When we spoke last year, ACG had recently announced it had taken a 5% ownership of New Maple Holdings Ltd. New Maple in turn owns New Maple Consulting Inc. and Canwe Growers Inc. ("Canwe"), which is a licensed producer applicant in the enhanced review stage under the ACMPR. Can you provide any updates?
Overseas cultivation, East Africa being our first geographical location, is our advantage to ensure profitability and shareholder value.
The way we see it, all LP’s need to look at ways of reducing their cost per gram, cost per gram/pound, regardless of the supply issues. The larger LP’s have already entered into overseas cultivation programs which will produce results late 2020 and increase pressure on the lower tier suppliers to supply quality medical marijuana at competitive pricing. There is no future for an LP with pure indoor greenhouse cultivation and limited annual harvests under current legislation and the western labor costs and obligations.
Smaller LP’s can’t win a price war with only domestic production in their portfolio, so the most obvious solution is to grow overseas, outdoors, in a suitable temperate zone, with a low-cost structure and be able to achieve 3-4 harvests per year from acreage. The cost structure in our cultivation zones, on short and long-term management programs produce a per gram product in flower of between 6-15 cents. This flower, as it is outdoor grow, is not able be sold to the Pharma market or used for recreational sales, however as it will be put through an extraction process to produce 1st phase crude oils, which when blended in a facility can be sold anywhere. This extracted oil may then be further refined and we may move into that field in 2020 but initially we have a specific target of being the lowest cost, high volume, quality certified raw material producer.
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