VANCOUVER, British Columbia, Nov. 12, 2014 (GLOBE NEWSWIRE) -- ArcView Group Market Research, a San Francisco-based Cannabis investment research firm, forecasts a 64 percent surge in the legal US cannabis market to $2.34 billion, from initial estimates of $1.53 billion by year end 2014. Furthermore, ArcView's research indicates that the five-year US national marijuana market could grow to $10.2 billion.
When marijuana becomes completely legalized in the US it could be 10-20% the size of the alcohol market, translating into total revenues of $40-80 billion per year.
Eyeing such massive potential revenues the 'Cannabis Dream Team' at Kaneh Bosm BioTechnology (KBB-CSE) has structured 3 key verticals to earn a share of those revenues. The executives at Kaneh Bosm are pursuing an automated Cannabis retail system, the BioCanna ADM, a massive greenhouse flagship production center, and a Cannabis production facility design and construction division, Kaneh Bosm EPC.
"We wanted to differentiate Kaneh Bosm in the Cannabis space by getting into positive cash flow ahead of other companies," stated Kaneh Bosm President and Director Michael Martinz in an exclusive interview with Financial Press.
"Our research indicated that there is a strong desire for an automated retail system. Our BioCanna ADM (Automatic Dispensing Machine), the automated retail kiosk system, may be a rapid pathway to revenue generation," states Martinz, "We are looking to lease these units to retailers for around $1500 per month, plus software licensing and servicing fees. Hypothetically, with 1000 kiosks in service, our gross monthly revenues will exceed $1.5 million."
He continues, "If you walk into a traditional marijuana dispensary there's an assortment of consumable goods – much like a deli counter. Containers are being opened and closed all day long, the product dries out, and its scent and flavour begins to degrade. Losses - neither of which are good for the business, or their customers".
Kaneh Bosm has signed an agreement with Alps Innovations for the exclusive North and South American rights to the intelligent automated retail kiosk, the BioCanna ADM for the dispensing of Cannabis, and related accessories.
"Some consumers don't like the fact that the product is handled by multiple people," reports Martinz, "Certainly if you are taking medical marijuana, you may have a compromised or weakened immune system, so you clearly do not want exposure to any pathogens. Further, proprietors of dispensaries are dealing with a largely cash-based business, which creates a vulnerability to theft. The kiosk solves all those problems. It accepts a variety of payments, it won't steal or be late for work, it protects your inventory, and minimizes labour costs. Additionally, where regulations permit, it may give you 24/7 functionality from your rental space."
From a regulator's prospective there is a strong value proposition as well. The kiosk requires ID, thus ensuring purchasers are of the age of majority, and the system tracks purchases from a central server. Customers will not be able to circumvent daily or monthly maximum purchase quotas.
Martinz continues, "The business metrics are very solid. If a kiosk sells just one pound of Cannabis per day, that will generate about $1.6 million a year in sales at $10 per gram."
On September 23, 2014 Kaneh Bosm announced that it signed a Letter of Intent (LOI) with the Penticton Indian Band (PIB) in British Columbia, Canada, for the development of a Joint Venture (JV) partnership to pursue a Licenced Producer (LP) designation under Health Canada's Medical Marijuana Production Regulations (MMPR). Kaneh Bosm and PIB via the JV plan a 3-phase approach to this production facility:
1. Construction of a 12,000 sq ft indoor medical Cannabis facility;
2. Construction of the first phase greenhouse, comprising 1 vegetative and 2 flowering bays totalling 48,000 sq ft; and
3. Completion of the greenhouse with 2 more flowering bays totalling 100,000 sq ft of production space in a state-of-the-art greenhouse.
The LOI identifies Kaneh Bosm as the exclusive partner to the Penticton Indian Band for the production of Cannabis and other biomedical and therapeutic plants. Penticton is located in the world renown viticulture region of the Okanagan Valley of British Columbia, and is climatically ideal for large scale greenhouse production.
"The joint venture agreement will be structured according to the financial and equity contributions of both parties. PIB will contribute a 23 acre parcel to the joint venture," stated Martinz, "There is already a large water reservoir on the site containing local ground water, which is nearly perfect in terms of ph and mineral content. There is also 3 phase power about 200 meters from the site, and we're going to ask PIB to bring power to the production facility as part of their contribution."
"Canada's Federal Government is promoting economic diversification amongst the First Nations communities," continues Martinz, "Ventures outside of the typical resource extraction and casinos are being received very favourably. According to Elaine Alec, our First Nations liaison adviser, this partnership checks all the boxes and we are expecting that our LP application may be fast-tracked."
"Once the completed 100,000 square foot greenhouse facility is in production, we anticipate generating approximately seven tons of cannabis per year from four crops," stated Martinz, "Our fixed costs should be right around $1 a gram, which is very low, primarily due to the reduction in power consumption utilizing the sun's photosynthetic power.
The North American Cannabis sector, both medical and commercial, has seen an incredible influx of capital recently. And that is a trend which is not likely to end any time soon. Much of this capital has been dedicated towards the construction of production facility infrastructure. This is a trend that Kaneh Bosm predicted as this sector grows out of its early stages.
"Much of this capital is being invested into the sector by those not intimately familiar with Cannabis cultivation," suggests Martinz, "Egregious errors in facility design have been made. Ultimately this will result in poor yields, high operational costs, and low quality product."
Enter Kaneh Bosm's EPC division, a full service engineering, procurement, and construction service, which strives to become the premier production infrastructure solution provider for Cannabis entrepreneurs.
"Success or failure in the Marijuana business begins and ends with a properly designed production facility," reports Martinz earnestly.
Kaneh Bosm is trading at $0.16 with a market cap of $2.2 million.
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