James E. Wagner Cultivation Corp (CVE:JWCA) (OTCMKTS:JWCAF) CEO Nathan Woodworth has nothing but praise for the company’s GrowthSTORM system. Woodworth explains that the company has reached a licensing agreement with Wellness Farms Inc for the use of JWC’s GrowthSTORM system. Woodworth notes that the GrowthSTORM system improves a variety of plant metrics and JWC intends to license its technology to many players in the cannabis space. The GrowthSTORM system produces high-quality product at a high volume with virtuually zero crop loss. Woodworth sees a need for this system in the Canadian cannabis space to address shortages in the recreational and medical markets.

Transcript:

Narrator: James E. Wagner Cultivation is a licensed producer of cannabis in Canada, with operations based in Kitchener, Ontario. The company uses an advanced and proprietary aeroponic platform named GrowthSTORM. GrowthSTORM is designed to achieve a balance of air and water at the root zone, and a more controlled delivery of nutrients to improve the plants’ health.

This proprietary system is designed to eliminate all contaminants from the cultivation facility, allowing for a controlled growth environment to provide clean and consistent cannabis every life cycle.

James E. Wagner Cultivation trades on the TSX Venture under the ticker symbol JWCA.

Benjamin A. Smith: Welcome back, everybody. In our studio right now we have a very special guest, one I’m very familiar with and like very much: Mr. Nathan Woodworth from James E. Wagner Corp.

Nathan Woodworth: Oh, thanks very much, Ben. We’re very fond of you, too.

Benjamin A. Smith: [laughter] Thanks, Nathan. Now, I want to get right into yesterday’s press release. It had been a fairly slow news cycle over the past couple of months, but yesterday you broke out of that: you announced that a royalty agreement with Wellness Farms about the deployment of your GrowthSTORM dual-droplet system. Can you tell us of the significance of that agreement, and whether you expect more licensing agreements going forward?

Nathan Woodworth: Absolutely. You know, it has been a slow news cycle; we’ve been focusing on executing, and we’ve been in talks with a lot of different companies to license our technology. You know, aeroponics is a fundamentally revolutionary technique, and the GrowthSTORM methodology is as revolutionary to aeroponics as aeroponics is to other cultivation methods.

So we’re very excited to have signed a definitive agreement with the Wellness Farm team. They’re a terrific team with a really strong, you know, growth side, and a business side, which I think makes them the ideal first partner for us. And there’s a lot more to come there. You know, we’re targeting some rapid growth in that area, and we want to license this technique out to both established LPs and to new licensed producers looking for the right methodology. And it is established as a royalty or streaming agreement, which means that there’s minimal burden on our partners upfront, ensuring their success and allowing them to launch out of the gate as quickly and as easily as possible.

Benjamin A. Smith: Great. Now I understand that you have some publishing, you’re going to publish some data on the GrowthSTORM dual-droplet system; I think that was scheduled for the first half of 2019. Is that still on track, and what should investors expect once that data comes out?

Nathan Woodworth: So it is on track. We’re actually just in the process now of implementing the new dual-droplet technology across our entire platform; we’re very excited about it. You know, I think it’s going to yield some really significant improvements in plant health metrics of all types. We’ve seen that on our prototype runs, and I think we’re going to refine to an even more extreme improvement in the current mature form of that technology.

You know, fundamentally what we’re doing is separating out our nutrient solution. All nutrient salts are different, and as we separate out into two separate solutions and deliver them in two separate droplet sizes, we’re optimizing in a way that hasn’t even been considered yet.

You know, our products are often compared to some of the best in the industry, although we haven’t had the opportunity to distribute to too wide an audience yet. We’re looking forward to our new facility coming online and doing so, and we believe that fundamentally, you know, the user/consumer will respond even more positively to material grown in the new dual-droplet system. And we are going to put together a report and publish some comparisons which, you know, we’re going to compare to traditional methodologies, we’re going to compare to the original GrowthSTORM system, and I think there we’re going to see that steady increase in our ability as we continue to expand our technological reach.

Benjamin A. Smith: Well, that’s great news, considering some of the substandard LP bud out there; obviously, that’s a work in progress. So it seems like there’s an opportunity for a good cultivator to come in and increase market share. Now, I want to switch gears to, you were saying how JWC, how you’re expanding JWC II and you’re currently waiting for your license and for that to happen on the JWC II portion of your complex in Kitchener. Are there any timelines of when investors can expect that to come online? Have you received any indication, and can you tell us how you plan on – how the scaling process is going to happen, once that licensing, once you’ve procured that licensing?

Nathan Woodworth: So you know, I can’t ever speak with certainty when it comes to licensing timelines, you know? I’ve been in this business long enough to know that’s in someone else’s hands. On the other hand, we’re in active communication with Health Canada and with other licensing elements there, and everything seems to be moving rapidly. You know, we are a very compliant LP, and we are very up to date on our SOPs and on all of those procedures. You know, we’ve designed a rapid implementation paradigm using the support of our pilot facility; within the first week of bringing plants into that facility, I expect to have plants in flower and we’re going to quickly ramp up from there.

You know, our goal is to constantly maximize our efforts as we ramp up into that facility, and we’ve set everything up which we believe will support that in the long run. In the meantime, we’re not standing still; you know, we’re building, we call our groups of grow rooms pods. Each of our pods contains about 8, or the equivalent of 8 of our grow rooms’ worth of space, and we’re going to bring on a second pod sometime in the next six weeks or so. Month after that we’ll bring on two additional pods, and we’re going to keep building. There’s no reason to stand still, here. We can produce high volumes of top quality product, and the industry needs that, as you observed earlier.

So you know, we’re going to keep pushing toward bringing on more and more space over the next few months, and we hope those products will be available in the recreational market as well as the medical market in hopefully a short period of time.

Benjamin A. Smith: Great. Now, can you explain to the viewers who are not aware of the aeroponics growing methodology, can you explain the differentiator advantages that James E. Wagner has versus conventional, you know, the conventional LP with a conventional open layout greenhouse? How do you stand out from those type of conventional growers?

Nathan Woodworth: I think there’s a lot of different methodologies out there. So trying to answer that in a general sense, I think I go back to some of the general advantages of aeroponics. With aeroponics, we can create a perfect root system; you know, those perfect roots are a result of the roots hanging suspended in the air, and we mist them with a specialized designed nutrient solution. And you know, that optimizes the roots’ own growth, which translates into optimized growth within the canopy.

And when you optimize a plant, suddenly you have the ability to control the total system. You can create a reproducible, repeatable result, which means that you’re going to produce the same high quality product every time. We can maximize our yield; you know, in the last quarter we averaged about 210 grams per plant; you know, other companies that report this number report numbers up to 154 grams per plant, so we’re significantly above the average there. And we’re going to continue to work toward that optimization.

You see from some of the pictures in the background there that our canopy is dense and regularized. So we’re able to continue to drive high volumes of plants through that process.

Another significant element which is often overlooked in our industry is crop loss. It’s really easy to lose a cannabis plant. You know, in the last four months or so, we’ve grown about 900 plants at our pilot facility, and I believe we’ve lost between 6 and 8 of those plants, which puts our total crop loss numbers in the very low single digits.

Benjamin A. Smith: No, it’s funny that you mention that, because I was actually speaking to a private cultivator out in BC yesterday, and he was theorizing that a lot of the LPs have actually, the crop loss actually reaches over 50 percent in some of these cases as they’re still working out some of the kinks. So your crop loss is actually that low, you know, within, you know, as you said, 6 or 9 plants out of 900?

Nathan Woodworth: Yes. And I believe, you know, we’re going to continue to shoot for a number below 1 percent; that’s going to continue to reduce over time. You know, there’s no reason to lose a plant if you have perfect control over the system, and one of the things that I’m fond of saying as a person who’s been growing for many, many years, I don’t take the title of Master Grower because once you’ve mastered growing, you don’t need a Master Grower, and the system is that mastery.

So bringing the GrowthSTORM system into your facility will grant you the ability to produce crop after crop with almost zero loss, high quality product, again and again. And really, you know, that ability to do that also results in some tertiary benefits. You know, we do bring out high volumes of product from our grow rooms and we do it on a repeatable basis, but the product that we grow out frequently has zero biological contaminants. Other companies use gamma irradiation, very powerful radiation, in order to destroy any biological contaminants in the material. After the irradiation process, it tests as zero. No bioremediation. Our product tests as zero.

Benjamin A. Smith: So do you expect that once you, even when you’re at full capacity, do you expect that some of your product coming out will not need irradiation at that point? Because there’s been some speculation that that’s drying out some of the product that we see in the marketplace right now. Do you expect that that won’t be necessary, or does it kind of depend on a crop-by-crop basis?

Nathan Woodworth: JWC has never sold a gram of irradiated cannabis, and we never will. There is no need to irradiate quality cannabis; it is a process which, despite the fact that, you know, scientifically, I don’t necessarily agree that it damages the product, I understand that the consumer doesn’t want us to do it. And we’ve come up with better ways to moderate that process. We can, in this industry, avoid irradiation if we use the proper controls. You know, our grow rooms are clean rooms, and everything in there is passed through multiple levels of sterilization upon reuse. The air is cleaned in four different ways, you know, the possibility of contamination is very low.

So you know, my brother is our QAP, and he and I have frequent conversations about what product we would be willing to sell. And we have drawn a fairly firm line: you know, we don’t feel that there’s a need for us to do that, and so, you know, none of our dried flower will ever undergo that process.

Benjamin A. Smith: Okay, great. And lastly, I wanted to ask you about organic certification. We wrote a story, or I wrote a story on Midas Letter a few months ago where you mentioned that that was on the roadmap, or you think that it will be eligible for that? Any timelines on that, although you can’t predict?

Nathan Woodworth: You know, I think it’s an ongoing discussion. There are some restrictions currently in the way they maintain organic certification, which makes it, in some degree, based on the roots being encased in soil.

Benjamin A. Smith: Really? So they don’t make exceptions for that, or?

Nathan Woodworth: Yeah, well, I’m –

Benjamin A. Smith: You’re working on it!

Nathan Woodworth: We’re working on that. In the meantime, I’m preparing to produce product which uses only organic inputs. You know, we can produce material which uses organic nutrients, which doesn’t use any harmful chemicals. We can produce product that has all of the benefit of an organic product. You know, that certification is a gateway that is controlled by others, and we will certainly do our best to navigate through it; but you know, I think it’s often the case, when you come up with a very advanced new idea, that it isn’t fully understood and appreciated by all who are involved.

So I hope in the long run that we can sway some hearts and minds in that regard, and we are still actively pursuing it.

Benjamin A. Smith: But whether it is or not, it’ll almost be like organic cannabis in a way? The quality of it?

Nathan Woodworth: What makes something organic is really the question at hand. To me, using all organic inputs, growing from materials which are sourced organically, this is what people look for in terms of the quality associated with an organic material. And so I think we can achieve that; whether it’s something that people associate the same value with is another question. I’ll leave that to them to decide.

Benjamin A. Smith: Well, great interview, Nathan. Thank you for showing up on camera, I appreciate that.

Nathan Woodworth: Anytime, Ben. Happy to be here.

Benjamin A. Smith: We look forward to following your story more.

Nathan Woodworth: Great.