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Invictus MD is Building a Portfolio of Licensed Producers with Large Production Capability

Ryan Allway

March 6th, 2017

News, Top News

The global cannabis industry has taken off over the past couple of years, but the Canadian market offers the most mature opportunities. With the election of Prime Minister Justin Trudeau, the country embarked on a course to legalize recreational marijuana on a federal level and become a global leader in cannabis cultivation, processing, and export. Investors have taken notice with several licensed producers reaching $100+ million market capitalizations.

In this article, we will take a look at Invictus MD Strategies Inc. (CSE: IMH) (OTC: IVITF) and its strategy to build a portfolio of Canadian licensed producers.

World’s Most Mature Industry

Canada’s cannabis industry could be worth $22.6 billion per year, according to Deloitte, as the drug becomes more widely prescribed and recreationally available next year. In fact, a recent survey found that 22% of Canadians regularly consume marijuana on at least an occasional basis while a full 7% consume the drug on a daily basis. Another 17% indicated that they would try the drug if it were legalized, which could make the total market 40% of the population.

Despite the significant growth in demand from consumers, there are only 38 licenses to grow, process, and/or sell medical marijuana under the Access to Cannabis for Medical Purposes Regulations (ACMPR) program established by Health Canada. There are many more licensed producers at various stages of approval, but the rigorous process means that it could be years before there is enough supply to meet expected domestic demand.

Many licensed producers have also begun exporting cannabis to other countries as a way to diversify their revenue. For example, Canopy Growth Corp. (TSX: WEED) (OTC: TWMJF) recently announced plans to export cannabis to Germany and other countries to support their medical marijuana programs. These moves could turn Canada into a leading supplier of cannabis around the world given its federally-legal status.

Building LP Capacity

Invictus MD Strategies plans to capitalize on Canada’s burgeoning cannabis industry by acquiring a portfolio of licensed producers and readying as much production capacity as possible to prepare for a projected shortfall of supply once marijuana is fully legalized. It has demonstrated the ability to act quickly and close deals to this point, with a flurry of announcements over the preceding four months.

Last year, the company announced the acquisition of a 33% stake in AB Laboratories Inc., a current licensed producer under the ACMPR. AB Laboratories has an existing 16,000 square foot facility in Ontario. As part of the same deal, Invictus acquired a 33% stake in AB Ventures, a newly incorporated company formed to develop a second licensed expansion facility through its common ownership with AB Labs. AB Ventures just acquired 100 acres and plans to build an initial 42,000 square foot production facility on the way to 100,000 square feet by 2019. This deal was originally announced as a letter of intent on November 24, 2016 and closed on December 23, 2016.

On January 17, 2017 Invictus announced a binding letter of intent to acquire 100% of PlanC BioPharma, a late-stage applicant in the final stage of approval with Health Canada. PlanC is developing a 30,000 square foot facility on 5 acres in British Columbia, with an option to purchase an adjacent 49 acres for further development, and has plans to hit 20,000 kg/year of production once they get rolling.

The company also announced a definitive option agreement with a third late-stage applicant to become a licensed producer on February 7, 2017. That was followed on February 24 with a definitive option agreement, giving Invictus 30 days after the LP applicant, OptionCo, receives its license to cultivate. OptionCo’s currently licensed site allows for production facilities to be built on 60,000 square feet of the company’s 150 acre parcel in Alberta. The company has submitted plans to build a 30,000 square foot facility with the option to add a 20,000 square foot production area on the second floor. The 150 acre property has 3 million square feet of buildable area, providing massive capacity to ramp up production as needed.

These businesses could prove extremely valuable over the coming years. After all, Canopy Growth Corp. recently became the cannabis industry’s first pure-play ‘unicorn’ with a market capitalization of more than C$2 billion. Canopy currently operates a 168,000 square foot facility. Many other licensed producers have market capitalizations of over C$100 million, which makes Invictus MD Strategies’ modest market capitalization a compelling value if its acquisition strategy succeeds and increased production capacity is realized.

Looking Ahead

Invictus MD Strategies Inc. (CSE: IMH) (OTC: IVITF) represents a compelling investment opportunity for cannabis investors looking for diversified exposure to the world’s most mature cannabis industry. With one existing licensed producer and two late-stage applicants, plus the AB Ventures spinoff, the company’s acquisition strategy could result in it becoming one of the largest pure-play opportunities in Canada’s $20+ billion cannabis industry.

For more information, visit the company’s website at www.invictus-md.com.

This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.

About Ryan Allway

Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.

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