WHITEFISH, MT / June 23, 2014 / Canada’s Marijuana for Medical Purposes Regulations ("MMPR") has attracted a lot of investor interest, as evidenced by Tweed Marijuana Inc.’s (TSX-V: TWD) (OTC: TWMJF) nearly $100 million market capitalization. Health Canada estimates that the market for legalized marijuana could surpass $1.3 billion with 450,000 patients over the next ten years, while adult use legalization could eventually add to the total.
With only 13 licensed producers under the MMPR program, investors have the choice of either investing in a handful of approved licensed producers, like Tweed, or investing in companies pursuing a license. Those pursuing a license could offer greater upside given Tweed’s $100 million plus valuation, with some companies pursuing licenses trading in the sub-$15 million price range.
Enertopia Corp. (OTC: ENRT) (CSE: TOP) is one of the companies pursuing a license with three separate projects in its pipeline. With its diverse exposure, the company’s experienced management team aims to increase its odds of success in obtaining an MMPR license. The three projects also have a combined capacity of about 64,000 net square feet of production space, which would make it among the larger producers.
Also See: Enertopia Corp.’s Exclusive Interview with CannabisFN
Green Canvas Facility
In February 2014, Enertopia announced a joint venture whereby it acquired 75% of Green Canvas for C$1 million and 19 million shares over a three-year period. The Saskatchewan-based facility will have an initial build-out of 14,000 square feet of grow space, which could eventually be scaled to 55,000 square feet.
The Green Canvas Facility is currently a producer under the existing MMAR program, which should help the application for their MMPR license to be approved. The facility has recently undergone security upgrades and is awaiting further review from the Health Canada before taking the next step forward.
Green Canvas facility is currently undergoing renovations and security upgrades. $50,000 was recently spent on the perimeter fencing alone to be compliant with the stringent Health Canada security guidelines. New cement floors were recently poured for the lab and security storage area. Quotes are now being received for the buildup phase one construction for the production rooms.
In May 2014, Enertopia signed the definitive joint venture agreement with Lexaria Corp. (CSE: LXX) for the upgrade of a Greater Toronto Area-based facility. Enertopia would own a 51% interest in the production facility, and pay 45% of the ongoing costs in addition to receiving a one-time payment of 500,000 shares of restricted Lexaria stock. The 30,000 square foot facility also has a right of first refusal on an additional 45,000 square feet.
Currently, the facility is awaiting municipal approval for a facility build-out that management expects will take approximately three months. In the meantime, the company plans to submit a building permit in July 2014 and seek MMPR approval thereafter in order to become a licensed producer. The sheer size and potential for expansion could make it one of Canada’s top tier growing facilities, if approved.
The GTA facility is being planned out to be the Company’s flagship project in Canada. Building design is in the final stages, this will include state of the art laboratory facility that will be one of the key components in cannabis research going forward for the Company.
World of Marihuana Facility
In January 2014, Enertopia announced a joint venture with an option to earn up to 51% net revenue interest in the World of Marihuana project in British Columbia. This project also already grows under the Medical Marihuana Access Program ("MMAR") with 2,500 square feet of production. The facility is currently producing five to six popular cannabis strains.
World of Marihuana applied to the MMPR program in October 2013 and is awaiting a Health Canada site visit. If approved, the existing 2,500 square feet could generate $1,100 in gross revenue per square foot per year.
As an existing producer under the MMAR, the project could also be more likely to be approved than many other MMPR applicants starting from scratch. The discount rates on these valuations could therefore be lower than some competitors.
Enertopia is unique among aspiring licensed producers under Canada’s MMPR system due to its three distinct projects located across different parts of Canada. If approved, these three projects could start generating in a little over three months from receiving Health Canada licensed approvals. The long-term potential for these projects is even greater given the many opportunities for expansion.
Investors in aspiring MMPR licensed producers, including Creative Edge Nutrition Inc. (OTC: FITX), Medican Enterprises Inc. (OTC: MDCN), or Modern Mobility Aids (OTC: MDRM), may want to also take a look at Enertopia given its diverse focus, previous MMAR statuses, and significant production capacity.
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For more information, see the following resources:
- Company Website - http://www.enertopia.com/s/Home.asp - Investor Presentation - http://www.enertopia.com/i/pdf/Enertopia_Presentation_May_2014.pdf - OTC Markets Profile - http://www.otcmarkets.com/stock/ENRT/quote
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SOURCE: Emerging Growth LLC