Exclusive Interview with Zenabis CEO Andrew Grieve
In January, Zenabis International (TSX: ZENA) (OTC: ZBISF) was formed as the outcome of the reverse takeover of Bevo Agro by Sun Pharm Investments. In significantly less than a year, the organization has improved its licensed production capacity from 5 tons to far more than 50 tons. CEO Andrew Grieve spoke with New Cannabis Ventures about the company’s values, development method, and method to funding. The audio of the complete conversation is out there at the finish of this written summary.
Grieve has a background in finance and technologies ventures, as effectively as the military. Just before becoming CEO of Zenabis, Grieve worked with the Benne loved ones, the majority owners of Bevo Agro. When the loved ones very first viewed as getting into the cannabis space, they asked for his viewpoint. Grieve helped orchestrate the RTO that formed Zenabis, and the board of directors asked him to fill the function of CEO.
The Zenabis Group and Values
The organization and its group are constructed about a shared set of values: compliance, duty, excellence, and delivery. Grieve is joined on the management group by other leaders like Chief Developing Officer Leo Benne, Chief Income Officer David Lluncor, and CFO Mike Smyth. Benne helped make Bevo Agro from two.five acres to far more than 50 acres. Lluncor has a depth of practical experience in the CPG and grocery space. Smyth served as CFO of a organization that later sold to Canopy, according to Grieve.
Zenabis began as a comparatively little producer with just 5 tons of capacity. The organization improved that capacity to 50 tons at a speedy pace, and it aims to attain 140 tons of licensed capacity by the finish of the year. The company’s company model combines that higher level of development with a low price of cultivation and production. For instance, the company’s money price of cultivation at its Atholville, New Brunswick facility in the second quarter was $.78 per gram.
Cultivation and Distribution
Zenabis has 4 licensed facilities in Canada: a 25,000-square-foot indoor facility in Delta, British Columbia a 460,000-square-foot facility in Langley, British Columbia (element of a bigger two.1 million-square-foot greenhouse) a 255,000-square-foot facility in Stellarton, Nova Scotia and the 380,000-square-foot facility in Atholville. Also, the organization has a 10.five-acre internet site in Aldergrove, British Columbia and a 5-acre internet site in Pitt Meadows, British Columbia for floral propagation and the cultivation of hemp.
The organization has an substantial distribution network that spans nine provinces and the Yukon Territory. Zenabis also has healthcare distribution by way of an on line platform and partnerships with Shoppers Drug Mart and Pharmasave.
Outdoors of Canada, Zenabis expects to have its very first shipments to the EU by way of its Malta joint venture in the fourth quarter of this year.
The Brand Portfolio
Capacity is only element of what it requires to turn out to be a significant player, according to Grieve. The organization is also focused on possessing merchandise that customers want, each flower and worth-add choices. The company’s existing brand portfolio contains the premium recreational brand Namaste and the healthcare brand Zenabis.
The organization also plans to launch Founders Reserve, a micro cultivation brand, by way of its Zen Craft Develop system. Zenabis will quickly have one particular of the very first micro cultivation licenses by way of a companion, according to Grieve.
Fundraising and Capital Allocation
Zenabis has performed a quantity of financing bargains considering the fact that it formed at the starting of 2019. It has focused on acquiring revolutionary approaches to safe capital whilst minimizing dilution, according to Grieve. For instance, the organization has secured prepaid provide agreements with Tilray and Starseed. The organization received $40 million in money for these two bargains. Zenabis traded a restricted percentage of its 2020 volume for money that is non-dilutive at pricing, according to Grieve.
At the starting of the year, Zenabis secured a $51 million credit facility. A lot more not too long ago, the organization took on an extra $25 million in senior secured debt financing, with restricted dilution. Zenabis opts to spend a greater interest price in exchange for significantly less dilution, according to Grieve.
That funding has helped the organization achieve the substantial ramp-up of production capacity in the brief time considering the fact that its inception, and it has offered adequate operating capital to enable the organization be money flow constructive. Beyond that, the funds will be applied to discover diverse merchandise. Grieve does not presently see the require to raise far more capital.
Tracking the Company’s Development
Zenabis has however to deliver the marketplace with guidance, but it does present a month-to-month cultivation forecast (facility functionality in comparison to style capacity). Grieve recommends investors track the company’s licensed capacity and close to-term production capacity. As the organization completed the second quarter, it outperformed its Atholville facility’s original style capacity by 35 %. The organization updated its style capacity and outperformed the updated metric by far more than 10 % in July.
Grieve also recommends investors watch the price of cultivation. He believes the highest worth players will have meaningful capacity at a low price of cultivation.
As far as what it requires for cannabis providers to accomplish worldwide good results, Grieve thinks the formula has however to be defined. Development itself is a challenge, especially adding the people today essential to hold up with the requirements of scale, but the industry’s chance to disrupt is massive. He sees the rest of the planet hunting to Canada as a model for effectively legalizing and rolling out cannabis.
To find out far more, stop by the Zenabis web site. Listen to the complete interview
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