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Speakeasy Cannabis Club Ltd
Symbol EASY
Shares Issued 109,513,429
Close 2020-10-13 C$ 0.465
Recent Sedar Documents

Speakeasy receives HC OK to operate weed facility

2020-10-13 06:36 ET - News Release

Mr. Malcolm Davidson reports

SPEAKEASY HAS RECEIVED HEALTH CANADA APPROVAL TO OPERATE ITS 53,200 SQ FT PRODUCTION AND PROCESSING FACILITY OPENING THE DOOR TO A RAPIDLY GROWING MARKET

Speakeasy Cannabis Club Ltd. has received an amendment to its licence to include 13,300 square feet of its 53,200-square-foot new facility, which will be used to process the company's outdoor crop, which is currently being harvested.

Amendment to licence means 13,300 square feet of licensed processing space with an additional 39,900 square feet of future production area

The licence amendment approved by Health Canada includes:

  • An additional 13,300 square feet of processing and secure storage space in the company's newly licensed cannabis facility will be used for extractions, concentrates and flower processing labs, occupying one of the four floors of the complex.
  • The remaining 39,900 square feet of the facility are nearing completion and will be used for flower production, which, once fully operational, will provide an estimated 2,000 pounds (indoor craft cannabis) per month.
  • The new licensing fully encloses the Speakeasy cannabis campus with the addition of six acres and a combined total of over 63,200 square feet of production and processing space.

Founder Marc Geen stated: "The next chapter of Speakeasy begins with this amendment. Demand for extracts, concentrates and value-added products have been steadily increasing in the market and we are in an excellent position to take part in a big way. With our outdoor harvest nearing completion, we will have a large supply of input material perfectly suited for extract and concentrate products that gives us a significant price advantage over others in the industry."

A process to increasing shelf life and margin

The type of genetics chosen, combined with the harvest and storage methods used for Speakeasy's outdoor facility, ties into the creation of extracts and concentrates that the company plans to manufacture in the newly licenced facility.

With this processing amendment, the company is one step closer to becoming vertically integrated, allowing Speakeasy to have full control over developing the consumer end product while increasing margins substantially.

By processing the plant into extract material, the new substance, or finished product, will have an increased shelf life as concentrates are less subject to environmental conditions with the ability to stay shelf stable for a longer duration of time.

Mr. Geen further stated: "Speakeasy has always intended on becoming fully vertically integrated by taking full advantage of our large and economical input material and creating high-value, in-demand products that carry increased profit margins. Our outdoor harvest material is perfectly suited to create a range of products at a cost that makes Speakeasy extremely competitive. We've made the tough choices and stuck to our philosophy; it is time to take the next step and turn all the work and planning into products and sales."

Extract market is the fastest emerging category in the cannabis sector

The extract consumer experience, coupled with cannabis 2.0, only allowing extract to enter the Canadian market in 2019, has created supply limitations.

Cannabis 2.0 products that consumers are reaching for are vast, while continuing to show innovation. Today, the extract products span from shatter, live resin, rosin, hash, diamonds and terp sauce to an array of vape juices, and the company expects new products to emerge in the coming years.

Consumers are choosing to purchase extract products because they present a significant improvement in their experience including:

  • Consistency: The dose can be refined more precisely and shelf stable for consistent experience.
  • Convenience: Consumers are seeking solutions that are easy, portable and discrete.
  • Potency: Consumption is required less often and offers a higher THC (tetrahydrocannabinol) dosage.
  • Value: The high potency translates to fewer sessions and more savings.

Ernst and Young estimates that extracts will grow from the current 10 per cent of the market to 37 per cent in 2025, while dried flower will shrink from 84 per cent to 46 per cent over that same time period.

Additionally, BISWorld estimates that revenue for the Canadian cannabis industry is set to reach $3.5-billion in 2020, with cannabis extracts sales totalling $350-million. Although industry revenue is only projected to rise an annualized 4.7 per cent to $4.4-billion cannabis extracts are projected to grow by 365 per cent over the five years to 2025.

About Speakeasy Cannabis Club Ltd.

Speakeasy Cannabis Club holds a cultivation, processing and sales licence issued by Health Canada under the Cannabis Act. Speakeasy owns 290 acres of land in Rock Creek, B.C., and leverages five generations of farming experience in B.C. as well as its favourable location to grow and process high-quality cannabis products at low cost. Speakeasy cultivates small batch, high-quality craft cannabis at scale in its 63,200-square-foot indoor cannabis complex and is approaching completion of its harvest of its 60-acre outdoor field. Total yearly production of cannabis flower and biomass is projected to be in excess of 70,000 kilograms per year.

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