A New Business Model Emerges and 12 Stories from New Cannabis Ventures

This is a copy of the February 17th edition of our weekly Newsletter, which we have been publishing since October 2015.


As Canada’s legal cannabis industry continues to evolve, new business models are emerging. In its early days, the industry required complete vertical integration in its flower-only market, with the licensed producers (LPs) growing the cannabis and selling it directly to its medical patients. As the industry has matured, we have seen the development of a wholesale market and, with the advent of adult-use, the emergence of cannabis retailers. Another change has been that several LPs have move towards specialization, with some not focusing on cultivation at all. There are examples of LPs that are limiting their activities solely to medical cannabis sales, like Shoppers Drug Mart, and, increasingly, some are also focused exclusively on extraction as the derivatives market has become more substantive.

In the past three months, Health Canada has issued 18 new licenses, and 13 have been for only  extraction (processing). The first LP to be licensed by Health Canada without receiving a cultivation license was MediPharm Labs, which received its license last March. The company offers both contract processing as well as white label production, and it has announced a substantial number of clients that have signed multi-year agreements, including one with Canopy Growth.

Despite its significant investment in its own extraction capabilities, Canopy Growth has signed agreements with Neptune Wellness Solutions and Valens GroWorks in addition to MediPharm Labs. Aurora Cannabis has forged a strategic relationship with another LP focused on extraction, Radient Technologies, which uses a microwave process.

As Canada liberalizes its products permitted for sale beyond its current extracts, which, despite their limitations have been extremely popular, later this year, the demand for extraction will accelerate. The introduction of edibles and other forms of extracts is likely to benefit this group of extraction-focused companies. We think that substantial value will be created by this part of the supply chain and suggest that readers interested in the Canadian market take the time to understand this sub-sector.

Mile High Labs is an industrial-scale cannabinoid extractor that produces a considerable amount of the CBD ingredients available on the market today. With headquarters in Boulder, Colorado, and offices and distribution centers across the United States and Europe, Mile High is a recognized leader in the advancements of CBD science, safety, and transparency.

To learn more about Mile High Labs, a leading supplier of compliant CBD ingredients and a client of New Cannabis Ventures, visit the company’s page that we maintain on its behalf and click the green Get More Info button.

New Cannabis Ventures publishes curated articles as well as exclusive news. Here is some of the most interesting business content from this week:

To get real-time updates download our free mobile app for Android or Apple devices, like our Facebook page, or follow Alan on Twitter. Share and discover industry news with like-minded people on the largest cannabis investor and entrepreneur group on LinkedIn.

Use the suite of professionally managed NCV Cannabis Stock Indices to monitor the performance of publicly-traded cannabis companies within the day or over longer time-frames. In addition to the comprehensive Global Cannabis Stock Index, we offer a family of indices to track Canadian licensed producers as well as the American Cannabis Operator Index.

View the Public Cannabis Company Revenue Tracker, which ranks the top revenue producing cannabis stocks that generate industry sales of more than $2.5m per quarter.

Discover upcoming new listings with the curated Cannabis Stock IPOs and New Issues Tracker.

Stay on top of some of the most important communications from public companies by viewing upcoming cannabis investor earnings conference calls.

Consider subscribing to 420 Investor, Alan’s comprehensive stock due diligence platform since 2013 for more in-depth information and market intelligence about the publicly traded cannabis sector.

Find your place in the cannabis industry by visiting our Careers and Jobs Page and learn which companies are hiring aggressively.

Exclusive article by Alan Brochstein, CFA
Alan Brochstein, CFA
Based in Houston, Alan leverages his experience as founder of online community 420 Investor, the first and still largest due diligence platform focused on the publicly-traded stocks in the cannabis industry. With his extensive network in the cannabis community, Alan continues to find new ways to connect the industry and facilitate its sustainable growth. At New Cannabis Ventures, he is responsible for content development and strategic alliances. Before shifting his focus to the cannabis industry in early 2013, Alan, who began his career on Wall Street in 1986, worked as an independent research analyst following over two decades in research and portfolio management. A prolific writer, with over 650 articles published since 2007 at Seeking Alpha, where he has 70,000 followers, Alan is a frequent speaker at industry conferences and a frequent source to the media, including the NY Times, the Wall Street Journal, Fox Business, and Bloomberg TV. Contact Alan: Twitter | Facebook | LinkedIn | Email

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