Vinzan International Files IPO Prospectus: Pioneering the Commoditization of Medical Cannabis Through Low-Cost Global Cultivation

In the past few years, the industrial hemp sector across major global stock markets has seen widespread gains, with surging cannabis indices becoming a common sight. The share prices of companies such as Canopy Growth Corporation, Aurora Cannabis, and Tilray have soared in public markets, and the industry shows no signs of slowing down.

However, beyond the stock market frenzy, operational losses in the medical cannabis industry have raised doubts among many insiders.

Cousins Brian Armstrong and Graham Armstrong believe that Vinzan International, which they co-founded, will reverse this industry predicament and lead medical cannabis companies into the 2.0 era.

According to statistics from Huizhong Research Institute, there are currently 14 publicly listed cannabis companies worldwide with a market capitalization exceeding $1 billion, five of which have reached a market capitalization of $5 billion.

Beneath the glossy market capitalization figures, undercurrents are surging that are causing growing pains for the industry. Vinzan revealed to VCBeat that most medical cannabis companies generally struggle to break even, remaining in a state of prolonged losses or slim profits.

This phenomenon reflects the two major challenges currently facing the entire medical cannabis industry: insufficient supply and excessive costs.

On the one hand, the approval process for cultivation licenses is highly complex. As the market has not yet established comprehensive quality control standards for medical cannabis, developed countries that have legalized cannabis must require enterprises to adopt greenhouse cultivation to ensure that various factors remain controllable. For instance, in Canada, a complete set of approval procedures is required for the establishment of each greenhouse. The limited expansion of cultivation areas and the intricate approval processes hinder the accumulation of economies of scale, thereby leading to supply shortages.

On the other hand, “Medical Cannabis 1.0” companies tend to build closed-loop business models and cultivate brand effects, while neglecting vertical specialization within the industry. These enterprises often cover the entire industrial chain, including upstream cultivation, midstream extraction and processing, mid-to-downstream pharmaceutical manufacturing, and sales. The lack of precise industry division has, to some extent, affected the supply volume and efficiency of medical cannabis.

Furthermore, the high costs of labor, electricity, and water in developed countries have also exerted certain pressure on controlling production costs.

Brian Armstrong and Graham Armstrong, two brothers, recognized the underlying drawbacks beneath the industry’s frenzied growth and presented a preliminary proposal for international cultivation to the original company’s board of directors. However, their recommendation was not adopted. Subsequently, they decided to strike out on their own by establishing a new company, aiming to turn this bold vision into reality.

This marks the beginning of the Vinzan International story. Brian Armstrong believes that applying the commodity trading model to the medical cannabis industry will inject new vitality into the sector.

As a successful entrepreneur, Brian Armstrong, Chairman and CEO of Vinzan, brings 28 years of experience in entrepreneurship and management. Over the past decade, the companies under his leadership have achieved an annual performance growth rate of 30%. Furthermore, he founded Canada’s largest B2B printing equipment manufacturing facility and led the company through its acquisition by a publicly listed entity.

His cousin, Grahman Armstrong, formerly served as an executive and board member of a prominent Canadian cannabis company and brings 12 years of experience in international trade.

It was the two brothers’ joint efforts that pioneered Vinzan’s unique business model, applying a commodity trading framework with a 150-year history to the medical cannabis industry chain.

Furthermore, two exceptional business leaders have provided a significant boost to Vinzan’s financial backing and market operations. Donald Stewart, the company’s Chief Financial Officer, previously served as Managing Director of Morgan Stanley Canada and held the position of Executive Chairman for 12 years. Kelsey Barnes, Vice President of Marketing and Operations, formerly served as Director of Operations at MedReleaf Medicinal; under her leadership, MedReleaf’s valuation grew from $750 million to $3 billion.

Brian Armstrong stated, “Under the leadership of this strong team, Vinzan’s IPO story will be distinctly different from that of other cannabis companies.”

“Traditional producers spend at least millions of dollars annually on power generation and irrigation facilities for greenhouse cultivation; we must have a better model.” Barnes, Chief Operating Officer of Vinzan, highlighted the company’s advantages: “We bring Canada’s leading expertise and extraction technologies to the world’s most suitable growing regions, thereby minimizing these indirect costs.”

As a pioneer exploring the “Medical Cannabis 2.0” model, Vinzan is the industry’s first medical cannabis company based in the world’s lowest-cost cultivation regions, operating through a B2B service model and leveraging a commodity trading framework.

First, Vinzan chose Laos and Southeast Asia, where cultivation costs are lower, as its bases; both regions allow for outdoor cultivation of medical cannabis, facilitating scaled-up production.

Secondly, for the upstream supply chain, Vinzan establishes contractual relationships with local cultivation partners, ensuring strict control over price and quality through purchase agreements. While cannabis cultivation inherently carries high risks, Vinzan can partially or even fully mitigate various risks associated with the cultivation process through these contracted procurement arrangements.

Following the acquisition, Vinzan established extraction facilities directly at cultivation sites. Leveraging proprietary purification technologies held by partner enterprises, the company processes cannabis to produce dried cannabis flowers and white-label medical-grade cannabidiol (CBD) products of varying purities, which are then supplied to the international market through downstream global partners and distribution channels.

This model has allowed Vinzan to secure a first-mover advantage in the cannabis trade.

After validating its self-operated model, Vinzan will establish international sales channels and collaborate with upstream planting and processing enterprises to help them distribute their products to global markets at higher prices.

Regarding competitors, Vinzan stated that while they are not the only company cultivating cannabis in the low-cost market, no other player has established such a clear and robust business model. Currently, some companies have adopted contract farming, while others focus on processing; however, Vinzan remains the sole enterprise in the market to integrate contract farming, processing, and global logistics into a unique commodity trading model.

Most cannabis companies have never considered focusing on Asia, as they believe the region lacks the legal environment necessary for developing a cannabis industry.

Graham Armstrong holds a different view, believing that Asia is one of the most ideal regions for cannabis cultivation and may even become the most developed region in the upstream segment of the medical cannabis industry chain in the future. Therefore, Vinzan, headquartered in Toronto, remains committed to establishing its cultivation operations in Laos and Colombia, with potential expansion into Thailand in the future.

Graham has a deep appreciation for the local customs and culture of Southeast Asia, spending several months each year in the region. He attributes Vinzan’s strong performance in the Asian market to its ability to build robust trade relationships on the foundation of respecting local cultures. “Entering countries like Laos requires a comprehensive understanding of their culture, customs, and regulatory procedures,” Graham stated. “On this basis, we seek to collaborate with local businesses to achieve mutual benefits.”

By chance, Graham learned from local friends that the Lao government was open to CBD extraction and had launched research into laying the groundwork for cannabis cultivation.

Graham accidentally discovered that Laos is a prime location for the cultivation and processing of medical cannabis.

First, Laos is located in a low-latitude region, offering natural climatic advantages suitable for cannabis cultivation, with two to three harvests per year—a yield significantly higher than that of North America. Second, cannabis can be categorized into two varieties: marijuana (cannabis) and hemp. The former contains high levels of THC (tetrahydrocannabinol), while the latter is rich in CBD. Laos has a long history of hemp cultivation, extensive planting experience, and greater ease in breeding high-quality seeds. Furthermore, as a member state of ASEAN agreements, Laos will benefit from more streamlined export trade procedures.

Ultimately, Vinzan successfully obtained Laos’ first license for the cultivation of medical cannabis and the extraction of CBD.

Currently, Vinzan operates a 10-hectare pilot plantation in Laos. The company projects that its production scale will expand to 70 hectares next year, reach 170 hectares by 2021, and achieve 230 hectares by 2022. It is reported that Vinzan’s CBD extraction cost in Laos is only $750, while the average purchase price for each kilogram of CBD extract is approximately $7,500, indicating a highly favorable profit margin.

Colombia’s strategic layout is driven primarily by considerations for the North American market. Taking transportation costs into account, Laos’s distribution markets are mainly Japan, Australia, and New Zealand. In contrast, Colombia, with its absolute advantage in transportation costs, will serve the substantial demand of the North American market. Similar to Laos, Colombia’s cannabis cultivation costs amount to only one-tenth of the wholesale price.

Furthermore, in terms of core technology, Vinzan’s engineering partner, Cyntek Industrial Inc., has mastered industry-leading CBD purification technology and has filed relevant patents. Regarding licensing, Vinzan has obtained comprehensive permits for cultivation, processing, and import-export trade in Laos; the acquisition of a fully licensed company in Colombia has also entered its final stage.

According to forecasts, Vinzan’s gross margin could reach 64%, with profitability expected as early as next year.

A few years ago, Colombia was hardly recognized in the medical cannabis industry, but it has now become quite common for cannabis companies in developed countries to collaborate with Colombian enterprises. It is believed that, as time goes on, the same trend will emerge in the Southeast Asian market, andVinzan, has already taken the lead in the industry.

Although the number of CBD drugs approved by the FDA remains limited at this stage and the market size for CBD pharmaceuticals has yet to reach scale, CBD has gradually become a highly sought-after product in the health supplement market. It is reported that CBD oil offers various health benefits, including anxiety relief, sleep aid, and antioxidant effects. Driven by the trend of population aging, the market size of CBD health supplements is expected to continue growing.

The ongoing relaxation of global cannabis policies has also provided a more favorable environment for the growth of the CBD health supplement market. Although Canada still maintains certain regulations on CBD health supplements, various U.S. states have gradually eased restrictions, allowing consumers to purchase CBD health supplements in supermarkets without a prescription. Furthermore, overall policy in Europe is becoming more lenient, with Germany having included CBD pharmaceuticals and health supplements in its national health insurance system.

Brian Armstrong stated that over the next five years, North America will undoubtedly be the largest market for medical cannabis, followed by Europe; Asia and South America will emerge as major cultivation hubs. Among these, Asia boasts superior infrastructure compared to South America and Africa, suggesting significant potential for growth in the cultivation sector.

Vinzan believes that establishing mature and stable global trade channels for medical cannabis will be the key to the success of its commodity business model.

It is reported that Vinzan is currently in the final stage of its Series A financing round.