There has been an increase in the number of companies focused on the cannabis beverage opportunity and this has been a catalyst for the cannabis sector.
During the last year, we have highlighted the cannabis oil opportunity and consider this to be one of the most lucrative opportunities. Cannabis oil is the product that is needed to create smokeless cannabis products and we have been closely monitoring this opportunity. Today, we have highlighted 3 companies that are highly levered to the cannabis oil opportunity. One of these companies is expected to start trading on the TSX Venture in the very near future and we recommend keeping an eye on this burgeoning trend.
MediPharm: The Next Big Canadian Cannabis IPO
In the very near future, MediPharm Labs will be going public on the TSX Venture exchange, under the symbol LABS, and is a company that investors should be monitoring. MediPharm was the first company in Canada to become a licensed producer for cannabis oil production under the ACMPR without first receiving a cannabis cultivation license.
MediPharm is research-driven and focused on downstream secondary extraction methodology, distillation, and cannabinoid isolation and purification. The company provides business-to-business contract processing of cannabis to Canadian authorized licensed producers and appropriate international growers, supplying integrity-assured cannabis oil to qualified companies for sale under their own brand. Through its subsidiary, MediPharm Labs Australia Pty. Ltd., MediPharm has also completed its application process with the federal Office of Drug Control to extract and import medical cannabis products in Australia.
So far, MediPhram has been able to secure supply agreements for cannabis oil with three Canadian licensed producers, INDIVA Limited (NDVA.V), James E. Wagner Cultivation (JWCA.V) (JWCAF) and Bonify and is in the middle of a major growth cycle. MediPharm has entered into cannabis concentrate program agreements with these companies, whereby MediPharm will received dried cannabis for the purposes of creating cannabis oil. The company is currently in negotiations with several other Licensed Producers and we consider this to be a major growth driver for the company. MediPharm offers a high-quality service and we expect to see significant demand for its services going forward.
MediPharm is primarily focused on producing pharma-grade cannabis oil and concentrates, operating out of a fully functional state-of-the-art 70,000 sq. ft. facility that has been constructed to cGMP standards with ISO rated clean rooms. The facility can currently process 100,000 kilograms of dry cannabis flower or trim per year; the largest extraction footprint in Canada. The company is in the middle of a major expansion and is executing flawlessly on an expansion that will increase processing capacity to 250,000 kilograms of dry cannabis per year by the fourth quarter of 2018.
MediPharm’s focus on quality control and building out to cGMP standards with ISO rated clean rooms provides a major competitive advantage. We are very favorable on this new opportunity and investors need to keep an eye on this one.
Radient Technologies: A Stock on the Move
Although the entire cannabis sector has been a beneficiary of Coca-Cola’s (KO) interest in Aurora Cannabis (ACB.TO) (ACBFF), Radient Technologies (RTI.V) (RDDTF) has benefited the most.
Yesterday, at the request of IIROC, Radient said that they are unaware of any material change in the company’s operations that would account for the recent increase in market activity. The shares came off their highs after this announcement and we are keeping an eye on how Radient trades from here.
Last year, Aurora Cannabis made a strategic investment in Radient Technologies and we think this relationship has been a major value driver for the cannabis oil technology company. Radient is highly levered to the cannabis oil opportunity and the company’s proprietary technology is supposed to make it much easier and quicker to process cannabis oil.
Radient Technologies represents a diversified opportunity and we are monitoring how the team continues to execute. There has been nothing in particular driving the share price higher and we are watching this one.
Halo Labs: An Early Stage Opportunity
During the MoneyShow Toronto, we met with Halo Labs and were very impressed with the management team and current operations. The company is focused on the United States cannabis oil opportunity and is levered to Oregon and Nevada.
The company recently entered the Nevada market and has been capitalizing on the medical and recreational market in Oregon. Since inception, Halo Labs has sold more than 2.5 million grams of cannabis oil in Oregon and has more than 20% market share. We are favorable on the leverage to Nevada and the focus on growth.
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