A Vertical Cannabis Company in the Making

In the cannabis industry there are several business models that may make sense, depending on a company’s capabilities, people, and markets. There are wholesalers, distributors, retailers, propagators, brand houses, laboratories, multi-state operators … the list goes on. If a company puts all the right pieces together, a vertically integrated model could make sense to keep as much of the money and as many of the variables as possible in house.

Pharmagreen Biotech, Inc. (OTCQB: PHBI) is an early-stage company that believes in the vertical integration model and has many of the pieces already in place to launch a comprehensive cannabis company in the lucrative California market. Here we’ll take a look at Pharmagreen’s ingredients and the company’s step-by-step recipe to create a major player in the industry.

What Pharmagreen Has

Pharmagreen was founded around a proprietary tissue culture process known as Chibafreen™. The traditional process of tissue-culturing plants encompasses four steps: 1) Initiation, 2) Multiplication, 3) Rooting, and 4) Hardening. Pharmagreen’s COO, Dr. Fawzia Afreen, developed Chibafreen as a novel way to combine two of the steps, thereby increasing efficiency and profitability. 

Chibafreen is applicable to a broad range of agricultural operations, but its value to cannabis and hemp farmers is enormous. Cannabis is a very complex plant with nearly endless combinations of terpenes and cannabinoids providing the basis for a wide variety of strains. Tissue culture propagation allows growers to lock in a repeatable genetic profile that guarantees consistency from one generation to the next, avoiding the common problem of genetic drift. This type of consistency is essential for both medicinal strains and retail brands, as consumers and patients alike need to be able to buy the same product over time.

Tissue culture is a key tool in eliminating diseases, contaminants, and pests from cannabis cultivation. The stability of the strains also allows growers to standardize and optimize feeding and fertilizing schedules that work best with each varietal.

With that technology in its bag, Pharmagreen went on a search to find the right location and market for its business. As often happens in the cannabis industry, the search led the company to California. Specifically, to Leggett, in Northern California’s renowned Mendocino County. Pharmagreen has an agreement to acquire Long Valley Farms, LLC, a cultivator with a legacy license in the state. The legacy status ensures the license will be grandfathered in regardless of the terms of the state’s anticipated new licensing system.

Long Valley Farms is a veganic grower working on a 12-acre property in the Leggett area. Veganic farming takes organic farming a step further as it doesn’t use any animal-based products such as bone meal, fish emulsion, or manure for fertilizer. Long Valley Farms is a no spray operation and utilizes on-site, plant-based materials to fertilize and encourage the growth of beneficial microbes and bacteria. 

The agreement would make Long Valley Farms a wholly owned subsidiary of Pharmagreen, and would include the land, licenses, and current operations of the company. Once the deal is finalized, Pharmagreen intends to build a state-of-the-art, Internet of Things greenhouse facility to expand the cannabis cultivation capacity on site. 

The Plan Going Forward

Pharmagreen is looking at a 5 month timeline to build the greenhouse once Long Valley Farms is acquired, with crops harvested every two months following completion of the facility. Once the greenhouse is built, the company intends to focus on the development of its tissue culture facility. This facility will not only make the Long Valley Farms operation better and more efficient, it will also provide a separate revenue stream for Pharmagreen as a whole.

There is a shorter-term path to revenue for the company, and it involves the processing of live rosin from existing grow operations. Extracts from cannabis plants are a major growth sector of the industry, but most extraction methods (like ethanol, CO₂, butane, etc.) tend to destroy many of the terpenes and cannabinoids from the original plant in search of one active ingredient like CBD or THC. Live rosin extraction uses a whole plant press without solvents to create an extract with all the active ingredients of the original plant.

Active cannabis ingredients are thought to work best in concert with each other, through a phenomenon called the Entourage Effect. The live rosin process preserves that effect while providing an extract that can be used to make the types of derived products, like edibles and topicals and vape pens, that are becoming so prevalent in the industry.

Pharmagreen has the equipment necessary to produce about $18,000 of live rosin per day. The company has applied for a local manufacturing license that will allow them to immediately start production and is also eyeing opportunities in the Leggett area with established licenses for lease to jump start revenue generation.

So, the plan for Pharmagreen’s corporate development looks like this:

• Step 1 – Live rosin production and sales. Very near term and immediate revenue generation once licensed.
• Step 2 – Finalize Long Valley Farms asset, license, and land acquisition and begin 5 month greenhouse build. Near term.
• Step 3 – Establish and expand brands in concert with increased production capacity.
• Step 4 – Expand with Chibafreen tissue culture facility. Approximately 2 years from now.
• Step 5 – Offer ancillary services such as DNA testing and cold storage associated with tissue culture.

The Upshot

Pharmagreen Biotech represents an early-stage investment opportunity in California, one of the world’s largest and most mature legal cannabis markets. Pharmagreen has an incremental and reasonable development plan, with many key assets in place. The company is committed to transparency with its investors and has recently uplisted to the OTCQB market, with the attendant heightened requirements.

There is much more to discuss regarding Pharmagreen, including the people who run the company, a deeper dive into the tissue culture technology, and a look at the benefits of veganic farming (both from an agricultural and marketability standpoint). We will be getting to those topics and more. For now, keep an eye on Pharmagreen as it advances the manufacturing and sale of live rosin, the acquisition of Long Valley Farms, and subsequent greenhouse build. 

Interested parties are encouraged to find out more here, and view Pharmagreen’s current corporate deck here.

This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.

About Robin Lefferts

Robin Lefferts has been involved in the legal cannabis industry since 2012, sometimes as an active participant and always as an interested observer.