You Can't Grow Cannabis Without Starting Materials
Feb. 3, 2017 5:37 PM ET|9 comments| Includes: ACBFF, APHQF, PRMCF, THCBF, TWMJF
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Summary
In Canada, medical marijuana patients are given a choice between growing it themselves and purchasing it from a Health Canada Licensed Producer.
Both patients and Licensed Producers alike must purchase their starting materials (seeds or live plants) from legally approved sources.
In this article we provide a brief overview of the companies involved in selling approved starting materials, and why its a big deal.
And finally, we'll share our favorite pick of them all.
In our recent interview with the 38th and newest Canadian Licensed Producer of medical marijuana, James E. Wagner Cultivation Ltd., we discussed the strains they are currently growing and the L.P. through which they obtained the starting materials for the plants.
One L.P. buying starting materials from another L.P. may seem a bit like the chicken or the egg conundrum but for Canadian Cannabis. Since one L.P. needs product from another L.P. in order to get going, we thought it would be important and interesting to point out the companies that are operating in the starting materials space.
Seeds and Clones
Starting materials can either be seeds or live plants. Often overlooked, starting materials are an important aspect of the Canadian medical marijuana program for two main reasons:
Prospective and current L.P.s need legally obtained starting materials to begin cultivation
Patients opting to grow their own also need legally obtained starting materials
We did a little digging and found a handful of companies that provide starting materials or plan to offer starting materials to other L.P.s as well as patients.
The Companies
According to the Health Canada website, 4 of the existing 38 licensed producers are currently offering starting materials for sale.
These L.P.s include: Canna Farms Ltd., CannTrust, Inc., MariCann Inc., THC Biomed Ltd. and Whistler Medical Marijuana Corp. Besides these four, there are other L.P.s eyeing the starting materials space as a potential opportunity.
THC BioMed (THCBF):THC BioMed started offering starting materials on January 23rd, and currently has 29 strains in stock. In addition to selling live plants and seeds as starting materials, THC BioMed is pursuing an acquisition of Clone Shipper. Clone Shipper developed a method of shipping plants in a self-contained environment with a battery powered LED light. THC BioMed also plans to offer a individual sized indoor cultivation unit to their "grow your own" patients in the future.
Whistler Medical Marijuana Corp. (21.5% owned by PharmaCan Capital PRMCF): Whistler has been offering live plant starting materials since October 2016 and is the only Licensed Producer to offer 100% certified organic starting materials. They offer four strains and ship their plants using the previously mentioned Clone Shipper.
Canna Farms Ltd. (Private): offers starting materials in the form of live plants.
CannTrust, Inc. (Private): offers seeds to patients wishing to grow at home and hopeful future L.P.s.
MariCann, Inc. (Pending Listing): is in the process of listing on the Toronto Venture Exchange via a reverse merger. MariCann currently offers three strains of live plant starting materials.
Potential Entrants
Canopy Growth Corp. (TWMJF): According to an August 2016 Lift News article, "Canopy Growth Corp, a conglomerate of Bedrocan, Tweed and Tweed Farms announced their pledge to support home growers in their choice to grow their own medicine by renting their non-MMPR space, selling start up materials and genetics and sharing their expertise" However, starting materials from any of their four licensed producers are listed as "Not Available" on the Health Canada website.
Aurora Cannabis, Inc. (ACBFF): In their previous announcement of their new Aurora Sky facility, Aurora Cannabis, Inc. mentioned an expansion of their current facility to establish "a centre of excellence for the propagation of starting materials for the Leduc County greenhouse and Health Canada licensed home growers", suggesting plans to enter the business of starting materials.
Aphria Inc. (APHQF): mentioned in an August 24th Facebook post that they are "beginning the process of investigating the growing, strain selection, transportation and pricing for the starting materials."
Another PharmaCan subsidiary, The Peace Naturals Project states on their website that they are "currently under way to becoming your premier provider of Cannabis seeds and clones."
Outlook
We believe that given the dependence of new L.P.s as well as at home growers on these providers of starting materials gives them an advantage over their competitors. Since newly approved L.P.s need to legally source their cannabis starting materials, their shopping process begins with competing L.P.s that sell these materials. This gives providers of starting materials an added level of control over the strains and genetics we see on the market in Canada.
Our favorite is THCBF, given their investment in Clone Shipper. All of the L.P.s shipping live plants to grow-at-home customers use Clone Shipper, and this technology is in a position to dominate the legal marijuana market in the United States as it matures and develops.
Conclusion
In cannabis' version of the chicken or the egg question, it becomes clear that the chicken (in this case marijuana) comes after the egg (starting materials). Without legally obtained starting materials, individuals and L.P. applicants alike run the risk of violating ACMPR. We look forward to the pending listing of MariCann on the TSX Ventures exchange, and will be sure to update readers as developments occur.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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