AAA Medic Montreal Inc CEO Scott Jardin provides an introduction to the extraction focused cannabis company. Jardin explains the company is preparing for â€śCannabis 2.0,â€ť when extracted products are legalized in Canada this fall. AAA Medicâ€™s core competency is consumer packaged goods and will leverage its Montreal location for an advantage in the Quebec space. Jardin explains that the company will also cultivate and it just received its industrial outdoor grow license for a 57-hectare site located in the St. Lawrence Valley. AAA Medic is currently undertaking a capital raise to complete the buildout of its extraction facilities, which Jardin believes will be ready by the end of 2019. AAA Medicâ€™s focus on butane (hydrocarbon) extraction sets the company apart from many in the industry who focus on CO2 extraction. He highlights the fuller, more complex taste profile of butane extraction, while noting the process is still regulatory compliant. Jardin discusses the companyâ€™s infused beverage offerings and reveals that AAA Medic uses terpenes as a natural flavor element. Jardin explains that the companyâ€™s non-infused offerings work well in both the lucrative carbonated water market and as brand awareness for when AAA Medic enters the cannabev space.
Narrator:Â Â Â Â AAA Medic Montreal Inc is a Montreal-based, privately held, medical and recreational cultivation, and processing cannabis company. It also manufactures oil and provides cannabis testing and development services.
AAA Medic has a 10,000 square foot facility located in Laval, Quebec and intends to build a second facility in the second half of 2019.
James West:Â Â Iâ€™m joined now by Scott Jardin. He is the CEO of AAA Medic, Montreal Inc. Scott, welcome.
Scott Jardin: Thank you very much for having me.
James West:Â Â Scott, letâ€™s start with the overview: what does AAA Medic do?
Scott Jardin: Really, we are a Montreal-based cannabis company focused on the extraction and processing markets. So itâ€™s looking towards Cannabis 2.0, if you will, October 2019, when legalization comes into effect across Canada with respect to edibles, beverages, higher concentrations of concentrates and vapes. Really looking to go after that market, and so weâ€™ve gathered a core competency of both strategic partners and staff, brought them on board with respect to our team, and thatâ€™s really where our core competency focuses on consumer packaged goods, but infused with cannabis. And weâ€™re going to target that, play on the Quebec aspect, of course, and being a Montrealer from Quebec, Quebec favours domestic production, and itâ€™s no different, I would imagine, with the SQDC.
James West:Â Â Sure.
Scott Jardin: And looking to build that bottle, start in Quebec, and really be a good Canadian company as well, and branch out from there.
James West:Â Â Okay, so youâ€™re formulating consumer packaged goods for the retail market?
Scott Jardin: Yes, sir.
James West:Â Â Are you growing your own cannabis?
Scott Jardin: I think in this day and age, especially now, you have to. So we do have some cultivation sites; we actually just got our industrial outdoor hemp license for some farmland in Sainte Luce, which is the St. Lawrence lower valley, and thatâ€™s 57 hectares of farmland where weâ€™ll be able to grow industrial hemp, extract the CBD oil, refine it further, and then infuse it into a number of different products, whether it be creams, edibles such as gummies, or softgel capsules. Beverages, as well; CBD in beverages is actually, you know, more a play in the wellness market. And I think that CBD will probably be much higher in demand, as you can already see from the United States and worldwide, than THC, as it stands today.
THC certainly will come along, but CBD, everybodyâ€™s grandmother knows about CBD today.
James West:Â Â Yeah, thatâ€™s right. Okay, so then, the extraction portion of the CBD: do you have extraction infrastructure and expertise as well?
Scott Jardin: So we definitely have the expertise; the infrastructure, weâ€™re building out currently. Weâ€™re actually doing a capital raise right now towards that end. We anticipate our facilities will be complete by the end of this calendar year, and licensed shortly thereafter.
On the extraction side, I think that, without giving away too much, I think one of the distinguishing factors for us, in particular when it comes to the vape pen and concentrates market, is that weâ€™re focusing more on the butane extraction, so hydrocarbon, if you will. A lot of the Canadian producers and extractors, the small pool that exists today, are focused on the CO2 side, and thatâ€™s more of a medical approach. But what happens is with CO2, they often end up cutting, using cutting agents, if you will, for the vape oil and the concentrates, and thatâ€™s to bring the viscosity down to an acceptable level to be used in vape pens.
The beautiful part about butane is that you have a higher concentration of naturally sourced terpenes, usually in the realm of 10, 12, sometimes 15 percent, and what that affords you is, it brings down the viscosity of the vape pen but has a more complex, fuller taste profile.
So if you look at the United States again in terms of the analytics and statistics, the majority of the vape pens and concentrates are butane-derived in terms of the extraction process. Thatâ€™s something that my group has experience doing, and as of November, I believe, Health Canada allowed that to be part of the regime for the licensing in terms of what types of methodologies you can use.
So weâ€™re definitely going to benefit from that, focus on that, put our expertise to work, and the beautiful part is that terpenes add a natural taste profile, if you will: lemon, lime, in some cases field berries â€“ versus, you know, youâ€™re very limited with respect to Health Canada regulations where you canâ€™t add flavour, you canâ€™t add caffeine to certain products. So thatâ€™s the benefit of having a process that naturally ups the percentage of terpenes in your final product.
James West:Â Â Right. So is it your expectation that on our about October 27th, youâ€™ll be able to have your beverages on shelves in Quebec?
Scott Jardin: Weâ€™re working towards that; it might be a little tight. I have some Plan B scenarios, if you will, to help get us out there, and thatâ€™s potentially working with some other wonderful up-and-coming Quebec companies that are slightly ahead of us in the licensing process but donâ€™t necessarily have the expertise to get to the finish line. Versus, we have a lot of the expertise and are maybe a month or two behind October.
So potentially by December, we could have some products on shelves; in particular, I think the one that I brought today, which is a terpene-infused beverage that doesnâ€™t have any active cannabinoids but will in the future, that particular product is an interesting play â€“ because it doesnâ€™t have any active cannabinoids, it can be not only in SQDC in Quebec or OCS-approved stores in Ontario, but it could be in your Longoâ€™s or Shoppers Drug Mart or 7-11 right now. Itâ€™s a zero calorie, zero sugar carbonated water that just plays on the cannabis space. It has, I donâ€™t want to say novelty, because itâ€™s not that, itâ€™s certainly better; but what we did is, we kind of refined the flavours to take out the sharp notes of that skunky goodness. So it has that undertone and a bit of that taste, but itâ€™s just fantastic, and then we mix it in with some of the naturally-derived terpenes to mimic some of the genetic strains of cannabis flavours.
James West:Â Â Okay. So these products are not infused with any cannabinoids, per se?
Scott Jardin: No. We eventually probably will go after the CBD side more than THC. I think if you look at, again, the US as a barometer, the beverage market is actually staggering in terms of growth, and thatâ€™s because people donâ€™t necessarily want to drink THC; the bioavailability of having that drink in your mouth before it goes down to your liver and converts to Delta 11 THC, itâ€™s not long, so you know, you donâ€™t get necessarily a good conversion for THC for that psychoactive reaction, if youâ€™re looking for that.
But on the CBD side, itâ€™s a little bit more different, so you know, youâ€™re going after a different market segment. Itâ€™s more the wellness side.
So we eventually will probably put CBD in these products, but right now, terpenes, you canâ€™t really market it so much. There are some health benefits; theyâ€™re naturally available, and you can find them in oranges, you can find them in mangoes and so forth. So what weâ€™ve done is, weâ€™ve infused that, but with an overall cannabis play, if you will, to this particular set of beverages. So if you look here, we have this middle beverage here, I donâ€™t know if everyone can see â€“ this is what we call Original 1 or OG#1, and Iâ€™ll give you a little smell and youâ€™ll know right away what Iâ€™m talking about.
James West:Â Â Sure.
Scott Jardin: Oh yeah. You get a bit of that skunky goodness.
James West:Â Â Oh, yeah. Smells like Iâ€™d want to spread that on a paper and throw some tobacco in there and fire it up!
Scott Jardin: Yeah, youâ€™re not the only one to say that. [laughter] This is really the, if you will, this is the undertone for all our other beverages. We have a total of three other flavours; I only brought the two kind of the ones that really people go crazy for, and this is Kushberry Basil here, so itâ€™s a mix of field berries and strawberries, if Iâ€™m not mistaken â€“ no, thatâ€™s the strawberry, here. So this is field berries, and itâ€™s mixed in â€“ this is the undertone for all the flavours. So if you give this one a smell, itâ€™s a much more fragrant, fruity flavour by comparison.
James West:Â Â Oh yeah.
Scott Jardin: Yeah. Weâ€™ll get you a little taste test later on, but this kind of stuff, let me tell you â€“ mix this one in a mojito, and youâ€™re having a good time.
James West:Â Â Yeah, well, I did taste a couple of them, and I think that, you know, the flavour is certainly pleasant and I could certainly imagine putting some vodka on that on some ice on a hot summer day with some mint, and yeah, there you go.
Scott Jardin: This is the thing, is that, you know, when youâ€™re looking at the cannabis space, we strung, we believe in the Pareto Principle. So youâ€™ve got 20 percent making 80 percent of the purchases, and those are the hardcore cannabis users. So how do you bring new people to market? And this is one way that first of all is not limited in terms of the distribution network, but also is an easy transition for people to get used to that skunky goodness, if you will, without going through the psychoactive reaction and whatnot.
James West:Â Â Right.
Scott Jardin: So itâ€™s a way to dip your toe in the cannabis market, and from a beverage side, weâ€™ve just got really good reactions. Weâ€™re working with, again, local Quebec producers to co-pack; itâ€™s our formulations. Weâ€™ve got some orders, some preliminary orders, out of California; weâ€™re going to work with some tills brokers to try and get it in the cannabis-related stores, because it is a tie-in to the cannabis market, but again, no active cannabinoids at this time.
James West:Â Â Right. So when the cannabinoids are legal in Canada, will you still have these products that donâ€™t have any psychoactive effect?
Scott Jardin: Well, Iâ€™m going to say absolutely, and you know, I wonâ€™t put you on the spot, but these are pretty â€“ youâ€™ve tried the beverage, so theyâ€™re pretty good.
James West:Â Â No, I like them.
Scott Jardin: I think as a standalone, they work very well. If you look at Lacroix in terms of the water market, I think itâ€™s upwards of $800 million in sales last year or the year before, so the beverage market, in particular the carbonated water market, is very interesting. This goes one step further, because thereâ€™s a cannabis play to it. So over and above all the other wide range of products for which we have experience in doing, this particular product would be the one that will run in parallel to the cannabis-infused version, but at the same time, be able to create brand awareness for our company, for Bouquet, which is the brand of the carbonated water, and I think itâ€™ll do very well.
James West:Â Â Yeah, you bet. Okay, well thatâ€™s great. Do you think that thereâ€™s any future in the production of cannabinoids as ingredients from biosynthetic sources above, in preference to, plant-generated sources?
Scott Jardin: You know what, itâ€™s very interesting. Iâ€™d have to say in our experience with the groups that weâ€™ve talked to, theyâ€™re a little bit of a ways off, in particular on a commercial scale. Weâ€™re very interested in that; thereâ€™s some specific cannabinoids that weâ€™re looking at that actually help stabilize your blood sugar level and also suppress your diet, and so you know, you can see the marketing aspects for those particular products, in particular in a beverage. So but the problem is, theyâ€™re very hard, and there are very limited quantities in the current genetic strains that are out there today.
So we were looking into the synthetic way of creating these cannabinoids and reproducing them on a more grand scale, but the problem is, again, from our experience in talking to some of these companies, is that theyâ€™re not quite there, yet. Theyâ€™re probably a couple of years off, and then again, on a commercial scale, how viable will they be? They have to do a lot of tests in terms of the cannabinoids, will they have the same effect and interaction with the body based on the synthetic level, and from the research that weâ€™ve done, thereâ€™s been some adverse effects, if you will, in some cases. Not across the board â€“ Iâ€™d say there are some companies that are doing it well â€“ but to scale up has been the problem.
James West:Â Â Right. Okay, well, Scott, thatâ€™s a great introduction. Weâ€™ll leave it there for now and come back to you soon. I assume this is going to be a public company at some point?
Scott Jardin: Absolutely. You know, weâ€™re looking probably in the next nine months or so to go public. We want to create a liquidity opportunity for our investors who believed in us from Day One. My Chairman, Renaud Adams, whoâ€™s still very involved in the company as a principal shareholder, strongly believes, as do I, in creating value for shareholders; so itâ€™s really about heading towards that opportunity, and I think that if you look in nine monthsâ€™ time, you know, facility is completely built out, licensed, potentially generating revenue with a presence not only in Canada but hopefully in the United States as wellâ€¦thatâ€™s a great story to bring to market.
James West:Â Â You bet. All right, Scott, thatâ€™s a great story as it is already. Thanks for joining me today.
Scott Jardin: Thank you very much.