Return to Corporate Site

Investor FAQs

Why was Rubicon Organics created?

With over 20 years’ experience in the Cannabis industry, Rubicon Organics' CEO Jesse McConnell, helped bring the first certified organic cannabis producer to the Canadian marketplace with Whistler Medical Marijuana Company ("WMMC") – which was sold to Aurora Cannabis Inc. for $175 million in January 2019.  However, WMMC operated a small-scale (5,000 kg capacity) indoor cannabis operation which has a significantly higher cost base and larger environmental impact - particularly for organic production which requires moving large volumes of soil. 

Jesse went on to co-found Rubicon Organics because he believed that it was possible to produce high-quality organic flower at scale in hybrid greenhouses.  Over years of Research & Development, Rubicon Organics' production system has been able to crack the code and management can confidently claim to produce a product that is both extremely high in quality and at a cost base that is competitive with large-scale hydroponic production. 

back to top

What is your strategy?

Rubicon Organics Inc. aims to be an industry leader in producing super-premium, certified organic cannabis at scale and taking meaningful market share in Canada in the super-premium certified organic category for flower, vapes and concentrates. Our capacity enables us to scale up production quickly while still maintaining the quality that consumers are demanding. Our goal is to develop the best organic products in the market and to distribute them across Canada and eventually – globally. 

back to top

Why Organic?

The benefits of consuming organic produce are real – with the main benefits being potency, flavour and safety:

  • Increased potency: like most plants, marijuana has its own unique and complex requirements to reach its maximum potential. If a grower can fulfill those requirements as closely as possible, the plant will express their full potential, and in the case of marijuana, a much stronger potency. One of the distinct benefits of organic production is significant increases in terpene production. When the flower is turned to concentrates, such as live resins, the results are much more intense flavour profiles, aromas and effects. What we see in more mature markets like California, are organic growers producing specifically for these high margin products. Examples would include companies like Field Extracts, Zkittles, or Sherbenskis.

  • Better flavor and taste: Organic growing methods will give marijuana plants the ideal environment that it needs to grow healthy and vigorously while also producing the ideal balance and amounts of cannabinoids, terpenoids, and terpenes. The more of these compounds are present, the better smelling and tasting the bud will be.

  • Safer to consume: With non-organic cannabis cultivation, pesticides and fertilizers are used to increase the yield of marijuana, with yield and profit maximization in mind at the potential cost of consumer health. When smoking a non-organic cannabis product, the consumer not only inhales cannabinoids and THC but also many toxins and chemicals. With organic cannabis, there is no risk of ingesting harmful chemicals.

  • Environmentally-friendly: Growing organic marijuana is better for the environment, just like the case for all other organic produce. Organic marijuana growing also uses natural composts which can be left where they are, allowing the ecological system in the area to thrive naturally and independently.

  • Price premium: The price premium associated with organic cannabis will likely remain for some time given the superior nature and scarcity of the product. Indoor organic operations, such as Whistler Medical Marijuana Canada (which Rubicon Organics’ CEO was a co-founder) focused on growing indoors and as such has a significantly higher cost base. This is especially true for organic production which requires moving large volumes of soil. Rubicon Organics’ product will still be priced near the top of the market given the quality.
back to top

Where will you be selling your products?

We are in discussions around supply agreements with multiple provincial LCBs and all of them have been quite enthusiastic about receiving our product. At the moment, management is more concerned about having enough supply for the liquor boards than whether they will take our product. There is still a real lack of high-quality product in the market. The Company expects to secure supply agreements in the second half of 2019.

back to top

What types of products will you be selling?

Rubicon Organics intends to sell flavourful, terpene-rich organic flower, vapes and concentrates to the Canadian market in late 2019/early 2020.  For now, we want to see our high-quality flowers realize their fullest expression. It is like growing grapes in Bordeaux and then distilling them to make raw alcohol.

back to top

What differentiates you from your main competitors?

Rubicon Organics is one of only a handful of cannabis companies solely dedicated to the cultivation and sale of super-premium, certified-organic cannabis, which fetches a significant price premium (around 80%) compared to non-organic cannabis.

Rubicon Organics’ plants are grown in proprietary soil made with certified organic ingredients. From planting to packaging, each stage of the growing process is carried out by hand. Overseen by skilled and knowledgeable growers, our process replicates outdoor growing techniques and everything that goes into our plants comes from the ground and the ocean.

 

back to top

Why “hybrid” greenhouses?

First, we need to look at the two traditional ways of growing cannabis for context:

Indoor: Indoor growing is a great way to produce consistently high-quality cannabis. The main advantages come from absolute environmental control of conditions ranging from light cycles to temperature to humidity. The downside lies mostly in costs associated with production, including energy requirements of lighting and ventilation systems, but also with the fact that a completely static environment is not necessarily the most efficient way to grow plants.

Outdoor: Outdoor growing benefits from utilizing nature’s free resources, most notably light, but suffers from the whims of an open environment and can become a never-ending battle to create consistent product. Typical greenhouses do better at using the free light, but often suffer in other areas such as air circulation and humidity/environment control.

The newest high-tech hybrid greenhouse designs take the best characteristics of each growing environment to maximize cannabis production while keeping costs low: hybrid greenhouses control the growing environment in similar ways to indoor operations, but with a major difference. Indoor grows seek to maintain a static, consistent environment in terms of temperature and humidity. If temperature needs lowering, for instance, mechanical energy in the form of AC is employed so that every part of the growing room is a specific temperature. Air is circulated mechanically via fans.

Hybrid greenhouses create by design temperature stratification that encourages natural convection via heat, vent, and air circulation with canopy fan loops. They create an active, rather than static, growing environment that mimics the natural environment in all the best ways and to match natural plant rhythms. They control the undesirable variables like indoor growing does, but more efficiently and at lower operating costs. Lastly, hybrid greenhouses enables the company to stress the plant to create a greater yield while maintaining quality.

back to top

How would federal legalization in the US change your business?

Federal legalization would act as a massive value catalyst, allowing deep pools of capital to enter the space whereas now it is strictly state specific. Federal legalization may allow us to operate much more efficiently from state to state. Because the difference in state regulation creates very different business models in each region, there are still questions remaining around how interstate commerce would really function upon legalization and how that would affect the entirety of the supply chain.

back to top

What are the main challenges that Rubicon Organics is facing?

Building and developing systems at scale for an industry that is still in its infancy. This would include all services from mechanizations, legal, regulatory, and beyond.

back to top

Do you have plans for expansion to other US states and/or internationally?

We are focused on executing on our business plan as a licensed producer in Canada and providing ancillary services to state licensed operators in Washington State. Beyond that we see tremendous opportunity for us in Europe and beyond and we are assessing opportunities to enter other markets.

 

back to top

Where are the most interesting international markets for cannabis and why?

All markets have their own unique interest to us. The Canadian market is interesting in that it is a federally legal recreational market, so the opportunities are vast. The United States is interesting because it is the largest, though offers significant challenges as legalization is state-dependent which makes it difficult to scale nationally. Europe is a “sleeping giant” that is interesting. Unlike the United States, they do not have a massive and robust black marketing so there is a significant opportunity to develop a mass supply chain.

back to top

What is your take on the cannabis industry consolidation?

Consolidation will be tremendous over the next 18 months as strong operational teams look to fill value gaps with other operational teams. Some will merge to become much stronger and some will experience significant dissolution. It will be a race to the bottom for the smaller companies that don’t align their strengths nor find solutions to mitigate their weaknesses.

back to top

Do you have any M&A plans that you could elaborate on?

There are a lot of exciting opportunities although we are focused on delivering on our current business plan. We expect to be fully ramped up at our Delta facility in Q4 2019 and thereafter explore opportunities for M&A in the US and with a select few Canadian operators. Our goal is to build a portfolio of super-premium, certified-organic cannabis brands, which may include US brands which are looking to expand their geographical footprint.

back to top

Would you be interested in an opportunity to combine with another company or be absorbed by a larger business?

We are focused on delivering on our business plan and always have the maximization of shareholder value at the forefront of our thoughts.

back to top

How do you fundraise and how much have you raised so far?

We fundraise through traditional means, which is via reputable top tier investment banks and our network of family offices and funds. Funds we have raised so far:

  • Equity – CAD$51 million
  • Debt – CAD$15 million
back to top