Cannabis Wheaton Adds a Valuable New Distribution Channel
September 27th, 2017
Exclusive, Feature Stories, News
Canada’s cannabis industry is projected to exceed $22.6 billion over the coming years, according to Deloitte, driven by the legalization of recreational marijuana nationwide. While many licensed producers have focused on ramping up production capacity, Cannabis Wheaton Income Corp. (TSX-V: CBW) has created the first cannabis streaming company focused on partnering with licensed producers to generate value for all parties.
Since its inception, the company has entered into 15 agreements across six provinces to fund facility construction, expansion, and innovations in exchange for minority equity interests and portions of the cultivation production. The company is now starting to bolt on important pieces to its streaming platform by building distribution channels for their cultivation production allocations – something that should ultimately generate significant long-term shareholder value without the capital expenditures of a full cultivation operation.
Pharmacies & Medical Cannabis
The Canadian Pharmacists Association (CPhA) initially opposed being included in the Marihuana for Medical Purposes Regulations (MMPR) – a predecessor to the Access to Cannabis for Medical Purposes Regulations (ACMPR), but the association reversed its position and insisted that pharmacies would be the safest way to dispense medical cannabis in Canada.
“Pharmacists are the safest and best equipped to provide clinical advice to patients and provide appropriate oversight,” said Phil Emberley of the CPhA. “Pharmacist involvement in dispensing of medical marijuana would help identify potential problems such as drug interactions, alternative therapies, contraindications, and potential addictive behavior, and provide the opportunity for patient counselling on appropriate use.”
The association called its change of heart an “evolution” informed by the lack of clinical oversight, the need for improved patient safety, and the notion that Canadians want and trust pharmacists to play a key role in managing and dispensing medical marijuana. Pharmacies also have an existing infrastructure in place to handle controlled substances, and a secure supply chain to limit diversion.
Partnering with a Pharmacy Chain
Cannabis Wheaton recently announced an exclusive distribution alliance with a national chain of independent pharmacies. Under the terms of the exclusive 10-year agreement, the two companies will develop and implement medical cannabis distribution and retail sale opportunities across 40 independent locations throughout Canada. The move could open the door to significant distribution opportunities for medical cannabis over the long-term.
Through group purchasing agreements, the pharmacy group has close ties to other independent pharmacy chains that collectively own and operate approximately 1,500 locations across Canada. This represents a significant portion of the more than 3,000 independent pharmacies throughout the country, which could become a key distribution platform for medical cannabis in many provinces and remote communities.
“We have been closely monitoring how the distribution of cannabis will play out in each of the individual provinces in Canada and how those provincial distribution systems may impact our streaming partners and our production yield allocations,” said Cannabis Wheaton President Hugo Alves. “Our goal is to ensure that Cannabis Wheaton and its streaming partners have opportunities to participate in distribution channels which allow them to maintain contact with customers and capture a portion of the retail margin from sales to those customers.”
Cannabis Wheaton Income Corp.’s (TSX-V: CBW) move to build potential distribution channels through pharmacies provides a glimpse into how the Cannabis Wheaton management team, comprised of seasoned industry experts, will strategically leverage their cannabis cultivation and supply platform. With a combination of production and distribution, the company is well positioned to unlock value for its own shareholders, as well as its growing list of partners.
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