The Cannabis Company That Broke The CSE: An Exclusive Interview With FV Pharma’s Chief Commercial Officer Michael Ash
By Brandon A. Dorfman
Jul 06, 2018
A PotNetwork Exclusive
FSD Pharma Inc. (CSE:HUGE) a Canadian Licensed Producer through their wholly-owned subsidiary FV Pharma Inc. took the market by storm this past month, following their public debut on the Canadian Stock Exchange (CSE) in late May. After the cannabis company broke the all-time record for volume traded on their first day, they followed that up with the largest monthly total quantity of share volume ever on the CSE. Trading nearly 870 million Class B subordinate voting shares in June, FSD Pharma quietly introduced themselves and re-introduced marijuana to the investing world.
“We continue to trade enormous volumes,” said Michael Ash, FV Pharma’s Chief Commercial Officer, reflecting on the company’s day-one record early in June. “I think the business stock is priced at a discount today. I think that certainly, my aspect is, we’re going to grow this business, and I think once we start our production, in the estimates we’re going to come up with in terms of our strategic alliances, I think that the stock will fall asleep. But yes, we absolutely did set some records on the CSE, and I think we continue to on a day to day business.”
In fact, FSD Pharma broke these records by a mile. Before their recent 30-day success the largest monthly trading volume on the CSE was in the neighborhood of 380 million shares. And, as Ash recalled, prior to FSD the exchange-traded roughly $40 million per day —total.
“When I last looked at it our average was about $23M a day,” said Ash. “Quite the milestone.”
“...it’s been a good move since then.”
Michael Ash is a veteran of the pharmaceutical industry. According to his company profile, his expertise lies in the areas of domestic and international sales and distribution, and product and brand development. Moreover, his knowledge of the industry is crucial to helping the company forge relationships across Canada, a necessity in the new, uncharted waters of cannabis legalization.
When asked to recount his resume, Ash, again, is quite modest for such an accomplished man. “I’ve spent the last 30 years in the pharma industry,” he said. “I started my career with Proctor & Gamble in personal care products, went on to Apotex which became the largest generic manufacturer in Canada with, today, over $2B in sales.”
He spent about 15 years in the over-the-counter vitamin and mineral supplements industry prior to making the move to cannabis. He compared the two industries favorably, stating that there is a lot of crossover between them. Still, as with all career moves, it was a new challenge that he took head-on.
“So I decided to jump in, and it’s been a good move since then,” Ash recalled of his jump to FV Pharma.
“They’re experts in growing, and they’re helping us get the ball started.”
As for Ash’s company, FV Pharma, the wholly-owned subsidiary of FSD Pharma and Licensed Producer under the ACMPR, it is no stretch to say that everything they do is HUGE, as their stock ticker suggests. The company’s first goal, after all, is to build out the largest hydroponic indoor cannabis facility in the world. What makes them unique in the cannabis industry, however, is the fact that the building they own for this facility is owned without debt. It’s a leg up of which other companies can only dream.
Ash described the facility as being an hour east of Toronto, in a town called Cobourg. “We actually purchased, it was the old Kraft factory,” he said. “It was 620,000 square feet. We have 620,000 square feet of growing space, and then I think we sit on another 40 acres, of which we will convert, eventually, to outdoor growing space but our objective is to be the largest hydroponic facility in the world.”
[*Editor’s Note: The company confirmed that on a 70 acre particle of land, 40 acres are primed for development. Their ultimate goal is to be the largest hydroponic indoor facility in the world with over 3.8 million square feet of cultivation and processing.]
The company’s strategy, however, is not about size, but diversification. Ash continued to describe a cannabis firm that is looking towards the long-term through strategic partnerships and acquisitions. And long-term it is probably a smart move, as most experts see the cannabis industry consolidating at some point in the future. In a young industry where winners and losers have yet to be defined, FV Pharma, and their parent company FSD Pharma, clearly hope to be the former.
Currently, they have a few strategic investments under their belt. As Ash described, they are partners in High-Tide, a fully integrated retail distribution company, and Cannara Biotech Inc. of which they own 25 percent.
“Cannara Biotech is just about one hour outside of Montréal, stated Ash. “It is almost the same size facility as ours. We actually own 25 percent of Cannara, and we share licensing to produce. I think that they have actually begun, right away, to start growing. They have also purchased an outdoor facility in Leamington, Ontario so they have another 600,000 square feet.”
Combined, in fact, FV Pharma and Cannara, have almost 2 million square feet of grow space. As stated, though, the long-term strategy is diversification, specifically in the pharmaceutical industry.
“We are looking at strategic acquisitions in everything from beverages to yogurt, to actual pharma manufacturing, powders, liquids, creams. That’s our ultimate goal, to basically be in every single aspect of the cannabis industry,” noted Ash.
Their most significant partner right now, though, is probably the company formerly known as Cannabis Wheaton, now Auxly Cannabis Group Inc. (CVE:XLY). “Cannabis Wheaton is looking to invest in, overall, the cannabis industry in Ontario, in Canada,” said Ash. “We have a strategic investment with them where they’re cultivating starting with 220,000 square feet, and they’re financing outright. And, basically, we have access to 50.1 percent of whatever is produced. So it was, from a cost standpoint for us, it was beneficial.”
And why partner up with them? “They’re experts in growing, and they’re helping us get the ball started,” replied Ash.
“We are going to be selling it in every one of the provinces.”
One could say that FSD Pharma is part of a “graduating class” of sorts in the cannabis industry. A slew of big-name companies has gone public in the past few months in Canada —from MedMen to Khiron, to The Green Organic Dutchman. With Canada recently passing Bill C-45, the Canadian Cannabis Act, and an already much more lenient regulatory environment for marijuana, the northern part of North America seems to have the upper hand when it comes to the cannabis industry.
As it would be pretty difficult for anyone not to, Ash agreed that Canada is light years ahead of the United States when it comes to cannabis. When asked to opine on the matter he noted that “there are certain states that would be comparable to [Canada], but I think that we certainly have the provincial and federal advantage in the sense that we are going to be selling it in every one of the provinces. I think the Senate just passed the cannabis law [recently], and have pretty much dealt with the criminality or lack of it. So, going forward, I do think that we have a pretty big head start in the sense that we’re allowed to sell it coast to coast.”
Of course, that head start has pushed some Canadian Licensed Producers to stretch the limits of what they can do. Earlier this year Canopy Growth Corporation (TSX:WEED)(NYSE:CGC) made headlines when they uplisted to the New York Stock Exchange (NYSE). Asked if he thought it was a smart move, or just a stunt, Ash immediately showed his respect for the company, applauding the strategic nature of their uplisting.
“You know, I can only draw the analogy of some of the large liquor manufacturers and how they started out. So I do think it’s a wise move. I think that the partner of Canopy is a large manufacturer of liquor, so I do think that it makes sense,” said Ash.
He explained that, in terms of the larger cannabis industry, what is now happening is that other industries are starting to have their interest piqued. In the case of Canopy Growth, that interest was a $200 million investment by beverage manufacturer Constellation Brands. “Now you’re kind of seeing the big institutions taking a good look at this industry,” said Ash. “They don’t want to be left out. So whether it’s all the major law firms here that are delving into it, to pharma companies, there was a deal Novartis did in Canada with a company out in B.C. So I think that, strategically, [Canopy uplisting is] a good move.”
“Yes, I think it will shake the stigma.”
Still, for all the hype and “buzz” surrounding the Canadian cannabis market, it has been a rough year for marijuana stocks on both sides of the border. After reaching their all-time highs at the end of last year, a number of events collided against each other, working together to bring down pot stock prices. Between an assumed market correction, Jeff Sessions repeal of the “Cole memo” delays in Canadian legalization, and more, volatility has been the word on every investor's mind this year. Add in tariffs and trade wars and an unprecedented clash of leaders on the international political stage, and many cannabis stock investors are left wondering if their portfolios will break even, let alone make money.
For his part, Ash had the calm of an industry veteran who has seen these ups and downs before. “I think that the market’s going to reflect the realities of the marketplace,” he said. “Some companies out there are selling a ton to medical dispensaries. But I think once you see that it’s being sold in selected government retail outlets, I think that you’re going to see companies show real earnings, real growth, and I think you’ll see a steady growth in the cannabis stocks.”
As to where the current downturn came from, Ash sees the early industry as a speculative one. He noted that “beforehand, I think there was a lot of speculation. People look at the size of the market, now, anywhere from $8 billion to $20 billion, and they went crazy. It’s kind of like the pot.com as opposed to .com.”
Still, Ash is positive about the market’s future. “I think that, now, it’s going to level out and be just about the earnings,” he noted.
As for positivity, he is also positive that the cannabis industry is beginning to lose the decades-long stigma placed upon it by the black market. At one point, during the debate over Canada’s legalization bill, an amendment was proposed which would have forced investors in the cannabis industry to be put on a public registry —an effort to weed out money launderers according to some Senators, though, more likely, residual stigma left over from the plant’s time as an illegal drug. After all, what other industry is forced to do such a thing?
“Yes, I think it will shake the stigma,” said Ash. “I met with some of the leading institutions in countries around the world in Israel. We’ve seen some of the research that’s being done, true research, and the future will be defined by some of the treatments related to cannabis. Whether it’s leukemia or anxiety, real research is being done, and it’s amazing. So, it’s not hype just so much about the recreational users but, ultimately, there’s like 120 to 140 different cannabinoids, and how they interact with the body, and how you will see disease cured. That’s the future.”
“I think that you’re going to see a real business going forward.”
In the end, Michael Ash returned to the vitamin business that he knows so well, once again comparing it to cannabis. Because, in the end, the cannabis industry has become just like any other industry on the market today —a full-fledged sector that is here to stay.
“I think that everybody in most of the banking institutions, legal institutions, the accounting firms, I think that everyone, now, is taking a look at this industry,” said Ash. “You can draw the analogy of [to] the vitamin business in the early ‘60s that was run by hippies in California. I think that was the image that we had going for us, but now, when you take a look at the institutions that are looking at it, I think that you’re going to see a real business going forward.”
If FV Pharma and their parent company FSD Pharma keep breaking records as they have, there is no arguing that, yes, indeed, the public will see a real business going forward.