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Everyone knows that cannabis offers a ground-floor opportunity for huge profits, with legal sales expected to skyrocket 145%, from $10 billion in 2017 to $24.5 billion by 2021.
And one of the most exciting aspects of the future $24.5 billion market is there will be a flurry of marijuana IPOs.
That's why, as an exclusive benefit for Money Morning readers, I chatted with Dave Doherty, Director of Green Organic Dutchman Holdings Ltd. (OTCMKTS: TGODF).
The Green Dutchman just went public on May 2 and began trading its common stock on the Toronto Stock Exchange (TSX). Because the company just went through the IPO process, we wanted our readers to get a behind the scenes look at how this works in the marijuana industry.
Now, our readers should know this isn't an endorsement of TGOD stock. You should always conduct your own research and determine for yourself whether a stock belongs in your portfolio.
But I wanted to share this expert insight on the IPO process for a marijuana company, as well as what Green Dutchman hopes to accomplish.
This type of insider insight can help our readers identify the most profitable opportunities in the cannabis industry and know what to expect in the cannabis market in the future.
Like Doherty mentioning where the global cannabis market is heading…
Our Exclusive Marijuana Industry Interview with The Green Dutchman
Jack Delaney: What did the Green Dutchman want to accomplish by going public on the TSX?
Dave Doherty: There are only five other cannabis companies listed on the TSX, and we were only the third to IPO directly onto the TSX. The process took us approximately half a year to complete; however, it was definitely worth the time and effort.
Not only is the TSX the premier stock exchange in Canada, it is the premier stock exchange in the world for cannabis companies to list, raise capital, and operate on. We are excited to work with the TSX and have our company's shares listed on the exchange.
In total, we have raised $290 million, and $132 million was from the IPO. Our domestic expansion is completely funded for 116,000 kilograms of premium high-quality organic cannabis for our Ontario and Quebec sites.
The additional capital will now be used for many things, including research and development [R&D].
We have possibly the largest budget of any LP towards R&D, with over $55 million allocated over the next year. We are building four stand-alone research labs in Ontario and Quebec that will focus on micropropagation, genetics and breeding, research partnerships, identifying novel traits, and clinical trials.
Additionally, a significant portion will be going towards new opportunities such as licensing deals, joint ventures, and potential M&A.
The research and development of other products made from our base ingredient (cannabis) creates significantly higher margins and opens us up a much broader customer base.
Additionally, Canada is a great place to start, but with a population of only 38 million people, it's quite small.
Right now, Canada is the only country with access to capital markets, and that's incredible. The TSX is the go-to market for Cannabis companies to list, operate, and raise capital.
We also have a massive fist mover advantage as the first of the G-7 countries to have recreational cannabis on the agenda.
We envision TGOD as a global leader in organic cannabis, so keep an eye out for more on our international expansion.
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JD: TGOD just reached an exclusive agreement with Stillwater Brands, a company providing innovative cannabis beverage products. Can you tell me a little bit more about that?
DD: TGOD recently added an exclusive agreement with Stillwater Brands to license a proprietary technology to add cannabinoids to food and beverage products.
The deal with Stillwater especially positions TGOD with a beverage and food producer, with market experience. Stillwater's RIPPLE SC is a proprietary, patent-pending suite of low-calorie, fast-acting, water-soluble ingredient products that allows consumers and commercial manufacturers to simply and easily infuse cannabinoids into beverage and food products.
What's key to the RIPPLE SC platform is that it's formulated to absorb into the bloodstream within fifteen minutes and last for up to four hours.
That allows RIPPLE SC-based edibles to offer a uniquely consistent and controlled experience that consumers can trust.
For many consumers today, especially with infused beverages and foods, the fact that TGOD is indeed producing an organic product should help their prospects. Combining TGOD's organic materials with RIPPLE SC's method, consumers will have healthier, better-tasting edibles with no additional sugar, fat, or artificial flavorings.
RIPPLE SC products are already available in Colorado, where it's among the fastest-growing products in the edibles category. RIPPLE SC also is behind other high-end consumer brands such as Stillwater Tea and Whitewater Tea.
TGOD's intention is to offer Ripple Dissolvables and other Stillwater products and formulations in international markets (outside of the USA). TGOD has made it clear that it intends to aggressively work on the other novel formulations in the beverage, functional foods, and dietary supplements areas.
Once legalized, the cannabis sector's biggest players will certainly move forward on beverages and edibles – but at the moment, only The Green Organic Dutchman Holdings will be offering an organic product for the most discerning customers.
The fact that TGOD is one of the world's only certified mass producers of organic cannabis gives the company a significant advantage in the months to come.
JD: Is there an easy way for American investors to own shares of Green Dutchman?
DD: Yes, of course.
We are listed in the U.S. under The Green Organic Dutchman Holdings Ltd. (OTCMKTS: TGODF). In the future, we will be applying to the Nasdaq marketplace.
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JD: There's been worry there will be more supply than demand when full legalization hits Canada this summer. Are these fears warranted or overblown?
DD: According to the Canadian Imperial Bank of Commerce (CIBC), Canadians will spend nearly $7 billion on cannabis in 2020, making the retail cannabis market larger than the hard liquor market in Canada. There will be an anticipated spike in demand behind the inevitable legalization. Canada has set the "green standard" for legal cannabis growth as Health Canada has been responsible for approving growing licenses and ensuring that demand and supply have remained somewhat balanced.
JD: What do you see for the global cannabis industry when marijuana is fully legalized in Canada? Will the U.S. be next?
DD: Canada is the world leader in the space, and other countries are using our expert growing techniques in addition to accessing Canadian capital markets.
At the moment, with marijuana being illegal on a federal level in the U.S., it's difficult to determine when the government will change its stance.
The market that is opening up right now is Europe.
It has a population twice the size of the U.S. and 20 times bigger than Canada.
We see huge opportunities for distribution.
TGOD is building a global premier organic CPG brand.
The U.S – having the best entrepreneurs on the planet – will catch up extremely quick.
By that time, our brands will be well known and wanted by consumers, and there will be opportunity once cannabis is legal in the U.S. for companies to do licensing and distribution deals.