November 6th, 2017
Exclusive, News, Top News
CFN Media spoke with Mr. Robert Abenante, CEO of Abattis Bioceuticals Corp. (CSE: ATT) (OTCQB: ATTBF) to discuss the company’s cannabis testing and product development strategy in light of the recently announced partnership with Emerald Health Therapeutics.
CFN: Let’s talk about the general lay of the land in the cannabis industry, especially in Canada with full legalization on the horizon. A lot of market focus has been on Licensed Producers ramping up production capability to meet an anticipated shortfall of supply. It seems that at some point, cannabis flower product will become commoditized and offer less upside than cannabis-based products like extracts, edibles, nutraceuticals and medicines. How do you see this playing out?
RA: I think that is generally the right take. Companies can differentiate their cannabis flower products only to a point, and given the way production capabilities are increasing in anticipation of legalization, aggressive price competition is inevitable. Licensed producers are already looking for ways to expand revenue streams and make their brand stand out by researching and developing associated products. The big news in the market recently is the Constellation Brands investment in Canopy Growth and the beverage products planned under that agreement. That is a prime illustration of the development of the industry.
At Abattis, we view our laboratory business as the prime vehicle to take advantage of these trends. The Dealer’s License, or Controlled Substances License, we possess is different from the licenses held by the producers. It allows us to handle cannabis all cannabis derivatives for research, development, extraction, formulation and testing purposes. So we can develop products derived from the plant and ultimately sell them through our Vergence sales and marketing channels. We can also partner with producers to co-develop or white label cannabis derived products. The possibilities are staggering, really. There are many verticals to address, including personal care products, functional foods/beverages, nutraceuticals, and pharmaceuticals.
CFN: We’ve covered the development of your laboratory testing and research business. You recently announced a partnership with Emerald Health Therapeutics, a highly respected and research driven Licensed Producer poised to become one of the largest LP’s in terms of production capacity. How does this partnership improve the lab side of your business in the near term? Are there other benefits we should consider?
RA: We are very excited about this partnership with Emerald Health. We feel it’s a natural fit with Emerald’s focus on genetics and strain development. Also with their deep scientific background, it dovetails nicely with our laboratory business. We have always targeted a partnership with a Licensed Producer because those companies need our services and we need their supply of product. Emerald is the perfect candidate so we got the deal done.
We are located close to their proposed cultivation site in British Columbia. We have similar goals in terms of cannabis-based product development. They are quickly ramping up their production levels with a new facility coming on line in the Vancouver area to complement their operations on Vancouver Island. They also have a partnership with Village Farms, one of the most experienced and largest greenhouse growers, to vastly increase production capacity. We view the oncoming supply of high quality raw materials for our research as a significant advantage to Abattis in this deal.
Additionally, there is the matter of access to capital. In the current market, Licensed Producers have an advantage of abundant access to capital over other companies operating outside of production. This will allow us to much more rapidly develop the lab business than we would have been able to on our own. Finally, we see the partnership with Emerald as a validation of our operations and business model. Together, we can accomplish more great things than we could separately, and we are very pleased to partner with them.
CFN: Another aspect of the lab business is cannabis testing. We’ve all heard the stories of tainted medical marijuana over the past couple years, and it looks like third party testing of the plant may be required in the near future. With all the Licensed Producers coming online and increasing production levels, who is going to be able to provide independent testing for all the supply?
RA: It’s been interesting to watch this develop as the market matures. Even though Canada is on the leading edge, globally, of the legislative framework around medical marijuana, there were inevitably some gaps that needed to be addressed. The rash of recalls, and even reports of patients having health issues from tainted product, highlighted one of these gaps. How can people trust the product they buy if nobody is testing? Or even more troubling, how can test results be trusted if they are conducted by the same companies trying to sell the product?
This is where Licensed Dealers come in, with the certification and knowledge and expertise to test cannabis flower and validate its safety as well as the levels of active ingredients contained in it. But if you look at the current Licensed Dealers, they mostly fall into a couple categories. The vast majority of them are not commercial but are more focused on research, often associated with a university or drug development organization, and really not centered on cannabis as much as on pharmaceuticals. Remember, the Controlled Substances License has been around far longer than medical marijuana. Another group of dealers licenses are held by a few licensed producers, leading back to the problem of a lack of independence from the sale of the product. So we think the independent testing market is ripe for a company like ours. We have a focus on cannabis, we are independent, and we are publicly traded. These are all major advantages for us, and we are happy to provide trusted testing services for all the new product hitting the market.
CFN: Taking a longer, strategic view, how does this partnership change your approach? For example, Abattis recently developed a CBD-based sunscreen that represents the types of products a laboratory with a Dealer’s License can research and develop. What can we look forward to?
RA: Our general approach to the market really hasn’t changed. I would say that the timeline to achieve many of our goals has been shortened through the Emerald Health partnership. With a premier partner like Emerald we have instantly raised our profile in the market. Better access to capital should help us speed things along tremendously. Supply of raw cannabis product for research and product development is no longer an issue. I should mention as well that our extraction business, utilizing Raybot’s proprietary, low cost and efficient technology, should see a significant boost. So rather than a change in approach, we think we’ll be able to ramp up all aspects of our business much more quickly than we could have prior to this partnership.
I believe that with a group like Emerald taking such a large stake in our lab, it serves to validate our ability to establish labs of the highest standards, a strategy we can now expand and grow across Canada in a rapid fashion. We will quickly look to roll out our X-Labs laboratory model across Canada and establish ourselves as the leading independent testing facility in Canada as more and more LP’s come online.
About Ryan Allway