You need certain key ingredients to successfully grow a business from the ground to the point where a buyer might pay a premium for it.
Luck is always near the top of the list – Napoleon’s ‘give me a lucky general’ maxim applies as much in business as it does in warfare.
However, there are a number of other attributes that, if missing, doom a company to failure.
READ: Kaneh Bosm BioTechnology announces listing on US OTC market
An experienced management, access to capital and a clear strategy that plots a course to the exit are three.
None of those work if there isn’t also a viable market; though the ideal is to target an arena where competition is low and the barriers to entry high.
In Kaneh Bosm Biotechnology (CSE:KBB, OTC:KNHBF), these ingredients are there in abundance.
The name first. Literally translated the first two words mean 'fragrant cane' and come from the Old Testament reference to cannabis in Exodus 30:23.
So no prizes for guessing, KBB is a cannabis company.
But unlike the giants of the industry such as Aurora and Canopy Growth, it wants to expand outside North America.
Its transformation in the last eight months reveals it is already part-way to realizing its ambition as it now has operations in Europe, South America and Africa.
In all, it has six discrete units that make it a vertically integrated ‘seed-to-sale’ operation.
Marathon Globa has an exclusive agreement with Cosmos Holdings
Through subsidiary Marathon Global it has an exclusive agreement with Cosmos Holdings, a European pharmaceutical distributor that gives KBB access to 35,000 pharmacies in 16 countries.
EU Cannabis Corp, meanwhile, has a 90% interest in industrial hemp licences held by Cannatec Greece.
This allows it to cultivate, manufacture, distribute and export industrial hemp and its many cannabidiol (CBD) derived extracts.
CBD applies different qualities
For the uninitiated, CBDs are the inert, non-psychoactive compounds derived from cannabis, which are distinct from THC, which gets you high.
CBD cannabinoids are prized for their manifold medicinal qualities including pain relief and anxiety suppression.
Lucas Birdsall, a long-time adviser to the company, thinks CBD opportunities are just the start in Greece. It has applied for a medicinal cannabis licence there.
He describes Greece as the “gateway to the EU for KBB”.
Another way to look at it is as an option on the liberalization of cannabis laws in Europe.
“Eventually, as they come around to legalization across the EU bloc we may be able to parlay what we have into medicinal or recreational cannabis supplies,” says Birdsall.
Farmakem, is key to the portfolio
Key to the portfolio, too, is Farmakem, a revenue-generating licensed medical cannabis company based in Slovenia. “It works mainly on the R&D side,” says Birdsall. “It will complement our supply arm.
In CanAfrica Holdings, KBB has planted its flag in Africa with a Lesotho-based low-cost cultivation operation that can also manufacture, supply, hold, import, export and transport cannabis and derivative products.
The CSE-listed company is in Latin America via a mirror image business in Colombia called Cannabis Medical Group SAS.
We touched on the firm’s unique selling points earlier, but it’s worth understanding just what will propel this growing enterprise along the road to success in the coming months and years.
Management is key. Eugene Beukman, Michael Martinz and Brendan Purdy represent a strong and experienced leadership that will oversee the company’s buy-and-build strategy.
Birdsall points out that the company’s founders were behind one of Canada’s largest cannabis streaming deals, so there is plenty of industry knowledge there too.
Financial backing is also on tap with the group raised around $10mln thus far.
This brought in a number of savvy hedge funds, including MMCap International, which was an early investor in success stories such as Aurora, Canopy and Cannabis Wheaton.
New frontier for cannabis
Of the group of investors behind KBB, Birdsall says: “They are quite experienced at both understanding the next frontier of cannabis as well as understanding the licences we have assembled to date.
“They recognize the ambitious nature of KBB’s seed-to-sale objective. They are going to allow us to raise materially larger amounts of capital going forward.”
Mentioned earlier, the strategy is to buy, build and ultimately sell. A recent spate of transactions that’s brought the business this far is just the start of the corporate activity.
Birdsall reveals there are deals in the pipeline that management hopes will come to fruition in the coming weeks and months.
In fact, there is no shortage of businesses lining up to work with KBB. “We have access to the capital the founders don’t have and we’ve also run public companies,” says Birdsall.
He thinks there is huge potential as the cannabis revolution takes hold internationally. “We want to be part of that,” he says.
But ultimately it is also about the exit and handing the company on to a buyer who can take the KBB to the next level, he adds.
“We view ourselves as a very attractive take-out target for an enterprise model licensed producer.”