– Bedrocan will be the second licensed MMJ producer to go public in Canada (mid August expected)
– Bedrocan has ten years of overseas experience (not a flash in the pan company)
– Market leader Tweed may lose its number one value spot, pundit says
Much as they did during the dotcom boom, this year, many faltering or dormant junior mining companies on the TSX Venture Exchange have turned their focus to finding some sort of play in the next big thing, as the new MMPR (Marijuana for Medical Purposes Regulations) policy implemented by Health Canada allowed medical marijuana to become a real industry.
As a result, Canadian investors suddenly have lots of choices in the medical marijuana space, with upwards of 40 TSXV and CSE companies touting MMJ business plans, or at least plans to have a business plan soon. Medical marijuana dispensaries have expanded more over the last few years. As the use of medical marijuana is legal in a number of states, from looking into a lansing dispensary if you are from Michigan or finding a dispensary in Florida, this industry looks like it is doing well, especially as there are people out there who have a health condition or an injury that requires the use of marijuana to treat this. You can even buy medical marijuana online. So if this is something you’re interested in trying for medical reasons, then you can find your local dispensary or look online now.
If you didn’t know, medical marijuana can come in many forms. From oils and strains such as purple space cookies, to edibles, there is a range for you to choose from, depending on your preference. So before you commit to anything, be sure to do your research.
So far, only one of those is a licensed deal; the $100m market cap Tweed Marijuana Inc.
There’s about to be a second. Bedrocan Canada is coming.
Pat DiCapo, a very successful Bay Street financier and the manager of the merchant bank PowerOne Capital Markets, is responsible for listing the next licensed medical marijuana company, Bedrocan Canada Inc. He also helped it raise $15,875,000 privately in anticipation of it going public. Mr. DiCapo’s Capital Pool Company, POCML 2 Inc., signed a deal to take Bedrocan public and yesterday at a meeting in his office on King Street West in Toronto, shareholders approved all the terms of the transaction.
David D’Onofrio, the CFO for PowerOne Capital and the CEO of POCML 2, is hopeful Bedrocan will begin trading in mid-August, having recently received conditional approval of the transaction from the TSXV.
The regulations companies must follow to be approved for a license to grow and/or sell medical marijuana in Canada are arduous, and have changed several times over the last several months, something that is making it hard for the flock to catch up to the first movers.
According to Health Canada’s website, there are only 13 authorized licensed producers from more than 900 applicants. Perhaps ten more are close to their final approval, and after that, the door may well close to everyone else.
Bedrocan has been selling fully licensed pharmaceutical grade product in Canada with high consistency between batches in terms of chemical composition, since February. That consistency is important for medicinal purposes, and doctors take comfort in that.
That consistency has also been hard for competitors to lock down. Tweed has had enough issues with their first grow operation, they bought a second one to hedge their bets. Others have had product recalled due to Health Canada quality control issues. And then there’s the struggle of getting patients at the distribution end when, essentially, you’re not permitted by Health Canada to do any advertising.
Bedrocan CEO Marc Wayne is well equipped to navigate these issues, having been in the business for several years before before it became the ‘next big thing’, and is the chairman of the Canadian Medical Cannabis Industry Association, a lobby group set up by licensed producers to help regulators and government make good decisions about the market going forward.
Before that existed, Wayne was the Director of Business Development for the Canadian Consortium for the Investigation of Cannabinoids (CCIC), a leading organization of scientists and healthcare professionals established to promote evidenced based research and medical education concerning the therapeutic application of cannabis and cannabinoid-based medicines.
Before that, Wayne founded a software company that was purchased by Yahoo!
Medical marijuana industry pundit Chris Parry at Stockhouse.com likes what he sees in Bedrocan, both in the short and long term.
“The big deal with Bedrocan for me – right now – is the number of people waiting for it to hit the market. There’s going to be a massive demand for that stock because their crew are the medical marijuana suppliers to Europe. They’ve got chops. They already grow and sell on the other side of the world,” Parry says by phone Friday.
He continues, “Locally, they have the right people in place. They’re the only operation I know of that Health Canada is allowing to import product, due to their foreign connection. They haven’t rushed to market – at all. They are the non chest pumping, getting it done team.”
This should be another successful deal for Mr. DiCapo, who is better known for his natural resource investments (including Continental Gold, Cordoba Minerals, Mason Graphite) but was smart enough to get involved with the leader in the medical marijuana industry, rather than just throwing a deal together and hoping for the best.
Parry says there’s a US investor base watching the stock, keenly waiting to get in.
“There was a ton of US interest in the Tweed listing earlier this year and that money hasn’t received the love it needed to hold value in the months since. If you use Tweed as a comparable, and look at what Bedrocan is doing right that Tweed is not, with the knowledge that Bedrocan’s going to open with maybe half of Tweed’s market cap… I imagine there will be some stock price ascendancy pretty quickly, with a solid business model feeding long term value.”
On the distribution side, medical marijuana patients who choose Bedrocan get the added bonus of a company with over 10 years of experience growing the plant, as Bedrocan BV received a permit to grow medical marijuana in 2002 from Dutch regulators. Their pricing, at $7.50 a gram, is considered consistent and fair.
Added to that, the company has the potential to grow for the scientific side of the weed business, with product clean and consistent enough to be used for clinical studies and research and development.
“Even good companies are struggling to put the pieces together, closing new patient registration while they figure out the details,” says Parry. “While Bedrocan is still, admittedly, dragging its feet on the e-commerce side, to me that’s the easiest piece of the puzzle. For the rest of that puzzle, they are just doing it right. It’s going to be an interesting first day on the markets.”
This is not a recommendation to buy or sell any security. Always do your own due diligence.