MJardin Group, a vertically integrated cannabis company based in Denver, Colorado, aims to keep its cost of indoor production low while expanding as producers and retailers in Canada, with plans to enter the health and wellness industry in Europe with CBD sales. Looking longer term, the company has its sights set on expanding into South America and Africa for medical marijuana production opportunities.
The 10-year-old company had a busy year in 2018. It raised more than $64-million in equity capital and $100-million of debt capital, went public on the Canadian Securities Exchange, increased its employee base by 50 per cent to 451, and became a licensed producer and seller in Canada, its website shows.
Below is a Q&A between Marcy Nicholson and Mjardin chairman and CEO Rishi Gautam:
Cannabis Professional: What are your plans with the rapidly growing CBD market?
Rishi Gautam: We will pick more profitable, higher margin side of market for CBD. We’re going to take a very targeted approach. Our target will start in Europe. We’re going to take advantage of that wide market. We’ll eventually bring some of that expertise to North America. We’ll be launching our CBD strategy in 2019. Our strategy is really in the wellness space and also cosmetics. We’re not in the pharma space, not prescription CBD that requires drug approval. We’re sticking to over-the-counter products. It’s a very large and robust market for us to focus on.
Cannabis Professional: What is your cost of cannabis production and are you making efforts to reduce this? If so, how?
Mr. Gautam: The main focus for us is not necessarily driving down the cost of production, it’s to maintain the cost of production. We strive for US$1 cash cost per gram, which is not too far off from some of the greenhouse folks. We’re creating high quality product at US$1 a gram.
The way we drive down costs is by optimizing our yields. You have to strike a balance between the lowest cost but also the highest premium product you can sell. In indoor facilities, the quality of the product is better. We’re driving down costs simply because we’ve been doing it so long. We started out as an operator [10 years ago].
We pay 3 cents per kilowatt of energy in our Winnipeg facility. In Colorado, it’s 15 cents per kilowatt. What we decided to do in Canada, is to focus on high-yielding indoor cultivation facilities. We’ve carefully selected a few assets in Winnipeg. We get more grams per square foot than anyone else out there. The industry average is 150 -200 grams per square foot. MJardin produces 360 grams per square foot.
Ways to improve over time is using our software. We created a software … to track and manage all of our production and activities. In the cannabis space, there is no software you can buy off the shelf that tracks the production data, the quality of the strains, the real data to run the enterprise.
Cannabis Professional: How much cannabis does MJardin produce annually?
Mr. Gautam: We will disclose that within the next few weeks. At a high level, we have a production rate at tens of thousands of kilos per annum.
Cannabis Professional: To whom are you selling your cannabis in Canada?
Mr. Gautam: We are not planning to supply the provinces for recreational [cannabis]. We have medical distribution that we have in store for the future. At a location like Rama, we’d have product sold directly to retailers.
Cannabis Professional: When will construction of your JV with Rama First Nation begin?
Mr. Gautam: We have not publically released timing yet (construction). We’ll be putting out a full timeline.
We’re creating over a hundred jobs locally. When we hire, we hire about 90 per cent of the jobs locally.
Cannabis Professional: You have partnered with several First Nations groups. Do you plan to do more of this and why?
Mr. Gautam: As part of our Canadian operations and strategy, we have a very unique profile in Canada. When it comes to community development and eventual distribution of product, we have partnered with a number of key First Nations groups. The strategy behind that stems with Bridging Finance (Inc). We wanted to be real community members. We definitely have found a very strategic fit regarding hiring locally.
Cannabis Professional: What are your plans for Colombia and Uganda?
Mr. Gautam: South America and Africa represent sources for low-cost cultivation for our long-term strategy. It’s part of our five-year business plan.