End of Year 2020 – Investors Update

Dear Friends,

As I reflect on this turbulent past year, I am truly amazed how far we have come with your help since we set out on the journey of creating better outcomes for medical cannabis patients. As such, I would like to take this opportunity to thank all of our shareholders, partners, and other stakeholders for their generous support.

As you know, the current approval processes for medical treatments generally starts with a formulation of elements. The objective of any clinical study is to ensure efficacy and safety, within a fixed sampling size. However, as cannabis is a plant and each plant is unique, the challenges have been in ensuring that each gram tested would provide a consistent result. In response, GCAC has developed a patent-pending data model called Seed to Sale to Seed or, Seed2Seed ™ (press release https://bit.ly/3mHRVOT).

 

This patent formed the backbone of all our 2020 efforts and has ultimately led us to the point where we have been able to go to market and get our first sales of the Citizen Green technology stack, specifically Efixii. This small but important deal with Israel based Bless Cultivation on October 14 (press release; https://bit.ly/2M38B6T) paved the way to launch the Efixii product on October 29 (press release: https://bit.ly/2KtimuA).  To understand the significant scale of the opportunity for GCAC, it is important to understand the concept of the technology.  If you haven’t done so yet I would encourage you to watch our fun and informative Efixii product video; https://youtu.be/CZuvCqEmDcE.  At the core of the Efixii system a simple but powerful QR code that provides immutable proof to medical cannabis consumers that a product is what it claims to be. Grams packaged with Efixii QR codes lead to datasets which generate GCAC revenues.   This is the Seed to Sale component of our technology stack. We encourage you to scan one of our QR codes with your camera phone to see how it works! And, to see how anyone can submit efficacy feedback for an Efixii QR coded product, just download the Efixii app and try it out for yourself by tapping “Scan Product QR” and then “Efficacy Feedback”.

By focusing on the all-important data generating QR codes, GCAC’s business model is to generate revenue in two ways; 1) through SaaS-licensing of Efixii to growers, distributors and retailers to generate those QR codes and storing attestations on a blockchain, and 2) from the sale of attested-data to large data aggregators.  Our SaaS licenses generate CDN$0.20/gram in fees and subsequent data sales generate CDN$0.18/gram, for a combined total of CDN$0.38 per gram in QR code driven revenues.  This represents an average cultivator cost increase of just 2.4%, based on an average of CDN$8.50/gram flower retail, but with massive onward benefits to both the cultivator and patient.  However, this cost increase is actually offset by the cultivator in the elimination of certain manual compliance tasks and reduced wastage, resulting in net savings to the cultivator, and therefore, a more affordable product for the consumer.  This transparency, in turn, leads to higher demand for Efixii QR code based cannabis products.

 

With consumers demanding only Effixii QR tagged products, the result is realized throughout the supply chain, driving growers not using Efixii to use it and, for those using it, to use it more. We call this the Network Effect, and essentially consumers themselves become our greatest sales channel evangelists.  By November 2023 our sales forecast is for a total of 128 million of grams, from 36 medium-sized cannabis growers, which at CDN$0.38/gram, results in top-line revenues of CDN$48.6M, with a forecast EBITDA of 65%. Indeed, our sales forecasts represent a reasonable 0.2% capture of a USD$25bn[i] medical cannabis market in 2022 and, with consumption and patent protection in hand, there is significant opportunity for Global Cannabis to become a recognized global leader in creating better outcomes for medical cannabis patients.

 

The key milestones of licensing and integrating the Tracelocker blockchain attestation technology in Q3 2020 (press release; https://bit.ly/2WGiSYJ) enabled us to fully execute our Seed2Seed technology vision for better patient outcomes.  For those of you not familiar with the folks behind Tracelocker, it’s worth checking out their CEO, Brian Collins, https://bit.ly/34D6Qnr. I am sure you will agree that having a partner with many years, not just as a technologist, but as a public company CEO on NASDAQ, really enhances GCAC’s execution potential.  A second critical milestone in Q4 2020 was our partnership with Purity-IQ (press release ref). Purity-IQ’s partner, Bruckers, is a multibillion-dollar testing-powerhouse and, with their cannabis fingerprinting solution inside of Efixii, this enables our growers to transparently demonstrate their product quality and reproducibility on a batch-to-batch basis. This partnership is a huge breakthrough for GCAC as it enhances consumer trust and, for growers, proves chain-of-custody compliance and enhances their export requirements adherence.

 

In closing, GCAC is focused on better outcomes for medical cannabis patients. Consumer efficacy feedback is a critical piece in the data story of cannabis, and in delivering the Efixii app, consumers can earn rewards by attesting to or answering a series of in-app clinical-grade questions. When these questions are answered they are correlated with other user experiences by advanced machine learning and AI at scale, resulting in an averaged efficacy rating for the treatment used.  I am happy to announce that as of December 22, 2020 both Google and Apple app stores have approved Efixii for our consumers.

 

I would like to wish you all a safe and happy holiday in the New Year.  We look forward to continuing to walk with you on this journey and sharing in the success that will inevitability follow.

 

Best regards,

Brad Moore

CEO, Global Cannabis Applications Corp.

 

 

 


[i] https://www.bloomberg.com/press-releases/2019-06-27/medical-marijuana-market-worth-usd-25-25-billion-at-21-cagr-during-2018-2022-technavio