GTEC Holdings Ltd. (TSXV:GTEC) aims to consolidate licensed producers of craft cannabis to become one of Canada’s leading vertically-integrated cannabis companies
SmallCapPower | August 24, 2018: GTEC Holdings Ltd. (TSXV:GTEC) has multiple cultivation facilities under Health Canada’s Access to Cannabis for Medical Purposes Regulations (ACMPR), each with a unique focus and strategy. The Company is focused on Canadian boutique craft cannabis production and aims to identify and consolidate licensed producers of craft cannabis to become one of Canada’s leading vertically-integrated cannabis companies.
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GTEC Holdings owns several companies that focus on craft cannabis cultivation, as well as related R&D activities. The Company is steered by an experienced management and operations team and backed by venture capital firms, especially Doventi Capital. GTEC trades at a market capitalization of $73.7 million.
Investment Thesis
- Broad portfolio of companies
- Experienced management team
- Financing by Doventi Capital and GTEC’s Management
Broad portfolio of companies
GTEC owns and operates six wholly-owned subsidiaries – one licensed dealer, one Health Canada cultivation license, and four late-stage cultivation applicants – which specialize in craft cannabis cultivation and related activities. The companies are located in the provinces of Alberta, British Columbia and Ontario. The six subsidiaries are listed below:
- Kelowna-based GreenTec Bio-Pharmaceuticals is GTEC’s flagship subsidiary, which is currently constructing an 80,000 square foot facility under the ACMPR with expected output of 10,000 kilogram/year. GreenTec has expansion capabilities for a second site located on 160 acres in the North Okanagan, as well as a third 35-acre site located on the Trans-Canada Highway in Revelstoke, British Columbia. The Phase 1 site is anticipated to produce 1,500 kilogram of cannabis/year. Phase 2 is planned to break ground in Q4 2018.
- Edmonton-based Alberta Craft Cannabis (formerly GrenEx Pharms) received its Cultivation License from the Office of Medical Cannabis (OMC) on September 29, 2017. It has a fully built out 14,000 square foot facility, which can produce 1300 kilograms of indoor craft cannabis annually. GTEC Holdings will immediately commence cultivation at the facility as well as the application process with Health Canada for a Secondary Site application, utilizing the over 20,000,000 square feet of expansion capabilities within the GTEC portfolio.
- Kelowna-based Falcon Ridge is a certified organic farm, which follows GMP and HACCP protocols to help ensure product safety. It currently holds three NHP product licenses from Health Canada. The farm has expansion capabilities of 11 acres and the Phase 1 site is expected to produce 1,000 kilogram annually. GTEC Holdings has already prepared plans to build a 10,000 square feet production facility on the property, which will be capable of producing one million grams of organically-cultivated cannabis annually.
- Kincardine-based Grey Bruce Farms is currently constructing its 30,000 square foot boutique craft cannabis ACMPR production on six acres. The farm has expansion capabilities of 500,000 square feet.
- Chase-based Tumbleweed Farms is currently under construction of what will be a 10,000 square foot boutique craft cannabis ACMPR production facility on 22 acres. The farm has completed interior construction and is currently finishing the interior build out. The entire project is expected to be completed in August 2018. It has expansion capabilities of 1,000,000 square feet with the option to grow to 8,000,000 square feet.
- Kelowna-based Zen Labs is a full-service chemical and microbiological diagnostics laboratory for soil, water, and cannabis. It has been issued a Dealer’s License from Health Canada and will also apply for its extraction license in order to produce and refine products for the GTEC group of companies. Zen Labs will act as third-party R&D for GTEC Holdings.
Experienced management team
GTEC Holdings has an experienced management team with a significant track record in establishing and expanding multiple successful legal cannabis companies. The Company’s founder, Chairman and CEO Norton Singhavon currently serves as Executive Chairman of Doventi Capital G.P. and Doventi Capital Fund II L.P. He brings experience in Canada’s legal cannabis sector pertaining to large acquisitions, consolidations and start-ups. Mr. Singhavon has successfully deployed over C$22 million into the legal cannabis sector and has been associated with another C$50 million of public M&A ACMPR transactions. GTEC’s co-founder Michael Blady has formerly served as director of Invictus MD Strategies Corp., where he oversaw the acquisition, management and growth of a diverse portfolio of cannabis-centric businesses. Mr. Blady has been directly involved in raising more than C$65M in the cannabis sector. Additionally, the operations team has relevant experience in cultivation operations of cannabis, coupled with significant know-how in genetics, SFE extraction, QA/QC and analytical testing.
Financing by Doventi Capital and GTEC’s Management
GTEC Holdings went public on June 22, 2018, and it is backed by some industry heavyweights. During the seed financing of C$16.2 million, Canadian venture capital firm Doventi Capital was a major backer of GTEC, investing C$8 million. Furthermore, GTEC Holdings management has invested more than C$6 million of their own capital, which is positive reflection of its business operations.
Outlook and Valuation
GTEC Holdings currently trades at a market capitalization of $73.7 million on the TSXV. The Company is expanding its cannabis production facilities considerably, gearing up for the expected proliferating in demand resulting from recreational legalization in Canada on October 17, 2018.
Disclosure: Neither the author nor his family own shares in the company mentioned above.
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