Hydrogen Utopia International
PLC
(the 'Company' or 'HUI')
Sunday
Times - Online Article 5 May 2024
Hydrogen Utopia International
PLC, a company specialising in turning
non-recyclable mixed waste plastic into hydrogen and other
carbon-free fuels, new materials or distributed renewable
heat, would like to inform shareholders
that there were 2 errors in the article published in
The Sunday Times, on 5 May and
entitled 'After years in
the doldrums, is legal cannabis finally on a new high? Legalisation
has proved a false dawn, whether for medicinal or recreational
marijuana.'
Please note the following 2
errors:
1. The Sunday Times article states
that harvest is every 8 weeks. This is incorrect. Harvest is
currently every 3 weeks and anticipated to reduce to every 2 weeks
from late August/September when 5 commercial greenhouses are
expected to be fully operational; by then, 25 harvests a year of
approximately 200kg of dried flowers per harvest are
expected.
2. The Sunday Times article states
that HUI owns Ohrid. This is incorrect. HUI has exercised its
option to acquire 49% of Ohrid Organic Limited, parent company of
Ohrid Organics DOO on 29 December 2023.
The Sunday Times online article
dated 5 May 2024 can be accessed by readers with a digital
subscription in this link: https://apple.news/AsZAYtzn8Sv6Ib26J0JL0pg
The original article is reproduced
below.
After years in the doldrums, is legal cannabis finally on a
new high? Legalisation has proved a false dawn, whether for
medicinal or recreational marijuana
In the mountain valley above North
Macedonia's Lake Ohrid, eagles glide on the thermals against a
clear blue sky. The air is crisp and alpine-clear. But beside a
bumpy road flanked by densely forested hills, a pungent smell fills
the air - the citric aroma of high-grade cannabis
flowers.
These rural hills in the former
Yugoslavia, and on the Greek side of the border to the south, hide
a nascent European heartland for the cultivation of legal
marijuana. After boom followed bust for the cannabis industry
during the waves of legalisation in North America and Europe, there
are hopes among brave investors that the region may form the basis
of a sustainable business.
In a series of laboratory-clean
greenhouses behind high barbed-wire fences at Ohrid Organics, men
and women in medical-grade scrubs tend to thousands of cannabis
plants in various stages of development. They clone, prune and
monitor them as, thanks to a mixture of artificial heat and light,
they go through an accelerated growing process. Harvest under such
conditions comes every eight weeks.
"They're so beautiful! They're like
my children," declared the delighted chief executive, Robbie
Donchevski, a former semiconductor engineer who returned to his
home country after a career in Taiwan.
Entry to the growing areas is
allowed only through pressurised air jets that blow away any
spores, insects or germs on visitors' clothes and hair that could
infect the plants. There is a good reason for the obsessive
cleanliness. These plants are destined entirely for the medical
marijuana market - largely in Israel, Britain and Germany. When
dried and packaged, Ohrid can guarantee they are free of pesticides
and fungicides that might harm patients weakened by multiple
sclerosis, epilepsy or other muscular conditions for which cannabis
is claimed to be helpful.
And why is the location in this
remote corner of eastern Europe so prized? Because an abundance of
sunshine, water, cheap energy and labour up here means Donchevski
can produce his weed for only 30 cents a gram. Most medical-grade
marijuana is grown in hyper-optimised conditions completely
indoors, using much more energy for heating, ventilation and
artificial lighting.
A typical indoor "grow" - as farms
in the industry call them - in Portugal or Israel would produce
flowers at a cost of perhaps about €2 (£1.70) a gram. In the UK -
where there are about four big grows in various undisclosed
locations - costs run at about £4 a gram, industry experts
said.
It remains to be seen whether Ohrid,
owned by the London-listed firm Hydrogen Utopia, will thrive where
farms in more expensive sunspots such as Portugal have gone bust.
It is still in the testing stage after an €800,000 upgrade. But
having just won its first order in England - for 50kg per month
priced at €2.50 a gram - Donchevski is optimistic.
In 2017, as legalisation was about
to sweep through North America, a stream of companies planning huge
licensed grows to feed the expected boom raised money on the stock
markets there. Canada won most of the floats because it had more
relaxed rules than Wall Street. Shares in Aurora Cannabis tripled
in value, making the Toronto-listed company worth about C$5 billion
by the end of the year. Canadian rivals such as Aphria and Canopy
Growth followed close behind.
Cannabis has been a plant in which
investors - perhaps fittingly - have endured dizzy highs followed
by crushing lows. It seemed entirely logical, as legislation
stipulated that governments wanted licensed and regulated producers
to thrive and squeeze out illicit growers. But in the years to
come, investors found that when Canada and some American states
legalised, pot smokers did not go rushing to the shiny new licensed
producers in anywhere near the numbers expected.
These regulated farms, bound by
strict rules on quality control and testing, found it impossible to
compete with the decades-old black market growing the stuff in
attics and garages.
Stockbroker Canaccord Genuity was
responsible for bringing most of the companies to the Toronto Stock
Exchange. As its London-based broker, Alex Brooks, recalled: "After
a go-go 2017, in 2018 and 2019 it all basically went to shit."
Shares in Aurora, Aphria and co collapsed.
Much of the blame can be placed on a
basic misunderstanding - among the economists drafting the
legalisation regime - of how the black market operated. Brooks
explained that the street price of cannabis had been around C$6 or
C$7 a gram for years. So, regulators assumed, set up the legal
producers to sell within 5 or 10 per cent of that and you should
take the market from the bad guys.
But it turned out that the black
market operators' street price was nothing like a fair reflection
of their cost price. As soon as licenced marijuana arrived, with
its laboratory-controlled levels of the active compounds THC and
CBD, the price on Canadian streets dropped 20 per cent.
Far from winning over dope smokers
to the legitimate market, the complete opposite happened as street
pot became available for pin money. "It was just not possible to
match the illegal cost structure with high-quality legal supply,"
Brooks said.
Much of the legitimate cannabis
grown in Canada ended up simply being destroyed due to a lack of
customers. In the US states that liberalised, it was even worse,
according to Brooks: "The price went straight down to 50 cents a
gram. And obviously, you can't make legal supply work at that
price."
The situation in the United States
was made worse because cannabis was not allowed to be shipped
across state lines, meaning companies had to set up costly growing
facilities in each state, adding still more to their
overheads.
Britain, like many European
countries, did not want to follow Canada and the states in the US
that legalised marijuana for recreational use. But in September
2018, following publicity around cases of sick children whose
parents wanted to give them cannabis-based medicines to ease their
pain, Sajid Javid, then the home secretary, relented. A law was
passed allowing specialist doctors to prescribe them after a
referral from a GP. It was designed to help ease conditions such as
multiple sclerosis, epilepsy, the nauseous side-effects of
chemotherapy and anxiety.
The regulatory shift inspired hopes
for the flagging legal trade. But the hurdles to get a prescription
were so high that the rush investors hoped for never materialised.
As in the US, growers in Britain were not allowed to export their
crop.
About 70 specialists across the UK
are thought to be prescribing medical cannabis and with a lack of
central data collection, the market size is hard to estimate. The
market research group Prohibition Partners has estimated that
63,000 people will have been treated with medical cannabis in the
UK by the end of this year.
Toby Shillito, an investment banker
turned adviser to companies setting up cannabis facilities, is a
stern critic of the current UK's regime. "Hardly anybody is using
medical cannabis," he said. "Doctors don't prescribe it because
it's not part of the medical school curriculum - and for the
patient, it's difficult to get."
Patients must retrieve their medical
records from their family GP, take them to a private cannabis
clinic "and then hope that the specialist will prescribe it for
you", he said. "It's a great shame," Shillito added. "We should be
able to build a British industry with British science, with
cutting-edge technology, creating jobs and stopping the black
market, the stabbings and all the rest of the appalling stuff that
goes with it."
Britain's biggest distributor and
manufacturer is Curaleaf, a US cannabis giant set up by Boris
Jordan - an American banker who has been controversial since the
Ukraine war due to his many years working in Russia. Curaleaf has
its own grow in Portugal, from where it imports cannabis oil or
flowers in bulk before they are processed in Sunderland into
pastilles, drops and other formats. Jonny Hodgson, its UK managing
director, said dried flowers make up more than half of
prescriptions, which patients inhale through a vaporising device.
Smoking cannabis remains illegal, even for medicinal
purposes.
Hodgson said: "Here in the UK, it is
frustrating. People are not aware they can get cannabis legally
prescribed to them; they think THC is illegal."
Germany has been one of Europe's
most progressive countries on cannabis and last month relaxed its
rules further, removing cannabis from the "narcotics" list - making
it far easier for doctors to write prescriptions and pharmacies to
give them out. The move triggered a wave of new prescriptions in
Germany, with one teleclinic alone said to have treated about
100,000 patients in the first two weeks. In the UK, though,
regulatory change is not seen as likely - either by a Labour or
Conservative government.
In the US, meanwhile, deregulation
continues apace, both for medical and recreational use. Last week
President Biden's administration indicated that the federal
government would recommend reclassifying marijuana as a less
dangerous drug and permit its medicinal purposes, opening up its
use to all states. The share price of Curaleaf, which issued a
statement describing the move as "monumental", shot up by nearly 20
per cent last week. At nearly C$8 a share - the company is based in
New York but listed in Toronto - that was some way off its highs of
C$16, but it signalled a partial recovery in the beaten-up
sector.
Back in Macedonia, Donchevski - who
says he does not use cannabis himself - is optimistic that his
"babies" will find plenty of customers in Europe and Israel. "These
plants are beautiful," he said. "They're better than
roses."
For further information, please contact:
Hydrogen Utopia International PLC
Aleksandra
Binkowska
+44 20 3811
8770
Alfred Henry Corporate Finance Limited (LSE Corporate
Adviser)
Nick Michaels/Maya Klein
Wassink
+44 20 3772
0021
Novum Securities Limited (Broker)
Jon Belliss/Colin
Rowbury
+44 20 7399 9400
About Hydrogen Utopia International PLC
HUI aims to become one of the
leading new European companies specialising in turning
non-recyclable mixed waste plastic into carbon-free fuels, new
materials or distributed renewable heat.
A HUI facility uses non-recyclable
mixed waste plastic as feedstock and turns it into syngas from
which new products and energy can be produced. HUI anticipates that
its revenues will be derived from a variety of sources, dependent
upon location and configuration of the HUI facilities, including
the sale of syngas, hydrogen and other gases, electricity and heat
sales, and the payment to it of fees for a
given quantity of non-recyclable mixed waste plastic received at a
HUI facility.
HUI will target areas where there is
significant private sector interest or potential, financial backing
is accessible and or where substantial EU and/or government funded
sources of grants and loans are or may be available. The global
increase in fossil fuel-based energy prices reinforces the need for
alternative, price competitive energy sources, which HUI's business
model can provide.
The pressing need to deal with
growing amounts of waste plastic combined with a real momentum in
the use of hydrogen from renewable sources may pave the way for a
rapid deployment of and investment in HUI facilities.