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Yesterday, Health Canada announced that licensed producers under the Marihuana for Medical Purposes Regulations (MMPR), can ship unscented and unflavored cannabis oil to registered patients. The licensed producers will be able to start producing and selling cannabis oil after being inspected and approved by Health Canada. One producer said customers could start receiving oil in about two months.
Licensed producers must apply for a Section 56 exemption under the Controlled Drugs and Substances Act to conduct research on extractions. The Section 56 exemption, under the CDSA, states:
“Licensed producers to produce and sell cannabis oil and fresh marijuana buds and leaves in addition to dried marijuana (plant material that can be used to propagate marijuana will not be permitted to be sold by licensed producers to clients). The role of healthcare practitioners in authorizing marijuana for medical purposes does not change.”
Who will benefit from this announcement?
Yesterday, Health Canada said it will allow 18 licensed producers to sell oil as well as dried marijuana originally allowed under new federal regulations. The publicly traded licensed producers in Canada that are levered to this development include:
- Tweed Marijuana Inc. (TWD) (TWMJF) already applied for a Section 56 exemption and the company is upgrading its facility so they can start extracting once the facility is approved.
- OrganiGram Holdings Inc. (OGI) (OGRMF) is a licensed producer of medical cannabis through its subsidiary, Organigram Inc., who is a licensed producer of medical marijuana in Canada. Organigram is focused on producing condition specific medical marijuana for patients in Canada. Organigram’s facility is located in Moncton, New Brunswick.
- Bedrocan Cannabis Corp. (BED) (BNRDF) is in the process of being acquired Tweed Marijuana (announced on June 24th). Bedrocan operates under its Dutch licensor and they are one of the most experienced medical marijuana producers in the world.
- Mettrum Health Corp. (MT) (MQTRF) is a Toronto-based company and a licensed producer of medical cannabis through its subsidiaries. Mettrum received its first license on November 1, 2013 for its facility in Bowmanville, Ontario. The company received its second license on December 11, 2014 for its facility in Clearview, Ontario.
Outlook
Prior to this announcement, the MMPR only allowed for the sale of dried cannabis. Canada still has a ban on marijuana infused cookies and brownies, however, this is a step in the right direction. Many experts expect the size of the Canadian marijuana market to double once recreational marijuana is legalized.
We expect this announcement to lead to incremental revenue growth for licensed medical marijuana producers in Canada. This will serve as a catalyst for some of these companies mentioned above and investors should monitor the impact this has on the companies’ top and bottom line.
Important Investor Disclosures:
Technical 420 LLC, and any of its directors, officers, employees, affiliates, or subsidiaries does not accept any form of compensation from companies in return for writing reports on them. Also Technical 420 LLC, and any of its directors, officers, employees, affiliates, or subsidiaries do not hold any stock positions in companies covered by Technical420LLC. All information relied upon for the above report is publically available via various research resources, including third-party sources we consider reliable, but we do not guarantee that any of such information is accurate or complete.
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