Article content continued

James West: Wow. So you guys really have, you have the barrels loaded when it comes to the marijuana industry.

Mike Gorenstein: We like to think so.

James West: Yeah. Okay, Mike, now just because I suffered from this confusion, so I’m going to assume that some of my followers/listeners/readers did as well: I didn’t realize that Cronos Group was formerly PharmaCan, and maybe you could shed some light on how Cronos Group came from being PharmaCan to being Cronos Group, and what changes happened in terms of management and shareholders.

Mike Gorenstein: Sure. So part of it is just helpful to give you my background. I was originally based out of New York at a hedge fund, Alphabet Partners, and I managed a $900 million volatility based fund. There were a few sub-funds in captive capital pools; I managed to bench a portfolio, and a little over two years ago I set out to try and find exposure in the cannabis industry in the U.S. For a number of reasons, it was very difficult for us to find something that we deemed investable, whether it’s because the companies were short-term solutions to short-term problems such as cash management, card processing, consignment. Companies weren’t scalable on the cultivation side because we felt there was difficulty for them to expand beyond the state boundaries; you’d have to comply with what’s known as the Cole Memo, the tax regime is very punitive.

As we were looking around, we were certainly finding it hard to invest in the U.S. for a number of those reasons, and someone actually came and asked if we were interested in investing in a SPV that was going to acquire a company known as In The Zone. We looked at it, we started diligencing the Canadian space, we loved the regulatory framework, we loved how scalable each of the LPs was, the high barriers to entry, the opportunity to distribute internationally, and we really looked at Canada as the gold standard of compliance, and something that we could build our platform off of.