EXMceuticals is a small cannabis company with big dreams to produce CBD on an industrial scale

The firm seeks to provide high-quality cannabis ingredients on an industrial scale to global CBD players

EXMceuticals - EXMceuticals a small Canadian cannabis company with big dreams
EXMceutical’s farming operations are located in Uganda, Malawi and the Democratic Republic of Congo
  • Seeks to produce CBD on an industrial scale for pharmaceutical, nutraceutical and cosmetic markets
  • Cannabis growing operations based in Africa, with refinement/export processing in Portugal
  • Projecting more than $233 million in revenue by 2022 

What the company does:

EXMceuticals Inc (CSE:EXM) is a small Canadian cannabis company with big dreams. 

The Vancouver-based company, which currently has a market cap of only C$55 million, intends to grow into one of the biggest wholesale grower, producer and supplier of cannabis and cannabidiol (CBD) ingredients to the pharmaceutical, nutraceutical, therapeutical and cosmetic markets in Europe and North America. 

It seeks to provide high-quality cannabis ingredients such as concentrates. extracts and isolates on an industrial scale to global players who require large volumes of raw material to make their CBD products. 

EXMceuticals is confident it can be the so-called King of the (CBD) Hill, while achieving the lowest operating costs in the industry.

The company's farming operations are located in central Africa -- Uganda, Malawi and the Democratic Republic of Congo, where it started growing cannabis in 2017. By operating in more than one country, the company is spreading the risk of any failure in one of those countries.

The company picked the countries because they can provide an ideal location for cannabis cultivation, with fertile soil, abundant rainfall, 12-hour days of sunshine and ideal tropical temperatures that allow for year-round growing and harvesting, and without the need to use more expensive greenhouses as is the common practice in cooler climates. 

Financially, these African countries also offer low construction, labor, regulatory and transportation costs.

The company also is committed to developing strong partnerships with the local African communities in which it operates. That means it buys local and hires local while creating training opportunities, especially for women.

Furthermore, EXMceuticals has created a non-profit Community Development Fund which will receive 2% of the gross revenues from the local production facilities to fund socially responsible projects like clean drinking water and educational opportunities. 

EXMceuticals also has a newly constructed research and development facility in Lisbon, Portugal for the study of CBD and terpene formulations. Terpenes are organic hydrocarbons found in the essential oils of plants which give cannabis its distinctive aroma.

The company hopes to use the facility soon as a nursery and center for the processing and refinement of the raw CBD oil from Africa. It will serve as a base of distribution into the European Union and North American markets.

How’s it doing: 

As part of its grand strategy, the company is looking to offer clients a secure and predictable supply chain of cannabis and CBD ingredients under long-term agreements. 

In 2018, EXCeuticals signed a memorandum of understanding with Canadian natural health-products maker GFR Pharma to form a joint venture in North America to sell cannabis oils and other ingredients in several countries, including Canada and possibly the US. The company’s role will be to supply the cannabis while GFR will process and distribute the final CBD products. 

The company’s main operation is in the Democratic Republic of the Congo, or DRC, where it has a 70% interest in a government-issued cannabis license and a land concession of 10,000 acres of organic farmland. The company has the right to expand to 100,000 acres. The plantation employs about 100 full-time workers. 

Currently, 40 acres are under production although EXMceuticals expects to ramp up to 200 acres to meet an increase in market demand. It took in its first harvest at the end of 2017 and to date 800 kilograms of raw product have been dried and stored for processing. Equipment has been ordered to increase production capacity to 20,000 kgs per month and plans are in the works to expand the plantation workforce. 

In Uganda, the company has had a joint venture since 2018 with Prime Ranchers Ltd (PRL) to produce, process and export cannabis oil and ingredients, with EXMceuticals owning 70% of PRL. Some 494 acres of organic farmland are ready for planting as the company builds related services for the farm’s operation and extraction facilities. Production can be increased to 5,000 acres.

EXMceuticals entered the Malawi market in February, winning a provisional license to cultivate and process cannabis on 120 acres. Once it gets a formal license, the company plans to ramp up to 2,000 acres.

While the DRC stands at the heart of the company’s Africa operations, management has big plans for Malawi.

In May, the company entered into an agreement to acquire agro-processor MM (Operations) Ltd -- which owns 682 acres of fully drip-irrigated farmland used to grow mangoes. MM also has built a state-of-the-art greenhouse capable of growing up to 700,000 plants, has access to a 4,200-acre greenfield site and operates a 107,000 square-foot, certified processing facility.

In January 2019, the firm listed on the Canadian Securities Exchange following the reverse takeover of Orofino Minerals Inc. And in April the company listed on the Frankfurt Stock Exchange.

EXMceuticals also completed two non-brokered private placements in that period that raised more than C$6 million earmarked for working capital and to advance its ambitious expansion strategy.

In July it named Tripp Keber, co-founder and ex-CEO of Dixie Brands, a premium cannabis-infused products company based in Colorado, as a strategic advisor to its board. Keber has previously served as a director for the National Cannabis Industry Association, the Marijuana Policy Project and the National Association of Cannabis Businesses.

Inflection points:

EXMceuticals is looking to gain additional acreage in other African countries and has undertaken negotiations with local governments and partners in Ethiopia, Zambia, Tanzania and Burundi to obtain licences to permit the cultivation of cannabis and hemp, as well as the processing and export of non-psychotropic cannabinoid ingredients like CBD.

The company is also waiting for the Portuguese government to approve soon its applications for licenses so it can legally import the raw CBD oil/ingredients from Africa for processing and refinement and then for final export to other European nations and North America. The company is also seeking a license to launch an R&D lab at the facility. 

It hopes to start generating revenue in the fourth quarter of 2019, but can’t really do so until it obtains the crucial import and export licenses in Portugal. The company has lofty revenue targets. For example, it projects it will earn more than $233 million in revenue by 2022, as demand for CBD evolves into a multi-billion-dollar market that could swell to $40 billion by 2032. 

What the boss says: 

“The plan for the business, which we've already embarked on and are executing, is to grow large volumes of cannabis in Africa on an industrial scale, process that locally, refine it in Portugal and access all the end markets in North America and Europe,” Jonathan Summers, chairman of EXMceuticals, told Proactive Investors in July.  

''If you just look at Europe and ignore the rest of the world you have 750 million people who are increasingly interested and getting very excited about CBD as a health supplement and I think the potential for this industry and companies in this space, if they execute, could be very substantial.” 

Quick facts: EXMceuticals

Price: 0.2 CAD

Market: CSE
Market Cap: $15.03 m

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