Health Canada’s transition from the Medical Marihuana Access Regulations (“MMAR”) to the Marihuana for Medical Purposes Regulations (“MMPR”) promises to commercialize the production and sale of medical marijuana. Despite hundreds of applications to grow medical marijuana, the regulatory body lists just 13 licensed producers under the new MMPR program on its website.

Tweed Marijuana Inc. (OTC: TWMJF) (TSXV: TWD), Bedrocan Cannabis Corp. (OTC: BNRDF) (TSXV: BED), and Mettrum Health Corp. (TSXV: MT) are some of the first licensed producers to become publicly traded entities in North America. Since the MMPR program is so new, investors are still awaiting the initial financial results from these companies as they begin commercial production and sale.

Supreme Pharmaceuticals Inc. (OTC: SPRWF) (CSE: SL) appears well positioned to become the next publicly traded licensed producer of medical marijuana. With a highly qualified team and top-tier operations, the company could become one of the largest producers in the industry, if it’s successful in obtaining a license.

Unique Business Model

Supreme Pharmaceuticals differentiates itself from many competitors with its client-centered, environmentally friendly and affordable medical marijuana that’s sustained through the marriage of commercial agriculture and traditional growing. With a pre-approval from Health Canada, the company recently raised over $2.5 million that it requires to complete the security upgrades and begin production.

By using natural sunlight rather than artificial light, the flagship greenhouse in Kincardine, Ontario produces high quality and cost-effective product on a seven-acre, 342,000 square foot facility. Management plans to have approximately 280,000 square feet in productive growing space, 6,000 feet in R&D space, and a 50,000 square foot high-security processing area.

The location in Kincardine lies at the heart of agricultural southern Ontario near the shores of Lake Huron, while standing adjacent to the Bruce Energy Center industrial park. By establishing its first greenhouse in this area, the company is well positioned to take advantage of numerous efficiencies from its size, design, and location, including synergies with nearby agriculture and industrial operations.

On a regulatory level, the company has received all necessary approvals from the municipality, local law enforcement, and local fire authorities. Management also noted the strong support from the local municipality and business community in a mid-September press release, noting that the support has enabled them to maintain a construction schedule that will permit them to grow cannabis by year-end.

Management Additions

Effective management is the lifeblood of any public company – especially early-stage ventures that rely on their expertise. While most medical marijuana companies have simply assembled small teams of businesspeople, Supreme Pharmaceuticals has spent considerable time building a team that is highly experienced in agriculture and passionate about the burgeoning medical marijuana industry.

In mid-August, the company announced the addition of Mr. Brayden Sutton as its Executive Vice President. Mr. Sutton has been involved in the research and analysis side of the cannabis industry for over ten years, including as President and CEO of CannabisHealth.com and as an analyst for 420Investor.com. With a thorough knowledge of the industry, he will be instrumental in developing strategy.

In late September, the company announced the addition of Mr. Chris Bechtel to its Advisory Board. Mr. Bechtel has a wealth of experience in capital markets, start-ups, and medical marijuana, including his role in starting a small oil and gas business when he was 23 years old that grew to over $30 million in annual revenue. He will be instrumental in helping the company manage its growth and unlock value.

Compelling Valuation

Supreme Pharmaceuticals feels they have developed the type of team and project that Health Canada is looking for in an MMPR licensed producer. With a combination of medical marijuana and commercial agriculture expertise, the company is uniquely positioned to capitalize on the growing medical marijuana industry with its sizable 342,000 square foot proposed production facility.

Many licensed producers and those companies perceived to be close to becoming licensed producers have been trading with lofty market capitalizations. With Supreme Pharmaceuticals’ stock trading at around $20 million, investors may want to take a second look at the company as it progresses towards securing a license and potentially becoming one of the country’s largest producers.

Company Name Ticker Symbol Market Capitalization
Tweed Marijuana Inc. OTC: TWMJF / TSXV: TWD C$80,234,000
Bedrocan Cannabis Corp. OTC: BNRDF / TSXV: BED C$49,275,000
Mettrum Health Corp. TSXV: MT C$61,700,000

Investors in ancillary businesses like AeroGrow International Inc. (OTC: AERO) or American Green Inc. (OTC: ERBB) may also want to take a closer look for exposure in Canada’s burgeoning marketplace. Health Canada projects that the industry could reach C$1.3 billion in size by 2024 with hundreds of thousands of patients enrolling, while the potential for recreational legalization remains a very real possibility.

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