GTEC Holdings Secures its Space in the Cannabis Industry
Vertically-integrated GTEC Holdings provides premium-quality, craft cannabis through a multitude of assets and operations based largely out of Western Canada. It was incorporated in June 2017 in Kelowna, British Columbia, and Director and Vice President Michael Blady reports that, since Cannabis Brightline’s previous profile on GTEC in 2018, its assets have been progressing steadily. The company has but a few steps left before it can fully step up its development within the cannabis industry and assert itself as a market leader.
Since September 2018, companies under the GTEC umbrella have made significant strides. Alberta Craft Cannabis (ACC) in Edmonton, Alberta has received its cultivation license and has begun increasing production to its fullest to enable further cultivation and has been selling its products to six limited partners, with which ACC has various supply agreements. Blady also notes that ACC has had its sales license inspection as of June 25, with a report of minimal deficiencies. This means it will be receiving the full sales license necessary to sell to retailers and medical channels sometime in August.
Grey Bruce Farms of Kincardine, Ontario has also completed construction, and it submitted its evidence package in April, leading to a successful licensing by Health Canada in early July. Blady confirms that the first phase of Grey Bruce’s construction has finished on five acres, with the option to expand several hundred thousand square feet if need be, though he notes that expansion will not be done until production escalates at the location.
He mentions that GTEC imports its genetic catalogue of cannabis into Grey Bruce, giving it its starting material plus two kinds of typical licensed producer (LP) strains along with ten rare, high-quality strains not seen on the market “We’re the only people who have these,” Blady adds.
Progress continues to be made with other assets in the GTEC family. Tumbleweed Farms of Chase, British Columbia has finished construction of its main premises and submitted confirmation of readiness as of March 15 and is currently awaiting licensing. Blady makes note that of the portfolio of twenty-six strains at the company’s disposal, the remaining sixteen will be added into the next available licensed facility. In this case, Tumbleweed Farms is the most likely candidate.
Additionally, GreenTec Bio of Kelowna, British Columbia is now in its lock-up stage of construction, and GTEC will also be developing a new indoor cultivation facility in Vernon, Ontario with F-20 Developments Corp. Both projects are nearly done and should be complete in the fourth quarter of 2019.
Finally, he mentions a deal struck with Canopy Growth Facility of Kelowna, British Columbia to purchase another property for further cultivation. Canopy purchased the Hiku and Doja brands in 2018 along with a facility deemed by the company as “too small for its appetite,” as he describes. GTEC agreed to purchase the facility when it was eighty-five percent complete, and Blady feels that the company’s model of premium indoor craft cannabis is a perfect fit to take advantage of the space.
Since the legalization of cannabis in Canada on October 17, 2018, Blady admits that not a lot has changed for GTEC itself on the operations end of the company, but the ruling has allowed it to bring in new genetic material in order to separate itself from the competition. The legalization of cannabis edibles and oils will give GTEC and its assets the opportunity to tap into another market, and with a standard processing license in effect at Zen Labs of Kelowna, British Columbia, Blady feels that GTEC will be looking to get into that side of the industry “when the time is right.”
He firmly states that the most important thing for GTEC, at present, is to get its product onto the market along with its new strains and sink its teeth into further marketing and branding. It is crucial for GTEC and its assets to be known within the market for producing what Blady refers to as “premium indoor flower,” a label quickly being associated with GTEC. The integration of further elements such as edibles, vape pens, and oils will come in time.
Looking ahead to any further implications the legalization of cannabis may have, Blady observes that, to comply with Canada’s regulations, a company must have its facilities completely constructed before being able to move forward in the industry. This will separate a lot of companies within the cannabis marketplace because some may not have the financing or logistical knowhow to complete these regulations.
With two facilities to be licensed and another coming online soon after, he feels GTEC’s rise to the premium indoor side of the market will continue and perhaps even make the entire process much easier. According to Blady, the cannabis industry is going through a transition, with companies looking for revenue and earnings right out of the gate.
He notes that the next twelve to eighteen months will be an interesting time in the lifecycle of a great deal of cannabis companies, to see “who can execute and who can’t.” Blady feels that if GTEC can achieve its goals in the next calendar year, it will be in a good position to continue its growth by acquiring additional assets at low cost, after inflated prices in the industry dip.
In the past year, Blady has found that GTEC’s biggest challenge continues to be in dealing with delays in regulations. Delays in construction and development have been largely accounted for, but it can be frustrating to have a facility fully built but still “be on pins and needles,” waiting for licensing of it. He observes that once a company builds a facility to the specifications of Health Canada, it is a drain on the company’s resources to be in the queue waiting to go live, so there is a greater push than ever to get facilities populated with workers and producing as quickly as possible.
Blady cites the company’s positive relationships with its suppliers and distributors as particularly helpful in its nascent years. “Everybody is working overtime as facilities come to fruition,” and a great deal of thanks is due to suppliers in the construction, trade, security, and regulatory sectors as well. He feels that these parties have played a huge part in helping GTEC and its assets get to where the company is today and will continue to help that success in the future.
Though GTEC’s reported revenue in the past year was nil due to it being in the build-out stage, Blady reports that a conservative estimate puts its 2019 revenue around $5 million to $10 million, depending on licensing dates. Looking ahead to 2020, Blady projects a number closer to $50 million or $100 million, once facilities come online and the new Canopy facility is integrated.
Blady and the entire team at GTEC are focused on getting its new facilities operating at full capacity, as well as building out the extraction side of the business thanks to Zen Labs, which will be testing product for brands like Alberta Craft Cannabis and Grey Bruce Farms.
He also mentions GTEC’s important retail strategy. GTEC has a minority ownership in Cannabis Cowboy, a recreational cannabis and accessories retailer that holds twenty-six development permits, the majority of which have been built out and are awaiting licensing. A license in Saskatchewan that is currently anticipating approval will be aided by a distribution facility in Saskatoon, allowing Cannabis Cowboy to sell its product without going through the provincial liquor board.
GTEC will be “focusing on growing the retail side of the business, [as well as] the extraction and testing side,” Blady affirms, and the company will “keep moving forward to becoming a fully integrated craft producer.” With so many projects and developments on the horizon, the future of GTEC Holdings is definitely one to watch.