In this Smallcap Power webcast, David Posner, Chairman of the Board and Director, and Adam Szweras, Corporate Secretary and Director, discuss Nutritional High’s vision, operations, cannabis investment opportunity, and being a leader in cannabis oils and edibles innovation.
Nutritional High Cannabis Investment Webcast Transcript
[David Posner, Director and Chairman of the Board for Nutritional High]: When we work with a state like Oregon for example we purchase marijuana flower from the cultivators, then we then produce it and then the manufacturer themselves go and deliver it directly to the dispensaries – which is our end consumer.
At Nutritional High, we felt there was a weakness in the marketplace. There was a whole variety of dispensaries and they were dispersed across the state. It took a lot of salespeople to be able to service the dispensaries properly. There were many dispensaries that would love to have different infused products, whether it’s edibles or extracts, but they just didn’t have the capacity to get them delivered.
I should say that I used to run real estate funds, so with Nutritional High, we wanted to create almost a real estate model where we went out we obtained the licenses in these different states. We buy a facility that is even greater than our capacity needs, and then we get non-competing products in our facilities. This allows us on one end to cover our overhead for the facilities. But more than that, instead of being able to have three, four or five sales guys in a facility we have the ability to go out and hire 10 to 15. Enough that we would be able to properly service that individual market. We felt with having the service component mixed in with the high quality products, we’d be able to take a substantial market share in these different states.
To give you [an idea of] the breakdown of the generations of extract processes; extracts originally were created mostly through butane gas extraction methods and then the next generation was made through CO2 extraction. So you’ll find many producers, like Aphria and Canopy, still using extraction through CO2.
At Nutritional High, we used a much different method. We used a cold extraction process. An ethanol based extraction, which does two things; it give us three times the output of the traditional CO2 extraction, so the profitability of it [the final product] is much better. But what is more important, is cold ethanol extraction makes a product that is very clear. So, if I showed you the butane compared with the CO2, compared with our product; what they call our product is “the clear”. It’s a higher quality. When you’re selling oil cartridges and vape pens you know that there’s more of a desire for this product.
More importantly, our process strips out all the contaminants and the terpenes from the product. So with the older extraction methods, they leave more of the different pesticides in the product which would continue on into your edibles. This was something we absolutely did not want! So our system strips out all the terpenes and other contaminants. It also makes an odorless and unflavored oil. So, when you’re looking at edibles, it’s the best thing possible. If we actually took a chocolate bar from our FLÏ™ chocolate brand and took one without extract, the possibility that you could guess which one was which would be a 50/50 chance. This is probably the greatest thing that we brought to the table on the edible side!
I started the company [Nutritional High] with Adam Szweras, he and I were the founders. He’s the Vice Chairman and Corporate Secretary and Director. He’s become very prominent in the marijuana industry. He’s also on the board of Aurora Cannabis. Adam is amazing on the licensing side!
I have a real estate background, so I was very good at going and finding the properties in all of these areas. So what happened to me, was virtually every state gives you zoning requirements: you have to be a thousand feet away from schools, hospitals, daycares, and prisons. So what happens is most people cannot find a property that suits their needs. We would go out find a property, purchase it on a conditional basis, then go turn in the application, and once the application was approved we close on the property. When Nutritional started, we became very proficient on the licensing side, which is amazing… but at the end of the day we had to have the best products in the marketplace [too]!
The first person we found was Billy Morrison, he’s a Director of the company, and he’s head of our Extraction. He’s really taken the extraction side to the next level with this ethanol based extraction. And he’s constantly learning the machines new techniques and he’s really a student of the game. He’s taken Nutritional High to the next level just on the oil side.
Personally, as the as the CEO of Nutritional High [at the time] I really have never made chocolates. I’m not proficient in it whatsoever. So, about a year and a half ago, we went out and hired Jim Frazier. Jim worked for the second largest white label chocolate company in the States. He owned his own chocolate company called Grimaldi Candy Company which made chocolate and candies. His whole life, all he’s ever really done is made chocolates! So our chocolates are [now] on the next level.
Not to knock any the other people in the marketplace, but if I took you to the dispensaries in all the U.S. states, maybe half the chocolate you would actually want to eat, aside from the marijuana content!
Jim really has the capacity to make chocolates, candies, and his biggest strength is enrobing. Enrobing is actually dipping different products into chocolate. Now we find this is something along with the dosage — Just to give you a little background; January 1st, 2014, Colorado went recreational – three days later all the edibles were sold out of the state! There was always a huge demand for edibles. The problem was many of these companies were very small companies. You could count on your hands how many of them actually have full scale facilities. This was true in the state of Colorado and the state of Washington. — We wanted to have a facility that where we had proper infusion. I won’t say we’re the first because I haven’t seen every facility in America; but what we’ve created is a semi automated system where we actually make these products with chocolate depositors. I was explaining with the chocolate enrobers. There’s a skill to actually making the chocolate but also using it properly. So, between Billy and Jim, they’ve created this system of depositing chocolate and enrobing this chocolate.
We feel this is going to separate us in the edibles market! Not just in the U.S. states, we’ve also signed the deal in Canada with Canada Health Wellness. For us, this was a very important step, Adam and I are Canadian, we wanted to have an impact in the Canadian market. Right now they haven’t come out with the rules on all the different edibles and extracts. But, what we wanted to do was actually bring these products into the Canadian market.
What’s also a little bit different from the U.S. [versus other markets], is you have a facility in each state; We have one in Oregon, one in Colorado, one in Washington. We don’t cross state lines. Canada allows us to sell federally across the country, and it allows us to go out and export to different countries! I spent a fair amount of time in the last two years over in Germany. Germany has 86 million people. They have medical marijuana and they have a program where the government is going to supplement and pay for cannabis, like it’s a prescription. They’re looking at much like any other pharmaceutical drug which is covered by the government. So we find the European markets going to be very interesting.
What we’re going to be doing is providing these extracts which are more on the medicinal side. It’s only medical marijuana there and we believe all the other European countries are going to start with medical marijuana and we want to start exporting through Canada Health and Wellness in our joint venture.
What we’ve done as a company, we’ve created a brand and it’s called the FLÏ™ brand. So all of our products that we create right now come out of the same brand. We wanted to push it, we wanted to have the strength. We believe that the value of Nutritional High and a lot of these marijuana companies on the U.S. side, is actually having licenses in each state. In some states there’s limited licensing, and and others there’s a limited amount of real estate, so people won’t have the capacity to actually grow in. We feel there’s a time much like what happened with Canopy Growth, and Constellation brands coming in, that there are going to be a lot of bigger players coming into the market. Whether it’s tobacco, pharmaceuticals, food companies, beverage companies, etc. So we’ve positioned ourselves that way.
We’ve also aligned ourselves with different non-competing brands so for example we’re aligned with a company called Xanthic Biopharma. What they’ve figured out is a way to take our oil and make it water soluble! Adam and myself were also one of the founders of Tinley beverage company, and Tinley has a great product but the difficulty with mixing Nutritional High extracts, was you are literally trying to mix oil and water! What Xanthic created is a powder that is in a Splenda [like]/sugar package, you open it up put in a bottle of water, shake it up, and you have a marijuana drink! And you wouldn’t be able to see any anything floating in the product, there’s complete clarity to the product. So we find this is going to allow Nutritional with the partnership with Xanthic to go into the marijuana drink business and have something that’s completely unique and special on the exporting side. To ship a “splenda pack” compared to shipping a bottle of water is like night and day, in what you can do and the cost. Everybody in the beverage industry dream was to be able to ship a product that didn’t have water.
Another one of our alliances is with a company called Lineage Grow. Now, it’s very important we work with different cultivators in different states because we buy only through the individual states. What our alliance with Lineage does is we can test different strains in the marketplace that we can use in our products, so we have complete consistency. What people want aside from the taste is they want to know every time they take a bite of a chocolate or every time they take a bite of any other edible that they have consistent dosing. The way we countered this as well as we have moulds, so the depositor puts moulds into individual small pieces. If we have a chocolate bar it makes 10 individual pieces that then come together.
So this really helps on the Lineage Grow side too, because we can try different things. There are a lot of people that are very interested in different products that have very low THC, and high CBD on the medicinal side. There’s a whole variety, and different range you’re talking about, there are thousands of different strains we can actually work with Lineage Grow.
On the sales side these alliances are very important because our sales people can be selling marijuana from Lineage Grow, and the Xanthic Powder. We have a deal with Isodiol. They are making basically a “keurig cup” that we will manufacturing for them — another non-competing product for us.
With all of these alliances, what happens is they’re covering part of part of our rent cost. We’re paying a fee for making each product. Then it goes to the next level where they’re paying for part of our sales staff. So we can really come out with this huge sales staff.
Now California was the first state in the U.S. that they allowed distribution licenses. So we went out and purchased the third largest distributor in California, the company is called Calyx. We have a definitive ally with them. We are in the process of closing this. There are an array of over 400 stores [that they distribute to] to start with. What this did was give us immediate distribution into the California market, so we could focus on manufacturing our products.
With the fact that were going to own that distribution company, we are going to be pushing our products higher than any anybody else. That allows us to work with different people. Calyx has about 12 salespeople, we want to ramp it up to about 30 people and control the California market. So we believed that we have positioned ourselves with Nutritional High on every level — in all in all these U.S. states especially in California and for this Canadian deal.
[Crowd Question]: Can we go back into your branding, did your distribution companies have anything to do with that.
[David Posner, Director and Chairman of the Board for Nutritional High]: No. They definitely like it, they think it’s something that can definitely go in. With branding, we really liked the name and we like the design of it. But it goes beyond that, it goes to the quality and the consistency of it.
The reason why Calyx did the deal was they were so excited that we had the professionalism and how we spent money on equipment, and machinery properly. It’s not like we’re going to spend millions of dollars but we are buying the machines to make the right, quality product. We believe there’s no massively prominent brands in the U.S. marketplace because it’s state by state. We have one of the bigger multi-state platforms… we’re right up there. We really believe market shares can be taken in the next three years.
My goal is never to be the first person in the marketplace and want to be a pioneer. We want to be the fifth, sixth, seventh… where we can see where everybody’s gone through, we feel everything works and we can adapt and make ourselves better, cheaper, and have more profitability. That’s how I like to approach these markets.
Now in California, we’re in pretty early in the market, but California has had a medical marijuana market for 20 plus years. So it is a very developed market with many dispensaries and there are a whole variety of products. So, because we had this distribution, we’re now focusing on going up.
As I was explaining before, and I’d say this is the biggest issue in the California marketplace, is the zoning for these facilities. They have to be a thousand feet away from schools, hospitals, daycares, churches… to give you an example of something like a church so many churches have daycares. So you call up the church and ask if they have a daycare, they say yes, so we have to say, yeah okay that’s probably no good. Many people in California, they didn’t have state licensing before. So it was all done on a patient basis. Now people actually have to get their state licenses. There are a lot of larger brands that to get their licensing they have to move their facilities, buy or lease a new facility, build the whole thing out and go. We are looking at rolling up a whole variety of different brands. We are really going out and looking to buy quality brands and revenue at this point in time. We feel we’ve grown Nutritional to a point and we created value, there’s value for anybody we want to acquire. We are in a position where our market gets high enough where we’d like to do some acquisitions, we’re aggressively looking to roll companies up right now.
When it comes down to the oil side of it, it’s the old Intel inside theory — any of the other brands we acquire would say, “the brand” powered by FLÏ™, at least with our oil. That is how we’re going to approach any prominent brands that we’re going to go out and acquire. So kind of build both brands.
[Crowd Question]: You can use the same brand everywhere? It’s not state specific?
[David Posner, Director and Chairman of the Board for Nutritional High]: Absolutely. We can use the same brand everywhere, the other thing is the branding looks the same, but different states have different rules on packaging, different kinds of disclosures, etc. The packages don’t look identical, but pretty close.
[Crowd Question]: Could you take us through your manufacturing a little bit? And talk about your moulds, packaging etc.
[David Posner, Director and Chairman of the Board for Nutritional High]: We’re trying to find most of the marketplace. And this goes well with the edibles, they don’t want refined sugars in the product. We’re trying to do everything in a natural/plant based focus — Over time we think we’ll go across the board. We have to have the manufacturing capacity for all of this, in the state with proper timelines. There’s a lot of times where we turnover products are very quick. But that’s the focus of Nutritional High, we always want to have that more natural sort of feel to it.
Nutritional High announced, through Gravitas and Cannacord, a 10 million dollar convertible debenture. There’s there’s a 60 cent conversion on the debenture, and there’s a 70 cent full award. We think it’s a very valuable piece of paper. We’ve had a lot of interest in it and we’re looking now to finish it up and close it. Right now, we’re trading around 70 cents. Basically, the actual full warrant is more or less in the money. We’re ascent of it either way. I looked at the ticker in the last hour, hour and a half, and today, we are as high as 76 cents.
So, we think it’s very valuable and we are going to be using the proceeds of this for acquisitions, primarily in the California market, unless something else becomes valuable. We call this company Nutritional High International Link. We really want to have a strong U.S. presence, we want to have a strong Canadian presence. More than that, we want to become an international company and we’re looking at the European market. We’re looking out how things are evolving in Asia. We’re looking into the Latin American South American market… We really work extremely hard at this and we take this very seriously. What we’re really skilled at it, is having the ability to learn the laws in each country and each state, and see what the actual licensing processes is. This is the most important thing — You don’t have a license you are not in the game. That’s our first focus.
At the same time, you know we’re building our brands. We’re constantly testing new products and building that quality side to our products. As I was saying with Jim, he is a master in enrobing. We haven’t announced that we’re coming out with any specific enrobed product, but we have this capacity. What our goal was, was to get the products that really people wanted in the marketplace: the vape pens, the cartridges, the chocolates, etc. So they understood that Nutritional High and the FLÏ™ brand was a source of quality. Then, we’re going expand our SKUs. This is why having the distribution, expanding the SKUs, and being in so many different states, and countries you’re going to see an explosion of revenue that’s going to come out in the next couple of years.
Every company wants to be profitable, but if you look at really any of these companies in the marijuana space, they are not, because there’s massive expansion. We want to make every individual profit center profitable for Nutritional High within a year period. That is our goal. You know, we started in Illinois and four months later we were profitable. Colorado, we were at our breakeven after seven or eight months. Our goal is to focus on this, and constantly grow these facilities, grow our licensing platform, and go on from there.
We want to become a highly profitable company and the reality is we have the biggest margins in the industry, in the products that we produce. So, this is the first step, having actually these high margins. The second is the execution of the growth. Down the road straight flower will be highly commoditized…. Just to give a little background let’s talk about the Colorado market. Three years ago marijuana on a pound basis was selling for close to $3000/pound and this is for higher quality not the highest but a decent quality. Now you’re looking at about 1300 – 1400 dollars/pound. So unless you have something special, or a tweak on it, or a way you’re going to process it or change it… It’s going to become a straight up commodity. So everybody’s just going to have to grow bigger, bigger, bigger!
In a state like Oregon, we can buy the building, renovate the whole facility and put in all our equipment for around a million dollars US. To get this kind of revenue out of a grow facility, I’d be spending 10 million plus. So when we’re going out and raising this money, we’re not just throwing it at these grows that are very expensive. We’re going to go after and purchase quality brands and revenue.
[Crowd Question]: So that characterizes… you’re an acquisition strategy then? Is that basically where your focus is?
[David Posner, Director and Chairman of the Board for Nutritional High]: Yeah pretty much. I’ll never say no to a deal that makes sense. I can’t say Nutritional High would never grow cannabis, but it would have to be almost in a seed to sale platform. When I say seed to sale there’s a lot of states like a state like Arizona where you actually cultivate, you produce and fill your dispensaries. So with that situation possibly, but you’re actually selling marijuana to yourself at a higher price. You’re not really wholesaling it so it makes a little more sense.
[Crowd Question]: Can you elaborate on how the actual distribution model works? Like, think about the Coke model, you have the truck, they walk into the store and place it on the shelf. So, what kind of, would be the analogy to your world?
[David Posner, Director and Chairman of the Board for Nutritional High]: In a state like Colorado, unless you’re actually licensed to carry product, you can’t carry product. They’re going and actually carrying the product and actually servicing. The more sales guys that you have out, the more proficient your manufacturing is. There’s a duality to it.
[Crowd Question]: Just looking at your product, your chocolates, they look delicious. But you’re only supposed to take a little square right?
[David Posner, Director and Chairman of the Board for Nutritional High]: I am a chocolate junky, so for me like I loved it from the first day. In most recreational states the products are 100 milligrams of THC for whole chocolate bar, 10 milligrams apiece. I would say for the average consumer 10 milligrams is enough. If somebody smokes more, or for the more medicinal side, those people will want to take a couple more into the 25 to 30 milligram rage. The chocolate bar in retail sells for about 30 dollars
[Crowd Question]: Usually medicinal products don’t taste good right? Medicine is not supposed to taste great?
[David Posner, Director and Chairman of the Board for Nutritional High]: Whether it’s recreational or medicinal products will taste the same and they’re really the same products, it’s a level of dosage that you put it in the product that makes the distinction. Our oil has that clarity and is tasteless, if someone really needed it we could load up the chocolate with the oil and it wouldn’t affect the taste. However, our focus was more on microdosing. We didn’t want people to take too much, we felt it was better for somebody to take 10 milligrams, and then wait an hour if they wanted more they could take more. There are warning labels in each state, and when you go into the dispensaries they will suggest dosing.
We don’t want people to have that feeling of having taken too much, we want people to actually like the product, like the taste, like the actual experience of it! That’s why we suggest the dosing I am suggesting right now. We want people to really enjoy these products and use them for their benefit whatever that benefit maybe.
[Crowd Question]: Shouldn’t there be a warning label or something on it?
[David Posner, Director and Chairman of the Board for Nutritional High]: Oh, they do. There’s warning labels in each state and as far as the suggestions, the dispensaries will also suggest how much you should eat. There are some people that eat 5 chocolate bars a day, but that’s not the average person. I’d say 90% of the people should be in the 10-20mg range.
[Crowd Question]: You could overdose?
[David Posner, Director and Chairman of the Board for Nutritional High]: I mean, nobody has ever died from an overdose. But you might not have the best feeling. In reality, we don’t want people to have that feeling. We want people to actually like the product, like the taste, and like the actual experience of it. And that’s why, we suggest, just like I’m sitting here right now, that overeating isn’t going to help our business model or product experience.
[Crowd Question]: Surprised the ex-lax people haven’t developed anything yet…
[David Posner, Director and Chairman of the Board for Nutritional High]: I can honestly say that we’ve developed a lot of products but we haven’t developed the ex-lax product yet. This hasn’t been on our testing schedule yet. But, you never know.
[Crowd Question]: Will you be working with Grimaldi Chocolates in Florida?
[David Posner, Director and Chairman of the Board for Nutritional High]: It’s an interesting question. We have not been licensed in Florida. I would say it’s more the skill set and the knowledge that will help that benefit us in Florida. You have the produce in a licensed facility. So, we wouldn’t be producing in the Grimaldi facility, regardless of the fact of having Jim there and having a lot of those team of experts. We would not be producing in Grimaldi.
[Online Question]: If you were looking to invest, which companies would you invest in other than your own company?
[David Posner, Director and Chairman of the Board for Nutritional High]: It’s an interesting question. I believe I would look to companies that have a focus much similar to what Nutritional High has. Somebody who has an angle or something that’s more high margin, something where the prices will stabilize over time but they’re not going to be really commoditized. So I would say that’s a focus of mine.
I can say you know personally we get a deal with Canada Health Wellness, they are a great company, I have personally invested in them. But, in general, there there are so many different companies with great skill sets. You see a company like Aurora Cannabis, as you know I’m obviously a little biased because you know Adam was involved in Quinsam. I think Quinsam’s an excellent balance for the investment. What they allow you to do is not have to worry about every single deal. Roger Dent, the CEO, is called basically before almost anyone else on every new deal and issuance. And he’s amazing on his investments, and you’ll see as his numbers come out. So those are my two, Canada Health Wellness and Quinsam, but Quinsam is my number one.
[Online Question]: What makes Nutritional Highs extraction process different than its competitors?
[David Posner, Director and Chairman of the Board for Nutritional High]: As I explained it’s not done on a CO2 basis, but a cold ethanol base. What we’re doing is we’re taking you through a three step process. We’re stripping out all the terpenes and all the contaminants in it; Where CO2 will strip out a portion of them. This creates a clean, pure product that then we can infuse or create cartridges with.
[Crowd Question]: Have you patented it?
[David Posner, Director and Chairman of the Board for Nutritional High]: In the U.S., we haven’t patented it. We’re looking at different ways to patent it. We find it’s a skill set of the IP. We don’t mind other people coming into the marketplace with this type of product. What happens, is in the U.S., you actually going to get individual testing. So, our oils tested from 86 percent to 98 percent purity. So somebody else’s precision at 80 percent margins like in 94 we almost want that competition in the marketplace. It solidifies us in the marketplace. I think down the road we’ll look at different patenting.
We started Nutritional with a small amount of funds, we have really grown it organically. We’re now going to the next level where you know we’re going and looking at acquisitions. But you know we really watched our money, we were very precise and there is precision to what we do. We are not worried about someone coming in and stealing our idea and patenting like that — especially on the U.S. side. That’s not our fear.
[Online Question]: What are your plans for Canada when it becomes legal here?
[David Posner, Director and Chairman of the Board for Nutritional High]: We are doing a joint venture 50/50 with Canada Health Wellness… so in essence unless there is some other company that does it before us, will be the first company that actually gets an extraction license on a 50/50 basis. What we’ll do is we’ll be using Canada House flower and flower from other producers, and we will be extracting. Right now you can only make a tincture type oil. They’re making it in the form of a pill right now, that has been allowed in the marketplace, like gel caps which we have the capacity to do. We’ve actually helped some of the the biggest companies with this on a consulting basis. So, Nutritional High has become highly proficient at it. We’ve got to see that the laws are we just don’t know. We have the ability to make so many different types of infused products. So we will make whatever infused products they allow us to make that makes economic sense. We do have the skill set to make them
[Crowd Question]: How many full-time employees do you have?
[David Posner, Director and Chairman of the Board for Nutritional High]: It’s weird, we have a lot, because we have so many subs. In something like Illinois, we probably have 12-13 employees altogether? It’s different because of every state. We really believe by the end of the year that we’ll have, some contractor and some full-time employees, be close to 100 by the end of 2018.
[Online Question]: Where are your headquarters in Canada?
[David Posner, Director and Chairman of the Board for Nutritional High]: Oh, it’s 77 King St. West. When we started out with a company called Foundation Markets, that Adam [Szweras] had started. We work out of there, and Gravitas and Foundation in essence own a company called Branson and there our corporate secretary — they do all the corporate filings for us. They if people cash warrants are you know are exercising the things they do. We are always on the road. So we’re always at some facility somewhere in the States or the Home Office… which I would say is not so much home.
[Online Question]: Do you see NH being a takeout target, and who would you want to be bought out by?
[David Posner, Director and Chairman of the Board for Nutritional High]: It’s everybody’s dream to become the biggest. Do I want to be the guy buying everybody up? 100 percent! However the reality is anyone who would come to us with a with a offer to take us over we would look at. We want the best for the investors. If it made sense I would sell, but it’s definitely not my goal. But I would look at everything, I’m not too proud to take a lot of money from some company, if it’s to benefit the shareholders.
[Crowd Question]: When all your entities come online, how are you going to show your revenue, by state, by product…?
[David Posner, Director and Chairman of the Board for Nutritional High]: On the MDNA, we will break it down by revenue but in actual financials it will be compiled together.
[Online Question]: What is the status of Palo Verde for licenses?
[Adam Szweras, Corporate Secretary and Director for Nutritional High]: Palo Verde’s licenses is being reviewed right now and we’re going through a process of review and renewal with the state. The state objected to certain relationships and we’re just working through that to ensure that they stay compliant.
[David Posner, Director and Chairman of the Board for Nutritional High]: So, for us, obviously Colorado was the first place we went. We wanted to establish marijuana street credibility and its one of the strongest marketplaces we have. We are definitely going to grow in Colorado. If we look at our resources and how we’re going to allocate those resources, it’s going to be allocated, even on the U.S. side, probably 70 percent to California. The California market rate is much bigger than the whole recreational marijuana market in the US. We’re going to focus on Colorado, and we’ve also worked with other people other than Palo Verde. We like our relationship with Palo Verde, they’re excellent. They’ve been very professional and we’d like to continue our relationship with them.
[Online Question]: Should Canadian investors be worried about investing in marijuana companies like Nutritional High who have interest in Colorado, although legalized in Colorado, marijuana is still illegal at the Federal level?
[Adam Szweras, Corporate Secretary and Director for Nutritional High]: Yes, marijuana is illegal federally across the U.S., Colorado, everywhere. However the the states have legalized it.
Federal rules under the U.S. Constitution are paramount in that area but the federal government until recently had specifically stated that they weren’t going to take any action against the marijuana industry. So that so nothing has really fundamentally changed there because there are certain enforcement guidelines that the Federal Attorney Generals follow.
The enforcement guidelines provide that the attorney generals have to go and put resources against fighting activities that violate federal law, which are harmful to society. With states having legalized pot for medical and recreational-adult-use marijuana, it’s very hard to argue that it’s harmful. So there has been no fundamental change in the actual enforcement in the U.S., as well, Congress has even gone so far as to defund the drug enforcement agency when it comes to enforcing action against medical marijuana.
So it remains to be seen, there’s still a lot of political and regulatory change coming in in the U.S. when it comes to this sector. But frankly, this allows us to continue to develop our foothold, to become a brand name across the U.S., and then when when there is federal legalization, which we believe will be coming at some point in the future, we will be in a dominant position.
[David Posner, Director and Chairman of the Board for Nutritional High]: For us we really like the way everything has unfolded in the U.S. It is going to really allow us to position ourselves to obtain these licenses in other states. You talked about Nutritional High being a takeout target — we think will be a takeout target at a much higher price, if things go slower, rather the quicker in the U.S. So we’re kind of excited in the way things have evolved over time.
It will be fine on an investor basis. I don’t want to compare us to other Canadian companies, but if you look at how far developed we are compared to many of the other Canadian companies and their market cap, I think you’re getting Nutritional High at a massive discount compared to the evolution of both sides of these companies. As an investor, I like to invest in the companies that I think are undervalued, where I think there’s big upside.