rosy:  We are currently the only company trading on the CSE in the cannabis ancillary equipment manufacturing and supply space.  There is little competition in the space at this time, which gives us a great first mover advantage.

Anil:  I noticed Quadron also sells ancillary products such as vape pens.  How does this fit in with your business model?

Rosy: Yes, at Quadron we’re focused on providing an end-to-end solution to licensed growers, and one of the ways we do this is by providing ancillary products such as vape pens as a delivery method for the oils our extraction units produce.  Our corporate strategy is to develop a wide variety of branded ancillary products, such as capsules, tinctures, suppositories etc.

Based on trends in the US, oil consumption is expected to grow over 100x faster than dried marijuana consumption and many cannabis growers do not have the equipment or expertise to deliver a highly consistent, branded, end product to their customers leaving a critical void in the market.  Our customized branded vape pens, for example, are highly synergistic to our extraction and processing business.

Anil:  Will Quadron look to expand into the United States?

Rosy:  The opportunity in Canada is massive as many investors have seen the unprecedented growth in both medicinal and recreational consumption.  For us, Canada provides a unique opportunity as there are thousands of licensed holders which we can potentially service.

However, because we provide extraction and formulation equipment and services to industry participants, we have no geographical limitations.  We can deploy our equipment and services anywhere in the world.  The US also presents a great opportunity at it gradually moves toward legalization in both the medical and recreational sectors and we are actively pursuing opportunities across the border.

Anil:  Fantastic. Thank you for sitting down with us Rosy, I think our readers learned a lot from this.

Rosy:  Thanks Anil, it was my pleasure.

 

 

For more information on Quadron Cannatech, please email QCC@kincommunications.com.