This is Dooma writing. With apologies, this week’s update will be a bit longer, especially as there was no update last week. We’ve had some recent personnel changes in Province Brands’ Business Development and Fundraising team and, while it was not my intention to get involved in managing the team on a day-to-day basis, this is an area where the company really needs my expertise at the moment. For now, I’ll be handling the updates, though they won’t all be this long. Next week I’ll return to the regular format.
Most importantly, our Series B fundraise is taking a bit longer than was initially anticipated. This is unfortunate. We’re hoping that with new personnel joining our team and an updated strategy, we can get the round closed no later than mid-March 2019.
A part of the issue was out of our control. Shortly after we opened the funding round, the market for publicly-traded cannabis companies went into free fall and it has not recovered yet. Further, a large number of US-based cannabis companies have since listed publicly and those have pulled investors’ attention away from Canadian companies, which seem to be perceived as a smaller market (since Canada’s population is around 1/10 that of the USA). As a result, there are currently upwards of 60 deals underwritten by Canadian investment banks that were initiated in the first quarter of 2018 and have yet to close or be fully funded. Ours is one of them. The other part of the issue is internal. Province had not adopted the best strategy to help facilitate the capital raise. We are addressing these issues and are developing a much stronger strategy to close more effectively.
Going forward, Province Brands will bifurcate our $30 million Series B round and offer two paths to investment. We will continue to work with Paradigm and shortly we will launch a non-brokered private placement that we will manage in a manner similar to how we successfully raised our seed, Series A and A2 funding rounds. Both rounds will have the ability to raise up to $30 million CAD, and our current plan is that when the combination of the two raises brings in $30 million (or not more than $34.5 million, as there is a small oversubscription allowance) we will take the company public on the TSXV as planned. This strategy is innovative and complex, and we would certainly love to have your guidance, suggestions and advice. I think most of you have my phone number, but in case you don’t, it is plus one five one four five five zero five eight six eight.
This past week primarily was spent on restructuring the Business Development and Fundraising team, cleaning up our tools, and preparing to make some major progress in the weeks ahead. We also made a new hire and will have a fifth full-time member join the team in early January. We just added two part-time contractors to the team and a third is joining soon. We are also scheduling meetings for my upcoming trips to Miami, Montreal and London. Let me know if you live in any of these cities and would like to meet. I’d love to connect with you! Finally, we’ll be preparing a roadshow in January to visit the most promising prospective investors. Let me know if there’s someone you think we should speak to or visit during the roadshow.
We’re going to get this done. We always do. Of course, it won’t be easy – but nothing ever has been for us. That’s OK. We’ve accomplished quite a lot, and I could not be more proud of this team.
I’ll wrap this update by drawing your attention to some huge things the Business Development and Fundraising Team, along with some of the other teams, have accomplished since we opened the Series B round. There will definitely be more to come.
1) Province Brands moved into a 123,000 SF building in Grimsby, Ontario, that will be the world's first cannabis brewery. Construction is currently underway. You can seem some images of the facility in these links: Grimsby 1, Grimsby 2, Grimsby 3, Grimsby, 4, Grimsby 5, Grimsby 6, Grimsby 7, Grimsby 8
2) We have announced the launch of our first alcohol beer made from hemp, Cambridge Bay Imperial Pilsner, which is fully legal and can be sold wherever alcohol is sold. First sales are expected early in the second quarter of 2019. Cambridge Bay Imperial Pilsner is a precursor to our forthcoming marijuana products, which won't be legal in Canada until October 2019. The first market where we will roll out the beer is the Yukon. Read the press release.
3) We have forged a partnership with Brock Street Brewing and will be releasing two different beers with them, one an alcohol product brewed from hemp, and one an alcohol-free marijuana product brewed from marijuana. Read the press release.
4) We have closed a partnership with Lost Craft Brewing and will be copacking a marijuana beer for them. Read the press release.
5) We have closed a partnership with Bell City Brewing and will be copacking a cannabis beer for them in our facility. Read the press release.
6) We have closed a partnership with Georgian Bay Biomed and will be copacking a cannabis beer for them in our facility. Read the press release.
7) We have closed a deal with Ayre Resorts to distribute our alcohol beer in their resorts and - only when it becomes fully legal to do so - our cannabis beer there as well. This has not been announced. Read press release.
8) Not yet announced, we have closed a major supply agreement with the Canadian Hemp Farmer's Alliance to supply hemp for our alcohol beer at $55 per ton. For reference, the price of a ton of barley is $600 per ton so this is a huge savings.
8) Not yet announced, we have forged a partnership with The Ublu Inn and the Kuugaq cafe in Cambridge Bay, Nunavut, related to our right to name the beer brand "Cambridge Bay".
9) We have substantially grown our science team and now have 9 researchers. We have 3 Ph.D. scientists full time and collectively our science team has received 99 patents in the past and been published in 54 articles in peer reviewed journals.
10) We have test brewed many batches of beer and are gearing up for our first production run of Cambridge Bay Imperial Pilsner. Here are some videos which show our team hard at work making beer (two do not have any sound). Video 1, Video 2, Video 3
11) We have purchased millions of dollars’ worth of equipment, including two 20,000 HL per year capacity brewhouses plus ample fermenters, enabling our company to produce 40,000 HL of beer per year as soon as we complete setup of these systems. Another system enabling us to produce an additional 135,000 HL per year has been designed.