Invictus MD Strategies Corp (CVE:IMH)(OTCMKTS:IVITF)(FRA:8IS1) Executive Chairman Dan Kriznic sat down recently and laid out the company’s goal of becoming one of the top licensed ACMPR cannabis producers in Canada.

James West: Dan, thanks for joining me today.

Dan Kriznic: Thanks for having me.

James West: Dan, why don’t we start with an overview: what’s the value proposition for investors in Invictus MD Strategies Corp?

Dan Kriznic: Yes. At this point, our main goal is to be one of the top licensed producers in Canada. We’ve since acquired over the last six months, two licensed producers, a third in Hamilton, Ontario, a company called A B Laboratories, and another one we just acquired two weeks ago, 100 percent of Acreage Farms, the second actual licensed producer out in Alberta.

James West: Okay. So you’re a consolidator of ACMPR licensees in Canada?

Dan Kriznic: At this point, consolidator wouldn’t be the right word. We’re looking at a footprint across the country, but not necessarily in every single province. So we’d like to kind of build out economics with the current ACMPRs that we have, but we’ll continue to look at other opportunities if they arise. But I would say at this juncture, we’re looking for definite expansion, because we’ve got 150 acres in Alberta; we’ve got, we’re just about to acquire another 100 acres in Hamilton, so we’ve got a very large land footprint to be able to build as many square feet as we require for the upcoming recreational market.

James West: Right. Okay, so are you – how many acres or square feet do you have under cultivation collectively right now?

Dan Kriznic: Currently we have 7,000 over in Alberta, with a 30,000 square foot expansion plan currently underway, and then we’ve got 16,000 square feet in Hamilton, Ontario. And with our expansion plan on the 100 acres within the next 12 months, we plan to put on another 42,000 square feet.

James West: How many ACMPR patients do you have?

Dan Kriznic: Right now we’re still in cultivation only, so AB Laboratories just received their license to cultivate on October 21st, and Acreage Farms just received their license to cultivate last month.

James West: Mm-hmm. Okay, so in that you’re targeting becoming one of the largest, so you’re setting your sights on basically the same positioning as Canopy, Aurora and Aphria, the biggest ones?

Dan Kriznic: Of course. So it’s still early days; right now we’re talking about patients, right? So by 2020, the estimate is going to be 150,000 kilos for the medicinal market, but 600,000 kilos on the rec market. So we’re gearing up to get enough square footage and buildout for the rec market that’s coming up, and that’s going to include various branding. We’ve hired our VP of Marketing and Communications; he used to be the Chief Marketing Officer of a large education company, very used to branding and bringing in students, but we’re looking at obviously bringing in clients.

So even though that we’re a bit behind in terms of a sales license and getting patients, we’ve already had significant demand for patients within our marketplace, and as we continue to work towards this July 2018 recreational market, we’ll be one of the top guys in terms of square footage at that point.

James West: So there aren’t a lot of growers in western Canada at this point?

Dan Kriznic: There are in British Columbia, but not in Alberta. So in Alberta there’s only Aurora and Acreage Farms, and we own 100 percent of Acreage Farms.

James West: And is the location of the provider of ACMPR-grown product important to the consumer, in your opinion?

Dan Kriznic: I think as we kind of move towards provincial regulations, so as we go into this rec market, we’re talking to Health Canada and the Federal government is talking about regulating it provincially. So I think to have a footprint in various provinces is pretty important.

James West: Okay. Is there any aspect of your approach to plant science that differentiates you from the other ACMPR growers?

Dan Kriznic: At this point right now, it’s about getting strain selection. Right now, there’s a lot of new growers coming online that actually don’t have a lot of access to starter material, but as we continue to look at the international market and work with Health Canada and get seeds from other areas, I think a big part of that is going to be, as I mentioned, strain. Number of strains, and the various different kind of strains, whether we’re going down the medicinal route or the recreational route, and whether it’s going to be high CBD for people with epilepsy or high THC for cancer patients or high THC for the rec market. I think strain selection is going to be a big player.

James West: Sure. So right now, do you source your genetics from other genetics providers licensed by Health Canada?

Dan Kriznic: Correct.

James West: Okay. So in your view, do you see that the ACMPR marketplace is becoming a little bit saturated in anticipation of this rec market, and do you think that there’s going to continue to be room for companies that are setting out to grow 150,000 kilograms per year, much longer?

Dan Kriznic: At this stage, there’s 43 licenses, so I don’t think it’s saturated at this point. We’re talking 720,000 kilos between the rec and the medicinal side. My conversion is about 10 percent, so you need about 7.2 million square feet to grow that, and that’s not currently out there.

Whether Health Canada is going to continue to provide licenses is to be determined; much more have come online in the recent months. But as we look at Health Canada and their ability to continue to regulate and manage these licensed producers, it’s going to become very difficult for them, right? If there’s going to be 100 in the next, say, year, that could be impossible. But if you look at the Colorado market that’s saturated, there’s over 450 cultivators out there, and it has depressed prices, etcetera, I don’t really see that happening in Canada just yet because I don’t see that Health Canada, with all their rigour in terms of inspection and going in to continuously monitor these licensed producers, I just can’t see them being able to monitor that many.

James West: Right. Okay. So then in terms of the rec market, how do you see yourself positioning Invictus relative to other companies? Is it going to be a sort of a western Canadian brand that will attract recreational users in western Canada? Or are you going to go the path of celebrity endorsement, or have you got far enough down the road to think about that yet?

Dan Kriznic: Yeah, definitely it’ll be about branding. Branding has to start now, regardless of the rec market coming down later; we want people to recognize our brand early on, so once it comes fully into recreational, they understand it. celebrity endorsements, I’m not a huge believer in; I haven’t seen it work. The US have tried it, a lot of the guys have been trying to endorse celebrities and get them to help sell product, but I just don’t see that as a key.

I think that, just like any other business, branding is going to be very important, and our pasts between myself and our VP of Marketing, when we built Canada’s largest education company, it was all about branding. So we’re just going to take what we did in the past and apply it to this industry.

James West: Okay. So your background is in the education industry?

Dan Kriznic: Correct.

James West: Could you maybe elaborate on your last successes?

Dan Kriznic: Yeah. So we built Canada’s largest for-profit education company in a period of four years, spanning 1,300 employees from Vancouver Island to Quebec City. 42 campuses with over 7,000 students, all private education, post-secondary. In terms of what we did since then, I basically left that to start Invictus; that was kind of the key goal. So exit on a number of divestitures within the space, and then started Invictus and incubated that as something I sort of wanted to cookie-cut in a different industry, but with somewhat similar attributes: highly regulated, very much driven by brand.

And in education, it’s about student acquisition, and cannabis right now is about patient acquisition. So taking a lot of the skill sets that we were able to be successful in the past, and applying it now.

James West: Okay. What other challenges do you see ahead for new entrants like Invictus into the ACMPR space who are, you know, there’s an increasing number of companies coming in under ACMPR, but really, they’re positioning for the recreational market, as, arguably, are the incumbent ACMPR growers. So for you, what challenges do you see that you’re going to have to overcome being a late starter?

Dan Kriznic: I would say the challenges, not necessarily that we have to overcome but the whole industry has to overcome, is quality. And what’s happening right now is you’re reading about various different pesticides that are going into the product, recalls that are happening…so when I look at our team and what we’re doing, we also own a fertilizer company. So we kind of control right from the nutrient side all the way to the end product, so in terms of what nutrients we use and what goes into the plants, it’s very much controlled.

So I think that quality and, let’s say, quality control is going to be a big challenge for all, and we’ve seen it in the marketplace.

In terms of us individually, from a challenge perspective, it’s going to be like any business. It’s going to be build a brand, make sure there’s enough capital to build expansion, build proper, you know, we’re not about buying buildings and then retrofitting; we’re about building from scratch, because it makes so much difference when you’re building from scratch. So, you know, I think that we’ll see over the next year or two, as we go into the rec side, that there’s going to be a few challenges and a few risks, but in general, it’s an industry that has been around for decades. It’s not something new.

People talk about ‘tech bubble’. This is not a tech bubble. This is, like I said, this has been a dark industry for years and now we’re bringing it to the light, and we’re able to capture tax revenues, etcetera off of it, and it’s something that society is accepting. So I think we’re going to embrace all the challenges that we might face.

James West: Okay. And finally, as an individual from the education industry, who do you have on your team that sort of you can point to and say, this is the guy who’s driving the bus in terms of plant science and genetics and everything?

Dan Kriznic: Yeah, so we hired a guy out of the US for our Chief Horticulture Officer, Phillip Haig. Phillip Haig has been, he very much understands the genome and understands cradle to grave from building facilities – he’s built a million square feet of licensed facilities in the US. He’s currently working on half a million square feet in New York, 125,000 square feet in Chicago, and his whole background has been plant science. He’s been on the team now for about six months, so he’s helping us build our facilities, he’s helping us source strains and seeds, he’s been featured on 60 Minutes, National Geographic…he’s very well known in the space.

So I would say that he’s been our kind of key guy within the team to be able to take that to the next level.

James West: Okay. That’s great. We’ll leave it there; I’ll come back to you in a quarter’s time and see how you’re doing. Thanks so much for your time today.

Dan Kriznic: Right on. Thanks for having me.