Red Light Holland Corp. (TRIP.CN) Earnings Call Transcript & Summary

Hi, everyone. Welcome to the first ever livestream of the HighBrid Lab. We have some really exciting news for you that's why we're livestreaming across multiple platforms. So if you're watching us on Twitter or YouTube or Facebook, you can actually comment and we're going to be seeing all your comments. I can't promise we'll react on time, we really love to hear what you think. So I'm Sarah Hashkes, I'm the Chief Innovation and Technology at Red Light Holland. I'm going to invite Todd Shapiro to join us. Hi, Todd.

Thank you very much, Sarah. Thank you for also getting up very early. You're on the West Coast right now, so we do appreciate it. We also really appreciate every single one of you for joining us, really meet -- how we -- we're able to get to you on Facebook, on Twitter, on Twitch. We're pretty hit that way. And of course, we'll get you on YouTube. So thank you again for joining us. And huge news, massive news for Red Light Holland, and we're really excited to introduce the team of the potential merger here with Creso Labs and Red Light Holland, equaling The HighBrid Lab. This is an incredible day for us. We're so stoked that you're joining us. And please, without further ado, let me introduce to you the one and only -- I'm sure you all know him, we all love him, and the expected Chairman of the Board for The HighBrid Lab, Bruce Linton.

Well, thanks, Todd. And like one of my theories, it really is that if you're going to do one of these, the point of it is that you should be pushing the brand and talking about it but I challenge because I always wear a hat, thankfully because my hair, but I have 2 hats. And I highlight that and that one of the things I take with great enjoyment and pride in is introducing really interesting people that i think would connect and potentially complement in a way that isn't necessarily obvious but the strength could be amazing. And so I've been very happy to be involved with both these companies for some time, and I love that fact that when you connect people, they people, they connect the dots and create something better than I could have if I just tried to direct it myself. And so super complements to all of you for putting this together. I think that the strength and potential should be exciting. There's no corner of optionality that we can't explore under this concept of the Red Light, right? If it's available to that world of a zone to play, we can be there. And so I'd like you guys to take it away. I will explain to our folks, the only reason I'm dropping out is I have a senior high school student, which gives me exactly 35 minutes every morning to interact with him and then the rest of the day is subject to, subject to. And right now, I'm 5 minutes into those 35 minutes. And so I know you guys are going to kill it, but I'm also going to go catch up with that one so that I end up having somebody goes to first year college not to first year XXXXXXXXXXXXXXX.

Well, thank you, Bruce, for joining us. We really appreciate it, and you mentioned family. At the end of the day, this is really about a family. As we know, investing is something that people clearly want returns on their investment or excited by your revenue generation and everything that companies are doing. But if you think about a movement that we're behind, the movement represents family, the Red Light Holland movement and how it equates now with the Creso Pharma movement and everything that we think we can do with The HighBrid Lab. We are representing family. It's funny, Sarah Hashkes led us off, and we used to do the Red Light Army. And the Red Light Army took off on social media, and we thank you all for your support. And Sarah mentioned to me that maybe Army isn't the best approach. What does the Army signify in this day and age? So when we think of The HighBrid Lab, we think of The HighBrid Lab family. And I love that Bruce mentioned his family because that's really most important. As we know, it's been a tough time for a lot of us during COVID. This pandemic has really messed with a lot of our minds. It's been a very difficult place. And first and foremost, as we get into the presentation now with Will Lay, I want to thank you because during these tough times, we've recognized all of your support and all of your love. And of course, all of your interest. And we're here to answer your questions about this interest. We're here to explain this deal and most importantly, it's about a culture and companies create culture, but companies that are publicly traded with support and with those investors, that's the culture. A culture of this movement and a family and of connectivity and, of course, of transparency. So without further ado now, I'd like to bring on Will Lay, who's been announced as the Executive Vice President of Red Light Holland, of course, The HighBrid Lab. He's a chief strategist. He used to do multibillion-dollar mergers with Canopy Growth. We're so excited to have Will. I call him Goodwill Lay, like Goodwill Hunting, such a whiz kid. And Will, over to you as we talk about The HighBrid Lab, and then we'll bring on Adam Blumenthal in just a moment to talk about the Creso side of things.

Yes. Thanks, Todd, for the introduction in I'm extremely excited about the opportunity to be part of this, this great company with these new exciting opportunities ahead of us. I'm actually going to take a pause on this slide right here to introduce Adam Blumenthal, who is the Executive Chairman of Creso. I think it's beneficial to everyone who's watching the presentation to get a brief background on both the Creso and Red Light businesses and how they'll interact together and how the branding looks like and how it lines up together, before we get into the meat of the presentation. So without further ado, here's Adam and Sarah. If we can show the slide and slightly larger so that people can kind of follow what Adam is explaining on the slide, I think that would be really helpful.

Great. Well, thank you, Will, for the introduction, and thank you, Todd as well, and Sarah for putting this together. Good morning, and good evening to everybody who's listening, and thank you for your time. I'm currently Chairman of Creso Pharma. We are an ASX-listed company. We've been listed for the last 5 years. Our business is essentially split up into 2 main focuses. We have Creso Canada and Creso Switzerland. And in Creso Canada, we have a 24,000 square foot state-of-the-art cultivation facility called Mernova. We own the land that Mernova is on, and we own the surrounding land. And it's scalable up to 200,000 square feet. We've been operating that for the last 10 or so months, and we've been creating product and been generating revenue. And revenue has been growing quarter-on-quarter very, very consistently. We've been servicing the Canadian market, and we've been having a great, great response and uptake. We've got craft designation for one of our products, which is obviously very, very rewarding to a lot of the -- sort of the staff for their efforts. One of the benefits of this. Transaction is the CSC listing will allow us to now expand our offering from servicing the Canadian market now going into actually potentially America and other jurisdictions. So that's a very brief summary of our Canadian operations. Two of our well-known brands, is Ritual brand and Black Mamba, and you'll see a little bit more about that later on. Our other main focus, our second main focus is Creso Switzerland. For the last 5 or so years, a fortune of time, effort and capital has been put into creating our products. There is a fortunate deep industry know-how and connections. And from that, we've been able to create world-class state-of-the-art CBD products for humans and animals. And you'll see them, a few of those, a little bit later on. We split those products into Creso Topical, Creso Therapeutic and Creso Nutraceutical. And part of this collaboration is that we will be looking to collaborate and attempt to try and create new products from Red Light Holland's know-how and the Creso know-how. Such exciting ventures may include things like functional CBD mushrooms. And that's something that we're pretty excited about. And lastly, we're in the process of acquiring Halucenex psychedelics, that is a clinical trial R&D company, and we'll be closing that acquisition in the short term. We're pretty excited about that because it adds a new dynamic to our business. And the overall motto and our overall goal in the business is to better the lives of individuals, whether they're humans or animals. And that's what we're attempting to do, and we believe we're doing a great job. So that's a very quick summary of Creso. Thanks, Will. I'll hand back over to you.

Yes. And Todd, do you want to just give a quick rundown of the achievements at Red Light today, and then I'll get into the presentation.

Thank you very much, Will, Adam. Amazing explanation of Creso, especially for a lot of the Red Light Holland shareholders who maybe we're a little bit in the dark. And I think after hearing Adam's explanation, it's pretty obvious, I would imagine, for most as to why these talks started months ago. And when you put a deal together like this, it doesn't happen overnight. It literally is months. It's probably been a quarter of a year in the process. And on top of everything, a ton of due diligence has been put into this and a ton of thought, a kind of careful thought on how does the merger look for 2 companies like this. And the exciting part about everything is, at the end of the day, branding products in -- with edgy ingredients to the world is so important, but not only just branding the products. Think about what Adam's side has done over at Creso. They put on literally like 100 years of experience into IP, into formulations for CBD, for animal health products. And they've also put in many different years here of brand build themselves and great products that we think we can elevate and get to market if you look what Red Light Holland has done within only a year and just over a year of being a publicly traded company. So we always talk about how we have concepts and then we have accomplishments. And the accomplishments we feel are incredible for Red Light Holland as in -- really in its infancy stage. And the support of you, I think, really recognizes those accomplishments, including getting a iMicrodose pack to market. Almost immediately, we're now in over 20-plus Smart Shops in the Netherlands. We purchased SR-Wholesale, a wholly-owned distribution company. Why did we do that? Well, let's distribute these microdose packs to as many smart shops as possible on top of our online sales in our e-commerce store. The great thing about SR-Wholesale is they have literally access to over 1,000 shops in Europe. And not only just can they sell because we can only -- let's be honest, we have to be honest with you. We can only sell the truffles in the Netherlands, but we can sell CBD products. We can sell different products across Europe. And this is where the Creso talk started to formulate. They have incredible CBD products, the best CBD products people would say, especially because of those formulations and the IP that went into creating them. So now we have a distribution arm that potentially could get CBD products into many more stores, revenue generation, sales. You think about what Radix Motion is doing with Sarah Hashkes. I mean this is unbelievable. We're working with Sarah for a reason. We acquired Radix Motion for a reason. A, forget about the fact that Sarah Hashkes is a rock star in the psychedelic community. I mean she's quoted by Robin Carhart-Harris in some of his talks. She is brilliant. She's created virtual reality for us. She's created augmented reality for us. She's created an iMicrodose app for us that helps track progress and usage of using a sensitive ingredient, psilocybin. Why are we doing that? We'll get into that a little bit later. How important it is tough to collect data, and collect data with consent, I might I add. That's part of this community feel that we are as a company. We're not just going to take your data. We're going to make sure you give us approval to use your data. And if you think about that, how many people -- and I'll just go to Sarah before I finish the slide. Sarah,in the THC and CBD world, has there been a lot of accumulation of data and understanding how that progress works for those products as well?

Unfortunately, there's definitely lack of data around a lot of things. Once things get approved medically, there isn't a lot of follow-up research. And that's part of the thing that we're really hoping to change. How does this affect people long term? What types of weed products are better for them? Actually, cannabis is a lot more of a complex substance than, in some ways, truffles. We have lots of cannabinoid receptors in our brain. And we're really -- we just need more data to understand how this affects different people, how to maximize the benefits. We know there's benefits for many, many people across many different situations, whether it's pain reduction or anxiety reduction. But how can we make sure that this is getting responsible use, that people are actually making the most out of this? I think that's where we can take what we're already doing in the psychedelic industry and bring it into cannabis. So that's why I'm very excited about this merger, too.

And thank you very much there. And again, that's just another synergy between these 2 companies. People often forget about what -- how important data collection is. And we want to make a difference through that education, through responsible use and through obviously, figuring out how potentially, maybe one day, you can make medical claims from the data you receive. Well, no one can really do that right now. So all these great synergies with what's going on with Creso and Red Light Holland, they mentioned, of course, this potential acquisition with Halucenex. We have one with Mera Life Sciences. I know a lot of investors are trying to figure out what's going on in there. We made an announcement many months ago about a nonbinding LOI with Mera Life Sciences in St. Vincent and the Grenadines. Of course, applied science, research and development, drug discovery, that's the pure intentions here. These deals don't happen overnight, and there's a reason for it. You got to work very carefully with governments, a lot of regulations, a lot of different legislation being written around this. Of course, we're very actively involved in all of that, which is why things take time, but I can assure you that talks are very productive. And we're very excited about the future potentially with Mera Life Sciences as well. Again, another synergy with Creso. And one of the things we think we do the best here at Red Light Holland in the psilocybin sector is really branding. And I don't care what anybody says. But if you look at probably what you're wearing right now, the cup of coffee you're drinking to the lunch you're going to have later, it's probably because somebody branded it well to you. So why did we acquire 80% of Happy Caps. Happy Caps is a gourmet mushroom from a farm. Ironically in Nova Scotia, where Mernova is, like where Halucenex is. Like the synergies are just wild for us. And this is why we're so excited. The Happy Caps co-founders, Andrew and Andrew, these guys are the biggest beauties you're ever going to meet in your life. And what we love about them is they get products into people's homes right now. We can brand with that. So if you're an investor, and right now, you unfortunately you can't go and get an iMicrodose pack because you're not in the Netherlands, well, what you can do is support us through Happy Caps, powered by Red Light Holland, get it in your home. So we love that we're working with Happy Caps. You're going to learn how to grow functional mushrooms. Mushrooms are cool. You can talk about them with your children. We can be mini farmers together. And we'll get into how we're farmers a little bit later on as well. And then there's the Wisdom Truffle brand creation and merchandise. And sometimes people joke about the merchandise that we're selling. I'll tell you what, it's catching on. I mean we saw Russell Peters wear it on Joe Rogan. People really love supporting brands and brands that come across as authentic and genuine and represent this movement together. And I think that is one thing that Red Light Holland is, bar none, doing better than anyone in this sector. We're industry leaders by being polarizing, by being upfront with you and by basically saying, "Hey, we have edgy ingredients. We're focused on results, but also what we want to do through education and information is provide access now." And we want to make sure we work with all the regulatory bodies and health authorities and governments to see how we can get all products, not just psychedelics. We're a psychedelics-focused company. But with Creso Pharma, how do we get CBD and THC to all of you across the world. We're responsible adults. We deserve to make choices for ourselves. These are tools for access and we will make sure that we work, again, very carefully though and patiently to ensure end results, which all lead back to revenue generation because it's a consumer good business. And we're really excited by it. Will, please take it away.

Yes. And thanks to everyone, for the awesome introduction so far. So now let's get into exploring the transaction in further detail. And on this slide, I'm going to highlight for you 6 of the key themes that we think kind of underpin The HighBrid Lab's value proposition. I'm going go through them relatively quickly from the top left to the bottom right because we're going to discuss each of these in further detail in the presentation, but I want to give you a flavor for what we're going to discuss. So we believe that we've created a portfolio of high-growth market pursuits that are balanced, in a way, that we can utilize short-term cash flow generation of some business units to support long-term upside opportunities in other business units. Together, we're a well-capitalized entity with $45 million of cash on our balance sheet, and we have complementary management teams and product offerings. We have an immediate opportunity to scale THC offering in Canada through Mernova and its craft XXXXXXXXXXXXXXX products. We'll also intent on entering the U.S. cannabis market as we believe that it's extremely attractive. Again, CBD is another immediate-term opportunity. Creso has a great suite of CBD products in Europe, and we're going to look to enhance distribution of those in all the ways that we can in a permissible manner. We also intend to bring these products to the United States over time. Red Light Holland's core mission to date has been to build a globally leading brand in psychedelics. And as a combined company, that core mission doesn't change. We still want to push the boundary, be first movers in new markets and build this into a globally recognizable -- the most globally recognizable recreational psilocybin brand. And as Todd and Adam have alluded to previously, with these 2 pending acquisitions of Mera Life Sciences and Halucenex, our combined company will have the flexibility to conduct scientific research on psychedelic compounds, and we believe that's a long-term upside opportunity. So before we discuss each of these points in more detail, I'll briefly take you through the structure of the transaction. So this transaction is being affected by a way of statutory schemes and arrangement under the Australian Corporations Act. For Canadian investors, this is very similar to a Canadian Plan of Arrangement. Under the schemes, Creso Pharma shareholders will receive 0.395 shares across -- or of Red Light Holland for each Creso Pharma share they own today. Existing Red Light shareholders, optionholders and warrantholders, nothing will change to your holdings in Red Light Holland. We'll have a new shareholder base coming in through the issue of shares to former Creso Pharma shareholders, and Red Light Holland shareholders will receive an implied premium of 30% based on the close of business on June 15. It also implies a 43% spot price for Red Light Holland on that same closing date. Although it's slightly more complicated to affect the transaction this way, as a combined company, we really wanted to have the flexibility by being listed on the CSE, which is our expected listing. And so rather than Creso Pharma acquired Red Light and move to the Australian Stock Exchange, with everything in reverse order and had Creso reverse-acquire Red Light so that we end up on the Canadian Stock Exchange. In terms of the Board of Directors, it's going to be a split for 3 nominees from Cresco, 3 nominees from Red Light. And as mentioned previously, Bruce Linton is expected to join as Non-Executive Director. Todd Shapiro, Red Light's current CEO, will remain the CEO of the combined company. And we'll discuss the rest of the management team in subsequent slides in this presentation. And as we talked about before, this combined company is going to be renamed to The HighBrid Lab, but we're not going to lose Red Light Holland. We're not going to lose Creso Pharma or any of their existing sub brands. They will all fall under this new umbrella, which we're calling The HighBrid Lab. We expect that Red Light's trading will continue on its currently listed exchanges. And of course, a transaction like this is subject to customary closing conditions. So let's get into those 6 key themes that we talked about earlier. The first of these is this concept of a high-growth balanced market pursuit. And what this means is we're organizing our business into 4 distinct business units in terms of order of time to profitability. I'll also note that each of these business units are in high-growth, multibillion-dollar markets. The reason we really like this approach is that we want to be disciplined with our capital. We don't want to be a company that's losing hundreds of millions of dollars doing R&D or other types of activities. So the way we organize this business is we say, "Okay. In the near term, we can generate cash flow in recreational THC through sales of Mernova products in Canada. We can enter the U.S. by acquisitions, which is near-term cash flow accretion opportunity. Similar for CBD products. In CBD, there's existing sales of Creso products around the world, especially in Europe. We can enhance distribution of that through SR-Wholesale. And we'll look to bring those products in the United States as well. That's still a more near-term cash flow opportunity. Between sales of iMicrodose kits and SR wholesale in the Netherlands, Red Light's recreational psychedelics business is actually profitable today. But as we execute on our strategy of being first movers and entering new markets as soon as they open, that can create a deferred cash flow on that basis. And finally, we've got the applied sciences in psychedelics. So with those licenses that we're going to have through our 2 pending acquisitions and the 100 years of pharma experience held by the Creso Switzerland team, we'll be able to do research on psychedelic compounds. But I will highlight again, we want to do this in a disciplined way where we're looking at and prioritizing projects that have relatively lower capital expenditures and relatively higher payback periods, and being able to allocate cash flow from other business units to support long-term ROI opportunities in the Applied Science division. On this slide, I'm just going to give you a little bit of the scope of the global operation that we have in front of us here. So as mentioned before, $45 million of cash on the balance sheet. We hope that this transaction will increase the liquidity in our stock. And the combination of these 2 factors will allow us to scale our business around the world. This is really a global business, whether it's Mernova cannabis sales in Canada, sales of truffles in the Netherlands or even pilot named patients, CBD and psilocybin sales in Brazil. We are currently laying the groundwork to execute on all of the strategic objectives that we have described so far, and we'll continue to do so using that flexible capital that we have today. I'll quickly introduce you to the anticipated management teams. As mentioned, Todd is going to remain CEO of the combined company. Todd has deep marketing and branding experience. And over the last year, has built Red Light Holland did this globally recognizable psilocybin brand. Hans Derix is the President of Red Light Holland, and he sits in the Netherlands. So Hans has been instrumental in getting the truffles farm in the Netherlands up and running, working through that 1 million-gram production run that's currently underway. Sarah has introduced yourself already, but I'll introduce here again. So Sarah, Chief Technology and Innovation Officer. Sarah's background is in cognitive neuroscience and immersive technologies, which makes them absolutely perfect for this role within the combined company. I'll quickly introduce myself as well. So William Lay, I'll be leading the combined companies' corporate strategy development and identifying and executing M&A transactions that are accretive for shareholders. I have lots of experience doing this in the last 3 years of letter-supportive $5 billion of cannabis transaction. So really looking forward to this exciting role within the new company. And you'll see on the slide that there are 3 seats that are left to be filled. So we are actively looking to hire world-class C-suite, very experienced members of -- CFO, Chief Operating Officer and VP of Sales and Marketing. And we think once those are hires are announced to the market, hopefully, before closing this transaction, that we'll have a management team capable of executing on the objectives that we've described so far. I just want to take a moment on this page to also mention that, aside from the C-level management team, this business is supported by a number of really talented individuals around the world, whether it's the 100 years of pharmaceutical experience in Switzerland that Creso has, whether it's expert growers of cannabis at Mernova, who are running the Mernova cannabis operation or marketing and branding professionals within Red Light technology and AI professionals in Red Light. This management team of ours couldn't be successful without the support of all of those talented individuals. And we think with their support, we'll be able to grow the business efficiently. I'll quickly introduce you to the Board of Directors as well. So as mentioned, and as Bruce alluded to earlier, we expect Bruce to join as Chairman and CEO -- or sorry, as Executive Chairman or Non-Executive Chairman of the combined company. I'm sure most people are aware Bruce has a long history of building very successful cannabis and psychedelic businesses. Having worked with him personally a lot in the past, I can speak so highly of his experience, and it's going to be very valuable to have him on board. And then the rest of the Board will be split between 3 Red Light nominees and 3 Creso nominees. And I won't go through each of them in detail. But what I will say is that I think the remainder of the Board strikes a really great balance and complements each other well. You have marketing and branding experience, really strong finance experience, previous cannabis and CBD experience, people who built businesses into multibillion dollars, whether it's in real estate or in pharmaceuticals. We have a whole suite of capabilities on this Board that is going to support our senior management team. And we also have access to an Advisory Board Group that we're not presenting today, but that exists within the current Red Light and Creso Pharma frameworks. So we're really confident in the team, Board and advisers that are going to take this company forward. Adam, I'll let you jump in here if you want to speak about recreational THC. And I'll add some points on the back of what you've got to say.

Thanks for that, Will. I appreciate that. So as I alluded to previously, we've got a state-of-the-art, a 24,000-square foot facility called Mernova, which is operating in Canada. We've recently received craft designation from the OCS, Ontario Cannabis Store. For those of you who know what that is or don't know what that is, that's a pretty high level of comfort that they've shown towards us, and it's a pretty great reward, I think, for the guys and girls of Mernova because I think there's only a handful of other groups in the country that got that. As alluded to earlier, we own the land surrounding Mernova. And at the appropriate time, we are able to scale up the facility to 200,000 square feet. That's really significant for the scale-up efforts that we plan to do with the synergy between us, Red Light Holland and The HighBrid Lab, especially when we look to -- especially when we look to expand into the United States in due course. Our 2 main brands, which are pretty well-known and regarded, Ritual and Black Mamba. And there's more information on that on our website and our previous PowerPoints that we've introduced. Our world-class team at Mernova are highly capable, and they've got great experience. Two of them were master growers in other larger cultivation companies such as Canopy. The HighBrid Lab and Red Light Holland will be able to create and brand their own THC products from this facility to be able to build brand equity, which we see as really important to be able to complement both what we've done and the branding that Todd and the rest of his team has created. And then again, THC microdosing opportunities, I mean, that's stuff that we're really, really excited about. And these are just one of many, many kinds of initiatives that we are going to be working on, and we look forward to updating everyone in due course.

Yes, thanks for that, Adam. And I'm just going to add on this slide that, over the last several months, I would say the U.S. cannabis market has received a lot more attention than Canadian cannabis market. And for good reason, there's potential changes in reform on the way. It's a much bigger market than Canada. But what I think can't be disregarded is the fact that Canada is a large and growing cannabis market. It's expected to reach CAD 9 billion by 2026. And we have a facility and a team and a group of advisers that are capable and that strongly desire to increase market penetration and market share within Canada. Having said that, we all recognize the major opportunity presented by U.S. THC markets. That market is expected to double in size by 2025 to USD 41 billion, and we existed at a time when structural issues on the framework of cannabis and the legality of cannabis in the United States means that U.S. THC operators are valued at a significant discount to Canadian operators. And so we're going to use the relationships, the expertise that our team has to make accretive acquisitions of U.S. cannabis companies prior to changes in federal legislation and build out that long-term upside opportunity in THC, south of the border as well as within Canada. And so Adam, I'll shoot back to you to talk through the CBD product offering at Creso.

Thanks. So I think, first and foremost, our CBD products are one of the only Swiss-based CBD products in the world. Having the Swiss know-how and the Swiss rigamarole being put into our products is second to none. I think it's quite important to note that, as Will previously alluded to, there is over 100 years of experience that has gone into creating our products, creating an IP, creating the know-how. Some of our team in Switzerland have administered hundreds of millions of dollars worth of clinical trials. They've created dozens of products that are kind of well-known household pharmaceutical brands today. And it's these individuals that have helped us over the last 5 years create our products. Our products are split, as I mentioned earlier, into CBD -- Creso Topical, into Creso Therapeutic or Creso Neutraceutical. We're starting to sell these products. We have our own distribution channels, and we've been able to generate pretty good revenue and growth on growth over the last few quarters. But again, as previously alluded to, Red Light Holland's current distribution throughout Europe, we don't have. So we're able to plug into that, we're able to leverage of the great brand and the great goodwill that Todd and his team have been able to achieve so far. And we can leverage off that to increase our revenues dramatically. And that's, again, some of the strategy that we want to share with you now and kind of got us pretty excited about doing this transaction. So I'll hand back to you, Will.

Will, I'm going to jump in here because one of the things that was super learning to us when we started talking about the deal was their animal health products and how they created CBD products for animals. And as we all know, during this really interesting last 1.5 years, animal ownership has increased tenfold. Obviously, with people being at home because of COVID, a lot of people are getting dogs, a lot of people get cats, et cetera. And interestingly enough, if you start to think about the world opening up again, very sadly -- listen, I've had a dog for 14 years. I love my little dog Yorkshire Terrier, named Hoff, and not named after Albert Hoffman, by the way, I've had that question asked to me before. But you think about it as we all get back to the office place and stuff and start moving around a little more, our poor little precious pets, our best friends, they're going to be anxious. They're going to be really going through a difficult time. And I don't think we should underestimate the future of the animal health product business, especially with CBD. So that really excited me because we want our little furry fun creatures to be as peaceful as they can be. So we're excited by that opportunity as well.

Awesome. And I will add a couple more points on the CBD product slide here. So one thing that Adam's talked about a lot is that 5 years of research development and the IP that's been generated for formulation expertise. Creso has worldwide rights for proprietary delivery methods for the CBD products, which increased bioavailability and absorption of cannabinoids. We think this makes their products superior to a lot of the incumbents on the market. And we're really excited to pair that superior product offering and scientific expertise with Red Light's expertise in marketing and branding to elevate these products and enhance sales through whether it's through introducing e-commerce platforms where permissible entering the United States, plugging it into SR. The Red Light's distribution network, we think there are real opportunities for the CBD portfolio to go even further and build off the great work that's already been done by the Creso team. Let's talk about the next theme, which is recreational psychedelics. And so what I will say here is that it has been Red Light Holland's core objective since becoming a company to create a globally leading recreational psychedelic brand. And as a combined company, The HighBrid Lab, this rigorous pursuit of a globally leading brand does not change at all and nor is there a responsible approach to consumption, which involves technology, education, tele-counseling. We want to encourage responsible consumption, and that's something that's going to be very valuable to the combined company. In the last few months, we've seen small but meaningful shifts in potential regulation around the world, which indicates the potential future value of this industry and this market segment that we're looking at. An example of that is Measure 109, which passed in Oregon in November. And swiftly after that, Red Light Holland informed Red Light Oregon, which is a JV with a well-known Oregan-based company to explore future participation in that market. We know that, that participation is some time away and there's a lot of hoops to jump through before we get there. But this strategy of being an early mover in new markets as we grow is something that's really important to Holland -- Red Light Holland, and #1 objective in Red Light Holland's recreational psychedelics business is to be the most recognizable recreational psychedelics brand in the world.

Yes. Listen, I mean, this is incredible what we're doing if you think about it. We're dealing within a legal framework. We've created iMicrodose pack that not many people in the Netherlands are selling truffles as microdosing. So this responsible consuming way through education, information. And if you think about what's happening in this world, right, with Measure 109, with the Bill 519 going on the Senate Bill in California, we're starting to see the hurdles fall down, okay? The exact same way we saw them fall down in Canada in 2000, 2001. Cannabis was allowed for medicinal use. It started off with compassionate grounds for those who very sadly were terminally ill, those who were -- patients sadly with AIDS, things like this. And they allowed cannabis to be used medicinally. Now we see it obviously completely regulated in the Canadian framework. And will it follow a path like that within psilocybin? Well, we're starting to sort of see those precedents be set. The Canadian Health Minister very recently allowed those who are terminally ill -- we applaud the decision, of course, to use magic mushroom, not a synthetic form, not some sort of like tincture form, the actual natural product itself, which is what we sell, magic truffles, essentially the exact same thing. And that's our know-how, and that's our expertise. We've now also allowed seen -- the health minister allow it for those with severe trauma. So these are the types of things that are happening. But interestingly enough, Measure 109 in Oregon, which I think a lot of people don't really realize, is it's actually beyond the medicinal use of what they're trying to write over the next couple of years. Basically, they want to be able -- they're going to provide magic mushrooms to people in Oregon. They're essentially saying that you just need a screening process and a little bit of a background check. It doesn't necessarily have to be doctor-prescribed. So it sort of lends a little bit more to the recreational side of things. And I do want to bring in Sarah here, and I think we're going to even all a little bit longer because we still have a lot of slides to go through. But there's -- if you think about a merger of this deal, I think it's worthy if we have your attention to really show you what our vision is like. Because this vision is superior to anyone else in the way we're thinking. Because if there are regulatory processes that need to be in place, we need to -- we feel, at least, provide data to these organizations, to these government authorities to say, "Hey, look, what we have potentially collected here," to allow you to understand what is actually happening with the end consumer. And Sarah, I think this is one of the things that we feel Radix Motion with iMicro app that we created and being able to track it, and you can speak with your body predictive movement data and stuff like this that we think authorities will love it. If we can present to them one day, they'll understand how end consumers can actually use this stuff.

Yes. Thanks, Todd. Definitely, in some ways, some places are more privileged than others as you talk about the regulatory hurdles that we're going to need to jump through. And the Netherlands is one of these places. So then absolutely, legal substance that people can use similar to coffee. You need to be an adult, of course, so maybe a bit more like alcohol. But the ability that we have right now, gathering data from consenting people that are using these substances, on a much larger scale than any clinical trial, gathering this data, looking into how this data also affects their bodies. We're taking biometric data. It's not just fill in the forms, right? This is sort of an old science. And XXXXXXXXXXXXXXX a bit forgotten our body because these are things that are hard to measure. If I want to see how your body is affected, how your heart rate is affected, these are things that we need sensors for. These are things that we need technology for, and we're really pushing that limit. And that's what's so exciting about this company. That's what's so exciting about the iMicrodose app. That's what's so exciting about the Wisdom Truffle that we're creating. It's not just a really amazing branded figurine that are machine-made. It's also a functional meditation a tool, which is, by the way, a huge market, growing market expected to be more than $2 billion in 2022 in the U.S. So we're going to be able to get people's heart rate data together with their body data, together with how psychedelics are affecting them, how microdose is changing their behavior, helping them achieve their goals. And with that data, yes, I really believe that, if we can communicate to people in government, which we already have in some places, their minds open. When they talk to people that understand the science, they can communicate the science clearly. It's not only about academia. That's very hard to read -- these papers sometimes. And we have the ability to communicate to people in a very clear way, whether they're the end user or governments, how effective this can be because there is a mental health crisis. Especially in the United States, people are really, really suffering. And if we have the ability to push this forward and help people, then we really, really should be doing this, which is what we are. So that's really exciting.

Thank you, Sarah. Yes, I think it's so important to note that through that data collection, Hopefully, we can get in touch with governments to share some of that knowledge that we have, which are going to actually help maybe form some legislation. I mean, maybe a crazy wild dream of ours, but like Sarah said, there are conversations going on. Will, I'll get back to you. I know we're getting a little bit off topic, but I just -- we have this great opportunity to really share this vision of the 2 companies and why The HighBrid Lab makes sense. So I figure why not go to take advantage while we can.

Absolutely, Todd. And I've got one more slide to go through, and then I'll pass it back to you to finish the presentation. But -- so the last of the key themes we talked about is this, this pending acquisitions of Mera Life Sciences and Halucenex, allowing the combined company the flexibility to conduct research with psychedelic compounds. I know there's another clear synergy of the deal that comes in here when Creso Pharma's team in Switzerland has 100 years of pharmaceutical experience, and we're looking to do research. That's a great synergy from the transaction. This is going to be a big market in the United States by 2027 therapeutic. Psychedelics is forecast to be $6.8 billion. And we know that it's important to participate in this, not just from a commercial perspective, but we'll also learn more allude more to what Sarah was previously talking about, about understanding these compounds, how they affect people and what that means for future consumers. And I'll reiterate the point that I made -- I'll reiterate the point that I made earlier in the presentation that we are very conscious of capital and we want to allocate efficiently in a disciplined manner to these business units, focusing on projects that have relatively lower capital investment demands and higher payback periods. And so we'll also look to introduce retreats for psychedelic use, where possible, where permissible in the future. But that's the Applied Science division. I'll pass to Todd to round out the presentation.

Yes. And I'm going to get into this slide in a moment and talk about opening up markets and everything that we're doing. But one of the things I think a lot of concerned investors are curious about and rightly so is the idea of how do -- how does a merger like this work? X amount of shares on Creso side, x amount of shares on Red Light Holland side. And I think people are rightfully so, a little nervous just to understand what happens with their positions in companies that they support. And Will, maybe on a very kind of high level here, you wouldn't mind jumping in, just to sort of explain the thought process, how it kind of works, the idea -- I know people are like, "There's going to be a rollback, is there going to be consolidation?" I mean these are just very small talks, to be honest, right now. Right now, we're just focused on getting the deal done and creating value. That's all we're going to be doing. It's working hard to create value for all shareholders across the board. And I think you can see by this presentation, it's very clear that, again, we accomplish things. So if we continue to accomplish things, we'll create that value. But maybe, Will, just to help you could do that and then I'll cut in the presentation here.

Yes, for sure, Todd. So this is a share-for-share transaction. And when we're involved in a share-for-share transaction, the most important thing to understand is the concept of the exchange ratio, which is a ratio by which existing Creso shareholders exchange those Creso shares for new shares in Red Light. So if you're looking at this from an analytical perspective, you don't add the 2 share counts together. That's not how this works. You look at the ratio and apply that to the Creso shares if you're looking to create the pro forma share count. Then if you read the detailed press release, there's different classes of Creso securities. So Cresco has listed options. Listed options have less value than Creso shares. So listed options have a lower exchange ratio. There are Creso unlisted options, so part of the employee compensation plan. That is going to be converted at the top level exchange ratio. So as we move forward with this transaction, obviously, we'll have to post information circulars on SEDAR. In Australia, Creso will have to post scheme documents to their shareholders and to the courts eventually to approve the transaction. This information will be laid out in detail in those circulars, and they'll be available in due course to give shareholders the information they need to get to weigh the transaction as they approach the shareholder vote.

Yes. And I think it's simple math, really. At the end of the day, it's about creating that value per share. And so people are sort of concerned about a high share count or maybe a consolidation of a lower share count. I mean, for me anyway, it's just about us increasing value, shareholder value by working hard. I think you can tell by this team that we have in place and by this vision and by this dream and by the synergies for The HighBrid Lab, that, at least in our mind -- and listen, we have voter support agreements to back this up, that we believe that this is really a no-brainer in terms of accomplishing wonderful things and revenue generation. So -- and really to do things that nobody has done, to be a leading cannabis and psychedelics company that is supported on Applied Science and, of course, technology and innovation. Find me a company that's doing what we plan on doing and is already doing separately. Think about us together. So if you can go to the slides, I just want to talk about essentially why this is so important. If you're a branded company, a company that thinks of Red Light Holland brands a great products by Creso Pharma, look at what is going on in the United States right now. There's cannabis that's been talked about for a few years right now. But of course, we're seeing so much movement in the cannabis space in the United States and is a great opportunity, as Will mentioned, to kind of seize potential companies through mergers and acquisitions in the States that might be looking for an influx of capital and combined, we should have $45 million, at least we have that now, to be able to maybe take advantage of some of these opportunities. It's not like companies in the day of cannabis where you saw big companies just overpaying. It was really easy. They had volume, they had shares, they could just pay in shares, and things faltered. But now we're seeing things sort of not falter and go or back on the uptick. And so if you could capitalize on these moments, that's what Creso and Red Light Holland, I think, are really, really looking to do. We're really sort of planning very carefully -- and I'll be careful what I say -- to make sure that these opportunities aren't just a waste of money, aren't just a waste of acquisition, but get us to be profitable, revenue-generating, everything that we're already doing in the Netherlands, call it. Let's move on in terms of -- here, in terms of the psychedelics movement, which is just really going off the hook, I like to say. I mean, look at all the celebrities. By the way, these aren't -- celebrities. I have to say that, for legal reasons, but these are just articles that have come out from Dave Chapelle to Chelsea Handler, to Kristen Bell, you name it, Mike Tyson. I mean these are -- people are open. People are open to talk about mental health. They're open to talk about anecdotally what helps them and governments are forced to listen. They're forced to listen for a couple of reasons. One, social movements are more powerful these days than they've ever been. So if you and your friends and your family believe that as adults, responsibly, something can help you, it's your duty to share that on social media. It is your duty to talk about it openly because we, ultimately, back to that family nature of The HighBrid, want to help as one big family. As a company, we can't make medical claims yet. Of course, if we could get into the Mera Life Sciences, the Halucenex Life Sciences one day, perhaps we can. But right now, the social movement is more important than ever. We represent that movement at Red Light Holland. We represent that movement at Creso Pharma and, of course, The HighBrid Lab, meaning providing access now is key. Let's talk about this. Let's collect data to support it. And of course, consensual data. And then let's speak to these government authorities to say, "Hey, there's companies doing illicitly right now. Well, maybe they do deserve to have cinderblock in front of their shops because they're not following the letter of the law. Whereas companies like ours are. And we're doing it responsibly." So I just think important to see how comfortable people are supporting this movement. And of course, we're behind it. And quite candidly, I give a huge round of applause over Red Light Holland. We got listed, we got a bought deal, which is a prospectus, which takes a lot of scrutiny from the Ontario Securities Exchange, which, of course, is one of the most important exchanges really -- the Ontario Securities Commission rather in the world. We have helped regulate and added validity to Magic Truffles, to psilocybin. We should be honestly be looked at by the advocates and by a lot of different people in the space going, "Wow, they're doing it with transparency, and they're doing it right." And of course, they're being patient on how markets can potentially open up. And this is why this slide is so exciting. And I guess just to finish it off here, Will, if you go to the last slide, I'm a brander, okay? I think my lawyers wanted me to script what I was going to say today. For Todd, you go a little bit off, you're long-winded, people get it. I -- you can't control my passion if you put me on a script. I will never go on script. I refuse to go on a script. What I will do is have an incredible team of people around me who get this mission and also get results and focus on results. And if you look at Adam's team over at Creso Pharma and their know-how and their IP and their hundreds of years of experience in creating some of the best products in the world. And if you look at this team now that we're creating a culture at Red Light Holland with geniuses as Elon Musk says, "I don't have a Harvard degree, but everybody around me does." And I don't know, Will or Sarah, of Harvard degrees, but you could sure yourself bet, they probably could have gotten to those schools with no problem. I may not be academia, but I got my ear to the street, and the street wants products like we're selling edgy ingredients focused on results. And look at what we have going on. Russell Peters sitting on Joe Rogan talking about Red Light Holland. We got merchandise that, go and buy, imicrodose.ca. It represents up movement. People love this logo designed by a top designer named Karim Rashid, who was named by Time Magazine, The Structural Designer of the Americas. I mean these aren't small people. These are people who have success in all different sectors that are supporting this vision and are proud to be a part of it. It's not always about followers in this world. Some people kind of call that superficial and blah, blah, blah but it does make a difference. That's our name out there. Our name is out there, and we respect and appreciate everyone, including all of you right now, for supporting this vision, for allowing our name to get out there and for embracing it. And we're stoked by it all. That's also why we got an 80% stake in Happy Caps. I look for people and energy. I love smart people, fun people, people who work hard and people have great energy. I've got Happy Caps at Gourmet Mushroom Farm, not only because we see that as being a great business. We can go right now to happycaps.ca, buy products and get them into your home, whether you're in America or Canada, and maybe we even add those into our distribution arm in Europe. But people, Andrew and Andrew, excitable, hard-working people who you're going to love because we're going to bring them out on social meeting. You're going to want to support these 2 people who are supporting us. So this is the type of culture and type of family we're building in with Red Light Holland and Creso Pharma supports that. We merge very well behind the scenes. Literally, I'll just say this, this was such a friendly negotiation for 2 massive companies that it was almost uncomfortable because no one played the leverage card. We just wanted to make a difference and make a difference now on what makes sense for both sides of shareholders and what makes sense for focused growth on this trajectory that we think is massive in all these sectors. The 4 big sectors. THC, CBD of cannabis. Of course, psychedelics, which were a core focus will always be applied science and technology and innovation. And that's why we're so proud to present this to you today, and we're really looking forward to the future with The HighBrid Lab.

Thanks, everyone. So just before we end, does anybody else want to say anything? Or should we show the amazing song that you'll made to celebrate this...

I want to say one other thing -- sorry. Okay. I just go off. This is why the lawyers want me on the script. We didn't give you a job contest. We did a -- help redesign a logo contest. You talk about communication. The deck that you saw, so well done, that's someone who won the logo redesign contest, and someone who won the give-you-a-job contest. This song you're about to hear is someone who wanted to give you a job contest. We have so much support. We're working with this amazing lady named Lauren Barnes, who won the give you a job contest, who's all about sustainability and community, everything this company and a merger of these 2 companies stand for. We have great people. Together with these people and of course, with what we're going to deliver on, on the combined companies, it's just so exciting. I'm going to stop talking now, but this is just an example of that how so many people are involved behind the scenes, and we're just so grateful to have such talented, hard-working people who really just support all our visions. We're very grateful to work together. Sorry. I'm going to stop now. But thank you all so much. You've been amazing.

Thanks, everyone. Let's listen to this amazing song. [Presentation]