Whitefish, MT / July 22, 2014 / The MMAR to MMPR transition is a confusing one. It’s changing rapidly, and I’ll try and break it down into a simple explanation.
Canada had a “grow it yourself” medicinal marijuana program in place for a little over a decade until the MMPR, or “Marihuana for Medical Purposes Regulations” was unrolled on April 1st of this year. The new regulatory regime aims to take small, unsafe grow operations out of urban areas, and replace the supply side of the program with large-scale commercial producers across the country. On March 21st of this year, mere days before the transition, there was a court ordered injunction led by a Canadian lawyer, who successfully challenged Health Canada and was able to cause a temporary injunction, allowing MMAR patients to continue growing, with the next hearing taking place in February, 2015. During the transition, both programs will essentially be in effect as long as the injunction is in place. In the mean time (MMPR) Licensed Producers are gearing up to capitalize on the multi-billion dollar market.
Currently there are 13 licensed producers in Canada with Tweed Inc (TSX.V: TWD) (OTC: TWMJF) being the first in the public space and probably the most well known. It is trading around a $110mm market cap currently, having reached much higher levels earlier this year. Bedrocan is also licensed and will be trading publically this summer, as will Organigram and Mettrum. They each expect to hit the market in around the $80-90mm level and all of them are already shipping medicine to patients.
Supreme Pharmaceuticals Inc. (CSE: SL) (OTC: SPRWF) is led by David Stadnyk, a highly successful businessman with over 25 years experience in the capital markets who has led more than 8 public companies and personally raised in excess of $500 million dollars in his career. Mr. Stadnyk also has an extensive background in pharmaceuticals, and was the founder of a large sports radio station, which still thrives in British Columbia today. He’s also personally owned several professional sports teams over the years in Vancouver.
CannabisFN Executive Interview | Supreme Pharmaceuticals / David Stadnyk / CEO & John Fowler / Head of Operations from TDM Financial
John Fowler, JD, is a licensed attorney out of Toronto, ON in addition to being Supreme’s Director of Operations. Mr. Fowler was the orchestrator, bringing AMMCan, and Supreme Pharmaceuticals together on their Ontario, facility and making all of this a reality. AMMCan already held the pre-approval, and Supreme stepped in to provide the capital required to implement and fast track the process.
In May of 2014, Supreme closed a deal on the 342,000 square foot green house facility with AMMCan, located in the town of Kincardine Ontario. The facility was originally built in 1987 by Agriculture Canada and was intended for growing low cost vegetables while leveraging very favorable energy rates. It has one major advantage over all else in the field, the cost of electricity. Due to the close proximity to a power plant and a 2-gigawatt transmitter on-site, the location has very favorable rates, which in the medical marijuana cultivation business - is absolutely critical. According to the team, they’ll be paying roughly half the price per-kilowatt than other Ontario-based producers.
The company announced on June 6th of this year, that all of the requirements from Health Canada were underway, and that they will soon be expecting their final walk-through. They hope to have plants in the ground by Q4 of this year, and a healthy patient base by Q1 of 2015. To be clear, this not a licensed producer yet, but the closest thing to it. They are one of the undisclosed number of early applicants that are in a pre-approval status, pending only the required security measures. The best part is that the security contractor in charge of implementing those security measures has already done it for one of the MMPR facilities in Canada.
In addition to the Ontario location, is a facility in British Columbia, which they acquired earlier this year. There are also discussions in place for more locations as the company grows.
It just might warrant a second look with ticker symbol “SL” in Canada (CSE) trading well over 1-2 million shares a day for the past several weeks and ticker “SPRWF” in the U.S. (OTC) trading an average of 1.1 million shares a day in the US. It appears that investors are starting to take notice to this potential sleeping giant.
And let’s talk greenhouses for a moment – probably one of the most misconceived components of growing quality cannabis. The team involved in the implementation has advised that construction is already underway to partition off sections of the giant facility into very small, controlled environments. This allows for a grower to come in and work in one perfectly controlled and sealed unit, as opposed to one large facility. (You may have noticed that the warehouse, large-grow model isn’t working out so well for some growers). The smaller the actual grow space, the better, and the bigger the facility and more room for growth as they expand, the better – or so one could conclude. It would be a “win-win” covering both sides; lab quality product, in addition to almost unlimited scalability if demand increases over the years. And let’s not forget that full legalization is a very real possibility in Canada, some say it could be inside of the next 3-4 years.
In addition, the Ontario greenhouse includes a 50,000 square foot concrete warehouse where all of the high-security post-harvest processing and storing of the marijuana will occur. This provides a much greater security profile than those producers hoping to conduct these secure activities under glass. Again, this provides a “win-win”: the benefits of a greenhouse for production with the benefits of a warehouse for secure processing and storages.
Sustainable business model with a proven team? Check.
Cheap production costs and low overhead? Check.
Possibility of being among the largest in the country? Check.
Very attractive valuation, in a frothy sector? Check.
On the short list to possibly being the next Licensed Producer? Check.
It appears that SPRWF has a lot going for it, and investors are very eager to see how this story turns out.
Learn more and sign up to follow Supreme Pharmaceuticals here: http://www.cannabisfn.com/mdc/supreme-pharmaceuticals-inc/
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