ABcann: Going Public with Standardized Pharma-Grade Cannabis
April 12th, 2017
News, Top News
ABcann: Going Public with Standardized Pharma-Grade Cannabis
Canada’s cannabis industry is expected to grow from $240 million to upwards of $4 billion by 2019, which analysts believe will create a dramatic shortfall in supply. With around 40 licensed producers, investors have a unique opportunity to invest in an oligopoly that has already minted at least one cannabis ‘unicorn’ with a market capitalization of more than C$1 billion. The next big opportunities may be already-licensed producers that have yet to go public.
In this article, we will take a look at ABcann Medicinals Inc.’s scientific approach to the cannabis industry and why investors may want to take a closer look ahead of its going-public transaction.
Rapidly Growing Market
Canada’s cannabis industry is expected to grow from about $240 million in 2016 to upwards of $4.6 billion by 2019, according to PI Financial, which believes that the industry will experience a nearly 200,000 kilogram shortfall in supply by that time. Based on its projections, the analyst believes that Canadian licensed producers will need to cultivate a total of 610,000 kilograms of cannabis to fulfill domestic and export demand by 2019.
“The rigorous process of becoming a licensed producer of cannabis in Canada imposes significant barriers to entry and there will be a shortfall in supply in a legalized market in the short-term until production capacities catch up by 2020,” said Canaccord Genuity Group Inc. analysts in a November 2016 research note. This could create an enormous opportunity for existing licensed producers that enjoy an oligopoly over the short- to medium-term.
In terms of revenue, the market for cannabis is expected to rival the size of the beer, wine, and spirits industries as the number of marijuana users is expected to steadily rise to nearly four million during the first full year of recreational legalization. Canada could also become a leading exporter of cannabis given its growing experience in the industry, which could significantly increase the size of the market over the long-term as liberalization continues around the world.
Efficient, Pharma-Grade Approach
ABcann Medicinals is well-positioned to capitalize on the opportunity as a globally-licensed, cost-efficient producer of premium quality organic standardized medicinal cannabis. The company’s core advantage is its advanced growing technology that is capable of creating a consistent, organically-grown, pesticide free, and standardized product where every variable in the growing process is optimized and computer-controlled for the best results.
The company has conducted extensive research and development in conjunction with the University of Guelph’s Controlled Environmental System Research Facility. Through a 3-year partnership, the company invested $1.5 million in research at its Vanluven facility in Napanee where researchers were able to produce yields more than 100% over the industry average – providing both a cost and quality advantage over competitors.
“After visiting ABcann’s production facility in Canada, I personally witnessed that their production technologies put them in a class with the best in the world in their ability to produce standardized pharmaceutical grade cannabis,” said Syqe Medical Founder Perry Davidson, whose company recently signed a deal with Teva Pharmaceutical Industries Ltd. (NASDAQ: TEVA) to distribute its medical cannabis inhaler and has become an ABcann customer.
The company has leveraged its technology to produce a variety of strains and compound combinations for the best therapeutic results from high THC, to balanced, to high CBD. This variety gives healthcare providers the best options for recommending the appropriate prescriptions to treat conditions ranging from arthritis to schizophrenia with the confidence that each dosage of the product will be the same high quality medicine.
The standardized products could also provide a basis for clinical trials.
“I believe that the route followed by ABcann for standardized cannabis grown under strict conditions, leading to reproducible contents, will not only satisfy physicians but will also make possible clinical trials which will develop the evidence to transform how cannabis is perceived today in the pharmaceutical industry and the regulatory agencies,” says Professor Raphael Mechoulam of the University of Jerusalem. Mechoulam is a widely known cannabis scientist whose team first isolated THC and identified the endocannabinoid system in the human body. He also sits on ABcann’s Medical Advisory Board.
ABcann Medicinals has an existing 14,500 square foot facility in Napanee, Ontario with a production capacity of 1,000 kilograms per year. During the first half of this year, the company plans to add an additional bloom chamber to help increase capacity in the near-term. The Phase II Kimmett Facility consists of a 71,500 square foot facility with a production capacity of 20,000 kilograms per year and construction is already underway.
Beyond these facilities, the company owns 65 acres of property that’s ready for development with power, water, and waste infrastructure in place. Management believes that this land is sufficient to support an estimated 1.2 million square feet of production space that could be used to produce a significant amount of cannabis each year. The Phase II buildout would put the company ahead of many existing licensed producers that have achieved high valuations.
Investors may want to keep a close eye on ABcann Medicinals Inc. as it moves closer toward a public offering. For more information, sign-up to receive the company’s investor presentation and e-mail alerts for its public offering date.
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