Investment details

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Over the last eight years, we have invested $850,000 cash into TCC — more than we can afford to lose — so we have “skin in the game.” We are COMMITTED.

We value the company at $3.6 million, mostly on the strength of our long-standing relationship with the Thai government. TCC’s ownership is currently divided into 10,000 shares. Three point six million, divided by 10,000 shares, is $360/share.

Our plan is to issue 8333 new shares, each priced at $360. That would raise $3,000,000 — giving the new investor(s) 45% of TCC, post-money (because 8,333/[10,000 + 8,333]= 45%).

This investment is expected to fuel TCC’s rapid expansion, as shown below.

Expansion v04

From that “first extraction,” we expect to clear a profit of approximately $20 million.

 

Specifically, we expect to use that money to build greenhouses (near Maejo University in Chiang Mai) and warehouses close to our contract farmers. We expect to run experiments to discover what combination of strains, cultivation techniques, soil types, fertilization regimes, etc., produce the best-quality cannabis in the highest volume (all with THC<1%, as required by current Thai law). Having identified the best strains, we expect to take cuttings from the best-producing plants of those strains to establish our mother plants.

From those mothers, we expect to micro-propagate a gazillion clones, raise them in greenhouses (under 18/6 light/dark) until they are fully vegged (which is another experiment: how many days under lights gives the best results, for each strain, given the extra cost of lighting?). We then expect to sell the fully-vegged clones to contract farmers, and to help them plant and care for the clones, until they are ready to harvest. (Which is another suite of experiments, regarding strains, cultivation techniques, fertilization regimes, etc.) The contract farmers will then, we expect, harvest the buds from the fully-mature plants, and bring them to one of our three local warehouses in big bags (one bag per plant, as part of seed-to-sale tracking). We then expect to grade the harvested bud for quality. The bud that doesn’t meet our standards, we expect to reject. We’ll have been working with each farmer all along, so we don’t expect to get much sub-standard bud (another experiment!).

All of these experiments will produce bud — some more, some less — that we can concentrate into oils, extracts, and isolates.

The high-quality bud, we expect to buy, cure, grind up, and convert into “crude cannabis oil,” in tracked containers (for quality control purposes, if nothing else). That oil, we expect will be taken to a central location, where we expect to process it further into refined oils, extracts, and isolates (still tracked). These, we expect to sell to research universities and to makers of topicals, edibles, and medicines (both traditional and Western), in Thailand and abroad. Ideally, we’ll establish additional R&D projects with these manufacturers, to identify exactly what they need from us in order to produce those projects for which their customers will pay the most.

One thing that we’re hearing from the other attendees here at ArcView’s Vancouver event, is that there is a massive global shortage of high-quality CBD relative to market demand. So, we don’t think that there is going to be any problem selling our “first extraction” of oils, extracts, and isolates from 20 hectares’ worth of bud.

In 2020, and in each subsequent year, we expect to pay a dividend. We expect dividends alone (ignoring capital appreciation) to return 10x the initial share price within four years from today.

Note that Thailand is aggressively seeking, and rewarding, foreign investment. An EU-Thai Free Trade Agreement is being negotiated now.  Thailand already has 14 Free Trade Agreements in effect (click on “Thailand” here), including deals with China, Japan, Korea, ASEAN, Australia and New Zealand.

If and when Thailand legalizes higher-THC cannabis, we expect to be well-prepared, as we expect our growing system to be optimized for maximizing cannabinoid output per hectare, irrespective of the cannabinoids targeted.

We do not expect to need to seek additional equity funding in the future. We expect to fund our growth through the re-investment of profits, and, if necessary, loans from Thai banks. This means that we do not expect that our investor’s ownership will be diluted by any future funding rounds.

Even assuming that the market price of our products falls by 33% per year (as we expect it will), we expect to be earning profits in the billions — yes, billions — within five years, and to continue to earn billions each year thereafter for at least ten years. If the market price of our products were to fall even faster and further, then we could be forced into a loss-making situation. However, our costs are so low (10 cents/gram for wet bud, at scale), and our value chains so short and efficient, that we expect to be among the Last Producers Standing, to survive the commoditization bloodbath, and to regain market share and margin once the bloodbath ends.

Please do note my careful use of the phrase “we expect to,” not “we will,” because prediction is hard, especially about the future. The race goes not always to the swift, nor the battle to the strong, nor bread to the wise, nor riches to men of understanding, nor favor to men of skill; but time and chance happeneth to them all (Ecclesiastes 9:11). The forgoing description of our plans is a series of “forward-looking statements,” which may not work out as we plan, despite our best efforts.

Respectfully,
Jim Plamondon
VP/Marketing
Thai Cannabis Corporation
Chiang Mai, Thailand

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