If you are looking for a pure medicinal cannabis company, look no further. Bedrocan, based out of Holland, has serviced 20,000 patients since inception, and is a veteran in an infant medical marijuana market. Now, that may sound like an oxymoron, but Bedrocan has been producing medical cannabis for 13 years and is the gold standard for the medicinal cannabis industry. Its medicine is available in 7 countries, including the emerging Canadian market. Bedrocan has earned such great respect that in 2011; the company was approached by Health Canada to provide its input on the Marihuana for Medical Purposes Regulations (MMPR). The MMPR is the governing body that controls the medical marijuana market in Canada.
Two terms used in a Bedrocan interview and/or article are the words “standardization” and “medicinal cannabis.”
Bedrocan prides themselves on being able to provide medicinal cannabis that is consistent from order to order. This form of consistency is only found at Bedrocan and possibly Cannamed. Cannamed might have measures in place for standardization, but Cannamed is not up to the degree of standardization of Bedrocan. Marc Wayne, Bedrocan’s President and CEO, said that this kind of standardization couldn’t be achieved in a greenhouse. To achieve this kind of standardization requires making all the variables the same in the grow operation from batch to batch.
Bedrocan doesn’t like to use the term “medical marijuana.” Management refers to their product as “medicinal cannabis”. Bedrocan truly believes they are making a medicine and its primary focus is testing their strains to effectively treat sicknesses and diseases to make life more manageable for its patients.
Game plan to dominate the market
Bedrocan has a 2-prong strategy to operate in the medicinal cannabis market in Canada. Their phase 1 part of the strategy was to import cannabis from their Netherlands location while their facility is being built. In December 2013, Bedrocan was granted a license to sell medical cannabis through importation. Although Bedrocan is unable to obtain the supply of marijuana they need to support their maximum customer base in Canada, they are still able to service 1,500 patients. The patient count is up from 1,100 patients in August 2014. In 4 months, Bedrocan has been able to increase its patient base by 36.36% all without a facility in Canada.
In addition to the growing number of patients, Bedrocan has a sizable backlog of patients who are on the waiting list. Once Bedrocan begins production in their facility, those patients on the waiting list will be added to the existing patient base. Although their facility was being constructed, Bedrocan felt it was necessary to develop a patient base, inform doctors, and build a reputation on a small scale before they ramped up production.
Phase 2 of Bedrocan’s strategy is to have a facility to domestically produce cannabis in Canada and end their reliance on imports from their Netherlands grow operation. The facility will be 52,000 square feet and according to Marc Wayne, Bedrocan’s CEO and President “when our new facility is operational in 2015, we believe our production, in terms of quality, standardization and yield, will be unmatched by any other producer in Canada or around the world. [The facility will be] the most technologically-advanced medicinal cannabis growing operation in the world.” Bedrocan is expected to receive approval for their facility sometime in January and start shipping medicine from their facility at the beginning of the 2nd quarter (beginning of April).
In preparation for the large capital required for the facility, Bedrocan completed a private offering back in April to raise $4,400,000, and in May, when they raised another $11,475,000, when they completed their reverse merger. In total, Bedrocan raised $15,875,000 and according to management, they will not need to raise additional capital in the near term.
At full capacity, the facility will be able to produce 4,000 kilograms (4,000,000 grams). Marc Wayne said Bedrocan would be profitable based on the sale of 1,000 kilograms (KGs). Bedrocan charges $7.50 a gram for each of the 5 strains of medicinal cannabis it sells. If Bedrocan can sell its entire inventory at capacity, it would generate $30,000,000 in revenue with $22,800,000 in EBITDA. That would equate to 76% gross margins, which is in line with many analysts expectations for the margins of other licensed producers. In an investor presentation, Bedrocan projects that the average patient will require 1.5 grams daily and approximately 500 grams annually. At full output of 4,000,000 grams, Bedrocan can service 8,000 patients.
Medical Advisory Board
Bedrocan initiated a Medical Advisory Board to help the company conduct research on various fields in medicine for the application of medicinal cannabis. “The advisory board includes physicians specializing in pain management, psychiatry, medical oncology, and physical rehabilitation, as well as a PhD expert in medicinal cannabis and plant-based medicines. Each member has clinical and/or research experience in the use of cannabis for the management of symptoms associated with chronic health conditions.”
Here are the resumes of the members of the Medical Advisory Board:
•Dr. Donald Abrams, Chief of the Hematology-Oncology Division at San Francisco General Hospital, Professor of Clinical Medicine at the University of California San Francisco, and one of the world’s foremost experts – as a researcher and clinician – in the medicinal uses of cannabis
•Dr. Aline Boulanger, Director of the Pain Clinics at both Centre hospitalier de l’Université de Montréal (CHUM) and Hôpital du Sacré-Cœur de Montréal, and Associate Professor and Director of the Pain Medicine program at the Université de Montréal Faculty of Medicine’s Department of Anesthesiology
•Dr. Karen Ethans, Director of the Spinal Cord Unit at Winnipeg Health Sciences Centre, and Associate Professor in the University of Manitoba, Department of Internal Medicine’s Section of Physical Medicine and Rehabilitation
•Dr. Martin Katzman, Clinic Director and Staff Psychiatrist at Toronto’s START Clinic (Stress, Trauma, Anxiety Rehabilitation and Treatment) for Mood and Anxiety Disorders, and a faculty member at the Northern Ontario School of Medicine (Laurentian University and Lakehead University) as well as in the Department of Psychiatry at the University of Toronto
•Arno Hazekamp, PhD, Head of Research and Development for Bedrocan BV, the official grower of medicinal cannabis in the Netherlands, whose PhD program at the Leiden-Amsterdam Center for Drug Research focused on the medicinal properties of the cannabis plant and its practical use in modern medicine, and who is a globally-recognized expert in the chemical analysis, quality control, and product development of medicinal cannabis
Exclusive licenses and awards received
Bedrocan meets or exceeds ISO 9000 rated production. “The ISO 9000 family addresses various aspects of quality management and contains some of ISO’s best known standards. The standards provide guidance and tools for companies and organizations who want to ensure that their products and services consistently meet customer’s requirements, and that quality is consistently improved.”
The International Narcotics Control Board granted Bedrocan permission to import cannabis from the Netherlands to Canada. Approval from this regulating body is arduous. Bedrocan is only 1 out the 4 companies in the world allowed to sell marijuana internationally. With all of these accolades and regulatory approval, goodwill should definitely factor these criteria.
Recent financial results
Bedrocan 3rd quarter & 9 month period results
- 3rd Quarter: $493,363
- 9 Month period: $1,086,744
- 1st licensed producer to eclipse $1 million in revenue
- Gross Profit:
- 3rd Quarter: $174,482
- 9 Month period: $404,560
- Cash & short term investments:
- Price: $0.66 (12/31/14)
- Shares outstanding: 69,470,500
- Market capitalization: $45,830,500
- Stock options to purchase common shares: 2,861,000
- Warrants to purchase common shares reserved for further issue: 17,104,300
Future plans for growth
Bedrocan has plans to expand distribution into Switzerland and Czech Republic. In addition to its expansion in Europe, Bedrocan has set its sights on Latin America. On December 18, 2014, Bedrocan announced that they would be entering Latin America, making it the 1st legal marijuana company to operate on 3 continents.
Although Bedrocan is commonly referred to as a medical marijuana company, they should be known as a cannabis bio tech firm based upon their management team, grow process, and commitment to treat a host of ailments. Bedrocan’s management is relatively quiet and prefers not to boast. They’d rather let the product and results speak for themselves. Bedrocan has aspirations of becoming a global brand and there is no reason to doubt it. Multiple governments who want to initiate a medical marijuana program have reached out to Bedrocan. While the product they produce is among the highest rated products on various rating websites, Bedrocan’s intangibles are in my estimation being heavily discounted by investors. I would be a long-term buyer of Bedrocan, as it appears to be the early leader of the medical marijuana industry.