CEO: John Poss
WSA: Good day from Wall Street, this is Juan Costello, Senior Analyst with the Wall Street Analyzer. Joining us today is John Poss, the CEO for GrowBLOX Sciences. The company trades on the OTCQB, ticker symbol is GBLX. Thanks for joining us today there John.
John Poss: I’m pleased to be here. Thanks for inviting me.
WSA: Certainly, so starting off please give us an overview and history of the company for some of our listeners that are new to your story?
John Poss: Sure, the company was founded in late 2014, early 2015 when Craig Ellins the founder of the company merged some technology he had developed into a public shell that was called at the time Signature Oil and Gas. Subsequent to that contribution of the assets of the technology, the company was renamed GrowBLOX Sciences. The technology that Craig contributed, was an invention that was called the GrowBLOX chambers that was developed to provide a safe and effective way to grow medical grade cannabis—produce cannabis from which drugs could be extracted as cannabinoids and terpenes could be extracted to create medical compounds.
Subsequent to that, the company was able to obtain a cultivation license in Nevada and recently a production license and the company pivoted from the initial focus of producing an agricultural technology to becoming a producer of cannabis for the medical marijuana consumer market, but more importantly to leverage the research it had done with a number of universities to actually file patents for medical compounds to produce cannabis-based medicine and that’s where we are at today.
WSA: Great so bring us up the speed on some of your recent news and some of the shareholder letter, updates as you add two additional medical cannabis licenses in Nevada?
John Poss: Yes, originally we acquired or we were able to obtain the cultivation license in early 2016, late 2015 and we’ve leveraged that and recently we acquired another cultivation license as well as a production license. In Nevada there are three types of licenses: Cultivation, which means growing marijuana or cannabis, production means taking the cannabis and converting it into oil so that you can produce marijuana-based products such as vape pens and ointments and edibles, but more importantly for us you can extract the constituent cannabinoids and terpenes and combine them into medicine and so that was a very important part of our strategy was obtaining that production license.
More importantly, today we are filing our first patent on a cannabis-based compound to treat Parkinson’s disease. It’s a really a wonderful development in the company and the compound that we described in our patent utilizes what’s known as the entourage effect. As you may or may not know over half of the drugs in the United States are derived from plants. Typically what the pharmaceutical industry does is find one component in the plant that’s effective in treating some disease and then patent that and then they find a way to synthesize it.
We take a novel approach, we’re not just focused on one cannabinoid, we’re using what’s called an entourage effect. Essentially the entourage effect is a scientific theory that describes the benefits of using multiple cannabinoids. Whereas, one cannabinoid may serve as a catalyst to make the cannabinoid receptors react to the constituent cannabinoid and then another cannabinoid actually delivers the medicine and creates the treatment, a third cannabinoid might open or close the receptors so that through moderating the dosage you can achieve the appropriate therapeutic effect. I think it’s a game changing patent and you’ll be seeing a press release on it tomorrow.
WSA: Certainly and what are the key trends you’re focusing on right now in this sector and how is the company positioned to capitalize?
John Poss: Well, we’re very focused on the licensing and we’ll call it the regulatory approval of cannabis for medical and/or adult use in many states. Our plan is to create a multi-state footprint. That is we are going to apply for licenses in California, Texas, perhaps Pennsylvania and perhaps Florida. The idea is that you need to create a national brand, you need a national footprint, you need to create brands that are recognizable to the consuming public. Right now most cannabis is really identified by two things, the strain and the THC content. There aren’t really very many brands. For example, if you want a breakfast cereal you buy a particular brand of breakfast cereal. If you want a beer you buy a branded beer. You don’t look at what the constituent components of that beer are or what the origins of the wheat are.
So, the idea is and the trend will be for brands to develop, so that people can recognize there is a consistent product, a consistent quality and get exactly what they got the last time the next time they buy it. It’s a trend towards brand development and consistency of quality, consistency of the user experience and that’s what we’re very focused on, is being a leader in that trend and we think we can do it because we grow our marijuana in cleanrooms. We’re really the only cultivator in the United States that does that. We’re one of the few publicly traded cannabis companies that had filed patents for medical compounds. We want to be a leader in quality and consistency and in producing medicines that are efficacious in treating specific medical conditions.
WSA: Well, sure and what are some of the factors that you feel make the company unique from the other players in the sector? I know you’ve already mentioned a couple.
John Poss: Yeah, those are really the two most important things to think about when you think about GrowBLOX. Number one, the quality, the science that everything we do is grounded in science. There are many cannabis companies out there that simply grow cannabis and sell it. If you can grow a tomato, you can grow cannabis. It’s not very complicated to grow on a basic level, but if you want to grow that highest quality consistent cannabis producing ingredients that are pharmaceutical grade that we put in medicines or even on the adult use and recreational side, you want to produce a consistent high quality product. We’re one of the few companies that will really be able to do that.
We for example use tissue genetics to replicate our plants. There is a phenomenon—one of the reasons that cannabis is not very consistent even though at quality, even though it’s the same strain is that if you take a, what’s called a mother plant and you clone it to boost more plants and you keep cloning it by the third or fourth generation it’s a different plant than it was when you started. That is there is less or more THC, there is less or more CBD. There is a whole host of factors that change with a genetic, they call it genetic drift.
By using tissue culture that is they’re using actual cuttings and paralyzing the cuttings [trimmings] and sorting the plants out in a Petri dish. Our plants are always the same, we can grow, take one strain that has specific attributes and replicate that strain into the future always getting the same plant, the same genetic characteristic every time we grow it. To our knowledge we’re one of only two companies in the industry that uses tissue replication as a way of creating this plant.
WSA: Certainly, so what are the key goals and milestones you’re hoping to accomplish over the course of the next year?
John Poss: Well, our cultivation facility in Las Vegas will open in January. We filed our first patent today. We expect to file probably as many as eight patents in the next 12 months, each patent addressing a specific medical condition. We also will be filing for a license in California. We feel like we need to be in California as soon as possible. We’ve already started those efforts and that will occur within the next 12 months. What happens in Texas regarding our license there will be subject to regulations as Texas has not yet published all the regulations in the final process for applying for a license.
So, the idea in the next year is to grow our basic cultivation business and production business and build revenues while filing the patent and we hope within the next six to twelve months to be able to start an FDA sponsored pilot study on this first compound which we described in the patent we filed today. So, we’ve got a lot to do in the next twelve months, we’re very excited about it. We’re a little company that’s going to get big very, very fast.
WSA: Sure and perhaps you can talk about your background experience John and talk a little bit about the key management?
John Poss: We’re very fortunate that we have a great team and personally I’m 68-years-old. I’ve I was first made a CFO of a New York stock exchange company at age 34 and I’ve been in the C-suite, C-level for the 34 years since then. So, I have a lot of experience with having been CFO of a New York stock exchange company, COO of a NASDAQ company, CTO of a NASDAQ company, I’ve been President and CEO of a number of private companies and one thing all of these companies have in common was that they had a problem. They had some intractable problem either a broken business model or they were out of money or poorly performing the vision or major existence, threatening lawsuits.
So, I’ve been in a bit of a trouble shooter too for over 30 years. I was invited to GrowBLOX because they had essentially run out of money from their initial public offerings and they were trying to do too much. So, my job was to come in and try to refocus the company, identify the real value opportunities, raise some more money and get that plan developed and implemented and that’s what I’ve been doing since I’ve been here. A major part of that is putting the right team together. I was really fortunate that when I got here the company already had a Chief Science Officer, Dr. Andrea Small-Howard, who has a degree in Plant Biology from USC, University of Southern California, she also has an MBA and she put together a really fine team of scientists on her research side.
We have three or four Universities represented that are working with us on the research. So, Andrea Small-Howard is just a real winner. I was able to hire a CFO, initially she came on as controller and now she is CFO, Ksenia Griswold. Ksenia has a degree in music that she obtained in Russia and she has a degree in accounting which she obtained in United States and she was a Manager with Ernst & Young, which you know is a Big Four accounting firm, and has a wealth of public company experience and so she is our CFO. She is also a top 10 finisher in the CPA exam in Nevada.
We have a Vice President of Operations and that’s Kevin Katay. Kevin has seven or eight years experience in large commercial growth. He knows how to grow a cannabis scale and was happy, was excited to join us because we were the first company that’s really growing cannabis the way I described earlier. That is in clean rooms, pharmaceutical grade. He is a tremendous addition to the team and we have many, many folks of similar description. We’re also thrilled have added two directors since I’ve joined the company. One is Leslie Bocskor who is a very well known figure in the cannabis space and the consulting firm Electrum Partners. Electrum Partners, for example is advising the State of Pennsylvania on developing regulations for their cannabis industry. He has also advised a number of states on how to properly regulate the cannabis industry.
We also have Shane Terry who is a retired air force pilot, and has moved into the cannabis space. He was Former President of the Nevada Dispensary Association. He does cannabis consulting all over the world and so we have just a really good Board of Directors and we have really fine management team. I’m really excited to have the opportunity to work with them.
WSA: And what are some of your key drivers that you wish perhaps investors better understood about you guys?
John Poss: I think that the thing they haven’t fully understood—because of the way this company initially rolled out and was promoted by the Founder—they think of it as an agricultural device company that’s developing the GrowBLOX chambers. That’s not who we are today. We’re a research company, a drug discovery company on the one hand and I think that’s a billion dollar opportunity for this company and for our shareholders because we all know that cannabis is generally efficacious in treating a number of diseases. We’re one of the first companies to find just the cannabinoids that are responsible for treating somebody with Parkinson’s and I might add that one formulation we give out for Parkinson’s does not have THC, which means that that it may in fact be able to overcome many of the obstacles to selling it on a broader market and that’s on the one hand.
On the other hand we’re going to be a vertically integrated cannabis company. We’re going to have licenses in Nevada, Texas, Florida, Pennsylvania, California and create a national footprint, and so I believe cannabis has a long, long runway. This is a long term game. This market is already developing very, very rapidly, but it’s only a fraction of its potential. So, I think we have a chance to build really two great companies inside this one company that we have today. On the one hand our pharmaceutical company, which will probably seek additional funding maybe in the spinoff, we’re not sure yet, and then on the other hand a vertically integrated cannabis company with a multi-state footprint and one that will build a reputation for consistent quality, the highest quality top shelf cannabis, and consistency of the consumer experience with it. So, I think there is a lot of things to be excited about our company and I’m not sure investors fully understand that story yet.
WSA: Right, so once again joining us today is John Poss, CEO for GrowBLOX Sciences, which trades on the OTCQB, ticker symbol GBLX. Currently trading at 28 cents a share, market cap is about $20 million and before we conclude here John, to recap some of your key points. Why do you believe investors should consider the company as a good investment opportunity today?
John Poss: Because of its potential. This is on the one hand a very strong cash flow play with our vertically integrated cannabis operations with a multi-state footprint and on the other hand because of the moonshot potential, it’s really hard to quantify what might become from these patents that we’re going to file as it’s really sort of staggering to think about. These could be very, very big.
WSA: Well, we certainly look forward to continue to track the company’s growth and report on your upcoming progress and we would like to thank you for taking the time to join us today John and update our investor audience on GBLX. It was great having you on.
John Poss: Thanks for having me, I really appreciate it. Take care.