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Aleafia Health Presents Investors With A Steep Discount Entry Point

Apr 22, 2019 • 8:12 AM EDT
8 MIN READ  •  By Michael Berger
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Download our full report on Aleafia Health HERE

Earlier this year, we published a report on Aleafia Health Inc. (ALEF.TO) (ALEAF), a leading Canadian cannabis producer, following its acquisition of Emblem Inc., and this is an opportunity to be watching.

2019 has been a banner year for Aleafia Health and we are excited about this emerging opportunity. Earlier this year, the Canadian cannabis producer was named as the 2019 TSX Venture 50 Top Performing Company of the Year and this is a testament to the strength of the business. Aleafia Health is led by a management team that has done a phenomenal job at putting the company in a position for success and we are favorable on this aspect of the story.

Aleafia Health has been focused on creating leadership positions in sub-sectors of the cannabis industry that represent significant opportunities and are not saturated. We are favorable on this focus and believe that it has the company better positioned for growth over the long-term. Although Aleafia Health represents an exciting opportunity with significant catalysts for growth, the shares have been under pressure and believe that the company has been flying under the radar. Today, we have issued an update on Aleafia Health and believe that this is company to be monitoring.

Announces a Groundbreaking Patient Education Platform

Last week, Aleafia Health reported an exciting development and launched FoliEdge Academy, a cloud-based cannabis education and certifications platform. The first-of-its-kind platform features proprietary, interactive courses that have been customized for large organizations, unions, insurance and healthcare providers, and educational institutions.

The platform was built with the support of D2L, a premier global online learning company, and we are excited about this opportunity. FoliEdge Academy course content will represent an important part of Aleafia Health’s scalable, cannabis health and wellness ecosystem, and can integrate with the company’s medical cannabis clinic network that has seen more than 60,000 patients to date. The evidence-based courses draw upon the company’s 10 million point medical cannabis dataset.

Aleafia Health appointed Rob Tyrie as the Head of FoliEdge Academy and we are favorable on this decision. Tyrie will lead the business development and the implementation of the solution with clients, including the integration of FoliEdge Academy courseware within health benefits processing for large insurance providers. Tyrie has spent more than twenty years with major companies, rolling out insurance technology solutions that allow consumers to get the coverage they need and to make the customer experiences the best that it could be.

Over the next few years, we expect to see a significant increase in the need for education and training services for the cannabis industry. We believe that this platform will help satisfy the increased demand for these services by improving the level of education when it comes to medical cannabis. The introduction of FoliEdge Academy cements Aleafia Health’s horizontal diversification strategy and will allow the company to connect with consumers within the large organizations that the educational solution is geared towards.

FoliEdge Academy represents a key pillar for Aleafia Health and we will monitor how the team is able to execute on this opportunity. We are bullish on the leverage to a market that is not saturated and believe that the market underappreciates this aspect of the business.

Bolsters Extraction Infrastrcuture

Last week, the company added 50,000 kg of extraction capacity with the Phase II expansion of the Company’s processing facility in Paris, ON. The expansion will, when operational, see the Company’s products and cultivation division, Aleafia Campus, maintain robust combined extraction and cultivation footprints across three facilities.

The facility has now secured a partial occupancy permit from the local government, marking the completion of an important milestone in the Phase II build-out which it expects to complete in Q3 2019. Aleafia Health will submit a Licence Amendment application to Health Canada, and will additionally require the final municipal occupancy permit prior to the operationalization of the site.

The existing Phase I facility is fully operational and licensed to cultivate, process and sell the Company’s health and wellness cannabis products for medical and adult-use consumers.

The expansion is expected to significantly increase the processing, extraction and packaging of high-margin derivative products including oils, capsules, sprays and other future formats under the Company’s adult-use Symbl and medical Emblem brands. Additionally, the Company will offer tolling and white label services to other Licensed Producers looking to leverage the Company’s extraction and packaging capabilities. Aleafia Health is currently purchasing the necessary equipment to meet or exceed the 50,000 kg capacity expansion, including milling, decarboxylation, COextraction and winterization machinery.  The Company believes that the 30,000 sq. ft. building expansion will provide significantly more space than is necessary to operate the new cannabis production lines.

We are bullish on this expansion as the company has agreements in place with major LP’s such as Tilray (NYSE:TLRY) and Aphria (APH.TO) (NYSE:APH) and it shows managements continued execution of the long term vision of the company.

Emblem Acquisition Supports its Focus on Patient Education

Last month, Aleafia Health completed the acquisition of Emblem, a Licensed Producer that has been capitalizing on the medical and recreational market in Canada. We believe that the combined company has significant growth prospects and believe that the market under-appreciates this opportunity.

One of the reasons why we are favorable on the combined company is due to the amount of synergies that can be created between the two businesses. The companies have been focused on similar opportunities within the cannabis sector and we are favorable on the amount of value that can be created as a result of this.

In regards to the FoliEdge Academy platform, we believe that the combined company is better positioned to execute on this opportunity. Through Emblem’s GrowWise Health division, the company has been highly focused on improving patient education and we expect this division to support the success of this new venture.

A Company with Significant Growth Prospects

We are very excited about Aleafia Health following its acquisition of Emblem and believe that the combined company has significant catalysts for growth. Now that the acquisition has been completed, Aleafia Health plans to capitalize on high-growth opportunities in Canada and abroad across four verticals: Cannabis Production, Health and Wellness, Cannabis Education and the Consumer Experience.

Aleafia Health will be able to leverage Emblem’s extraction and product innovation to sell high-margin medical cannabis directly to its patient base for the first time. This represents a significant opportunity for Aleafia Health as well as its patient base, which can access Emblem’s differentiated high-margin derivative cannabis products.

Another way that Aleafia Health will benefit from the acquisition is through the Provincial supply agreements that Emblem had entered into. These agreements will allow Aleafia Health to sell products in Ontario, Saskatchewan, British Columbia and Alberta, and we are bullish on the leverage to these markets. The company plans to gain national medical distribution through Emblem’s agreement with Shoppers Drug Mart and gain national retail distribution through Fire & Flower, Starbuds and the emerging OnePlant network.

An Opportunity to be Watching

Aleafia Health represents an exciting opportunity and we believe that it has significant catalysts for growth. We believe that the acquisition of Emblem has significantly improved the company’s leverage to the global cannabis market and we consider this to be a massive opportunity. The Canadian cannabis producer is in the early innings of a major growth cycle and is led by a management team that has had its finger on the pulse of the market.

During the last year, Aleafia Health has been able to significantly improve its fundamental story through acquisitions and we believe that the next year will be all about execution. The company has significant relationships in place and has massive growth prospects. We will monitor how Aleafia Health continues to execute and believe that this is an opportunity that has significant upside potential.

Although Aleafia Health has been executing at a very high level, the shares have been under pressure and have come well off its 2019 highs. We believe that Aleafia Health represents a compelling play on the burgeoning cannabis market and this is an opportunity that investors should be watching. To learn more about Aleafia Health, please contact support@technical420.com.

 

 

 

Pursuant to an agreement between StoneBridge Partners LLC and Aleafia Health Inc. (ALEF) we have been hired for a period of 180 days beginning February 1, 2019 and ending August 1, 2019 to publicly disseminate information about (ALEF) including on the Website and other media including Facebook and Twitter. We are being paid $7,500 per month (ALEF) for or were paid “ZERO” shares of unrestricted or restricted common shares. We own zero shares of (ALEF), which we purchased in the open market. We plan to sell the “ZERO” shares of (ALEF) that we hold during the time the Website and/or Facebook and Twitter Information recommends that investors or visitors to the website purchase without further notice to you. We may buy or sell additional shares of (ALEF) in the open market at any time, including before, during or after the Website and Information, provide public dissemination of favorable Information.

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Authored By

Michael Berger

Michael Berger is Managing Partner of StoneBridge Partners LLC. SBP continues to drive market awareness for leading firms in the cannabis industry throughout the U.S. and abroad.

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