Dear MCIG Shareholders:
I would like to take the opportunity of this letter to introduce myself to you. My name is Mike Aertker and I was asked by the Board of Directors to assume the position of Co-CEO of MCIG in July of this year. This is both an honor and an exciting opportunity to pursue new challenges where I could have never predicted my career would take me. In hindsight, I never realized the parallels between the emerging legal cannabis industry and the career path I have taken to this point and see a highly relevant convergence between the two. Upon graduation with a Bachelor of Science Degree in Biomedical Engineering (Tulane University), I began my career in biomedical research where I would remain for nearly two decades. During that time, I also earned a Master of Science Degree in Biomedical Engineering and an MBA (both from Tulane University) while I advanced to a senior leadership position within the organization. My experiences in biomedical research taught me important lessons in critical thinking, planning, strategy, complex facility design/operations and leadership.
The next stage of my career provided an emphasis on international business development for sales of mobile and modular laboratories globally. This work gave me great insight into operating globally and nuances of cultural influences on how business is conducted in different parts of the world. Additionally, it enhanced my knowledge of specialized mobile and modular facilities that also have so many applications to the cannabis industry.
I come to MCIG at a difficult time in its history as the value of our stock has fallen significantly over the last 12 months. My primary focus, along with the MCIG team’s, is to chart a new course for the company to ensure both immediate growth of the company and sustainability into the future. We will accomplish this through the following:
- Expansion of current successful divisions
- Addition of new divisions which can provide substantial value to MCIG
- Investments in companies and technologies that are proven and show strong earning potential based on current market conditions
- Promotion of proven MCIG brands
- Honest and timely communications with our shareholders
The past 12 months for MCIG have not seen growth or innovation and this is reflected in our stock price. We are at an exciting time in the cannabis industry and there is a myriad of opportunities for us to both innovate and grow. Our past failure to grow new business during this time and continue to innovate and increase our own efficiencies contributed to the performance we experienced. Despite this, I firmly believe that MCIG has a strong model and talented team that will be able to rebuild the value of the company and capitalize on the current opportunities in the cannabis market. I would not have accepted this position if I did not have an absolute belief that this is the case and that we can be successful moving into the future.
Plan for the Future
I have spent that last two months meeting with the MCIG team and divisions and exploring new opportunities for the company. This has entailed understanding how current operations work as well as looking for the best opportunities for capitalizing on the strengths to grow our operations and value. A greater emphasis will be placed on true vertical integration where MCIG will have direct operations or investments in companies that will process raw product to final use consumer goods. We are working on several exciting projects that we strongly believe will result in the growth of MCIG-owned assets and greater opportunity for participation in all phases of cannabis product development from harvest to retail product. Key to our model moving forward will be looking for opportunities where we can leverage the efficiencies of true vertical integration to increase both company assets and revenue. MCIG currently has two categories of business as our model: wholly/partially owned subsidiaries and investments in cannabis-related technology. Following is an update on these and more specific plans for each.
Cannabiz Supply is a one-stop-shop for supplies that are needed by cannabis cultivators, production facilities and dispensaries. This is an excellent business model for several reasons. Firstly, these businesses in the cannabis space all require specialty items and Cannabiz Supply is able to provide them and deliver products locally to their facilities. Secondly, supply of packaging and labelling to cannabis companies is a much needed component of their business as it must follow state-mandated regulations and is both prescribed specifically and crucial component to their compliance with the laws governing the cannabis industry. This is a very strong component of the Cannabiz Supply model and an area in which we intend to grow.
The Cannabiz Supply model requires scaling up to increase revenue. We see strong potential for further growth locally in Nevada, Southern California and in states where cannabis legalization has recently occurred. The first step to growing Cannabiz Supply will be the addition of sales, marketing and inventory personnel to provide the necessary support to develop additional customers in Nevada and Southern California. Nevada and California have a high number of licensed cannabis businesses currently in operation. Each of these license holders is a potential customer and we believe the first step toward growth of Cannabiz Supply is adding sales, marketing and administrative personnel which will occur in the coming months.
The second step to growing Cannabiz Supply will be leveraging of current customer relationships to their other locations. As there are strong customer relationships already in place, this strategy allows for an effective way to grow revenue for the company. Cannabiz Supply has just negotiated such a deal with a large production facility in California that will add substantial revenue to the company. Cannabiz Supply will continue to look for similar opportunities with other current customer as well as seek new customers to add to their portfolio.
Third, we will look to expansion to states that have recently legalized cannabis as new markets. This has already begun in Oklahoma with some customers who have expanded their operations there. The Cannabiz Supply model is one that is very conducive to duplication in additional markets as the products needed are similar and adjustments can be made to comply with packaging and labelling requirements in each jurisdiction. Expansion in these markets will require additional cost over what local expansion will require so this will be implemented at a future date once additional revenues are seen from local expansion efforts. That said, we strongly believe that Cannabiz Supply can experience significant growth in these emerging markets in the near future.
PureQuest Ozone Technologies/Cannabiz Supply Partnership
A prototype of the CannaPure post-harvest treatment system is currently being tested for its ability to eliminate microbial contamination of cannabis post-harvest. Initial lab test results indicate this to be a highly efficient process and capable of turning failed product into product that meets regulatory requirements after a 4-hour cycle. Many cultivation facilities are seeing failure rates from 15% to as high as 40% for their harvests and with the CannaPure’s ability to eliminate microbial contamination from cannabis with this process, this will result in huge savings to the value of their product. Cultivators can pretreat all their product ahead of lab testing to ensure it will have the highest value. This has the potential to be a game changer in the cannabis industry and will have a significant positive impact to the bottom line for cultivators. We believe that this technology has significant potential to be a highly effective tool for the cannabis industry and will continue to support and develop this product to best meet the needs of our customers and the future of the cannabis industry.
AMARE Technologies, Inc./MCIG Partnership
The initial testing of the efficacy of the AMARE Technologies lighting systems versus other manufacturers showed excellent results as indicated by laboratory testing. The AMARE Technologies lights accomplish these results while providing greater coverage and much lower operating costs (current draw and heat load) than competing lights. The greater coverage provided decreases the number of lights needed for a given space and further lowers the startup costs associated with new grow spaces. The lower heat load has a significant impact to the amount of air conditioning that is needed for indoor grows in hot climates. This will result in very large savings to facility HVAC costs as well as the ongoing electrical costs to cool the space. We are very excited by the initial results that we have seen with these amazing products and are very optimistic about the market share we believe they can occupy in the near future.
CA City Production/Distribution Facility
In 2018, we announced the acquisition of 2.5 acres of land in California City, CA and were one a few companies granted three recreational licenses by Kern County for cultivation, manufacturing and distribution and a license for distribution from the state of California. We are committed to advancing this project and seeing it become an active cultivation, manufacturing/production and distribution hub for cannabis products, equipment and supplies needed for the cannabis industry. This project is of great importance to me as I see this as key to bringing true vertical integration to the MCIG model. We are currently in the process of securing the necessary financing needed to complete a production facility and secure the equipment so that we can begin operations in 2020. We are also in the process of preparing to apply for the cultivation and manufacturing licenses from the State of California. The cannabis market in California is very strong with retail stores selling $2.5B worth of cannabis products in 2018. Our entry into this market for manufacturing and distribution will be an important part of the growth of MCIG.
VitaCig Inhalation Technology
VitaCig is a wholly owned subsidiary of MCIG which was launched in 2014 and is the first and original electronic vitamin administered through an essential oil diffuser. We have recently relaunched our VitaCig line with a new website and will continue to develop new product lines for the brand. As part of this relaunch, we have developed new products (“Cool Citrus” and “Stress” Excalibur capsules) with more to come. Additionally, we have expanded our reach by growing our network of international partners and local distributors so that we can reach more consumers.
Outlook for the Future
All estimates for the growth of the legal cannabis market in the US as well as overseas show that all sectors will experience significant growth in the next few years. MCIG will be positioned in multiple sectors to take advantage of expected growth as well as to mitigate risk from any single sector being affected by outside factors. We are formulating a strong plan to ensure growth in the near term as well as into the future. Our focus is on expanding where we have been successful and carefully pursuing new opportunities that add value to the MCIG brand. True vertical integration will be key to our model moving forward as we believe this has the greatest positive impact to the value of the company. As a company, we strive to improve our communications with our shareholders as we work to grow the company. Our team sees strong opportunities in the industry that we can leverage and we are all working hard for you to make MCIG an even greater success again.
About MCIG Group
Headquartered in Jacksonville, Florida, mCig, Inc. (MCIG) is a diversified company servicing the legal cannabis, hemp and CBD markets via its lifestyle brands. mCig, Inc. is committed to be the leading distributor of technology, products, and services to fit the needs of a rapidly expanding industry. mCig, Inc. employs a world-renowned tech team and has recently expanded its products and services to satisfy its evolving role in cannabis and hemp markets.
The Company has been featured in media nationwide, including CNBC, Bloomberg, TheStreet.com. For more information, visit www.mciggroup.com.
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This press release may include predictions, estimates or other information that might be considered forward-looking within the meaning of applicable securities laws. While these forward-looking statements represent the Company’s current judgments, they are subject to risks and uncertainties that could cause actual results to differ materially. You are cautioned not to place undue reliance on these forward-looking statements, which reflect the opinions of the Company’s management only as of the date of this release. Please keep in mind that the Company is not obligating itself to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events. When used herein, words such as: potential, expect, look forward, believe, dedicated, building, or variations of such words and similar expressions are intended to identify forward-looking statements. Factors that could cause actual results to differ materially from those contemplated in any forward-looking statements made by the Company herein are often discussed in filings the Company makes with the United States Securities and Exchange Commission (SEC) available at www.sec.gov and on the Company’s website atwww.mciggroup.com.
SOURCE: mCig, Inc.