When I first started really looking into the medical marijuana sector last year, there were very few companies further advanced than the multitude putting out ‘we’re looking at opportunities in agriculture, health and mining’ press releases.
Naturally Splendid (
TSX:V.NSP,
Stock Forum) was one of the early industry front runners.
They weren’t talking about growing weed and they weren’t interested in patient networks and they weren’t looking to paste the face of an Olympian snowboarder on downpipes. Rather, they were in the hemp business. Specifically, deriving omega 3 and 6 oils from hemp, and putting out associated products to the retail market through their
Natera product line of hemp proteins and seeds.
The Natera product is legit. Staff at Stockhouse will cut a dude to get their hands on it, whenever the NSP folks opt to ship us a box of samples. Which, sadly, happens all too rarely.
The packaging is first rate. The product placement in stores has been exceptional. The Naturally Splendid booth at any trade show is usually three deep. The management team have executed, and they’ve done so without promo, without funky dilutive financing games, and without putting weed leaves all over their logo and packaging. This is a professional outfit by any measure, and certainly by comparison to those in the weed space.
But Naturally Splendid is trade halted, and has been for a few months now. Why? Because they’re complicated and the TSX is scared of weed.
NSP is trying to complete a deal that will bring in some new partners, new product lines, and new uses for their IP, and the TSX doesn’t know what in the hell to make of all this. I’m told by a contact in the legal area that NSP was asked by the TSX to sign a document agreeing that they ‘wouldn’t conduct any illegal activity’ if they were allowed to resume trading.
Not that they ever have done anything illegal, and not that any other company anywhere has had to sign such an undertaking before to my knowledge, but what they actually do is a bit of a mystery to many, and it’s one of the reasons their stock has underperformed over the last ten months.
But any chance they have of pushing forward into what amounts to a mega-deal on the horizon is hamstrung by the exchange continuing to place companies in chokeholds while they have a chat, rather than having the chat out in the open.
We saw this from the TSX with companies like Chlormet last year, which was riding a spike in investor interest when the TSX decided they were too far over the change of business line and took the wind out of their sales right through the peak interest level in the sector. Satori Resources and Papuan Precious Metals were so constantly harangued by the exchange over any hint that they might be involved in mining AND weed, that they missed great chances to return profits to shareholders at the risk of the TSX shutting them down.
Say what you will about Chlormet, Satori and Papuan, but it’s clear to anyone who takes even a passing look at NSP that it’s far closer to the NASDAQ than it is to a bait and switch, and the exchange shouldn’t need two months to figure that out.
NSP was the first industrial hemp company on the TSX. It is working with the National Research Council on hemp omega research, as well as POS Biosciences, a former government lab, now privatized, that was so impressed with NSP’s omega oil extraction tech that it has asked them to bring it to POSB’s 600 existing corporate clients, as well as their 70k sq. ft, $130m facility, where the company can now churn out 20 metric tons of hemp omega per month with no capital cost.
That’s the equivalent of $30m of product, none of which will get you stoned, but all of which will get you healthy, and all of which will be in high demand for export.
Clinical studies on the NSP product showed a jump of 637% omega presence in eggs from chickens fed the product, 400% more omega in the thigh meats of the chickens, and (something they didn’t expect but were stoked to see) it lowered trans-fat in the chickens by 5%.
Those results are SICK. They are holy grail-like. They’re almost so good as to be unbelievable.
But while NSP is selling hemp protein in supermarkets and working with esteemed research institutions and academia such as the University of British Columbia and attracting big money from the US (more on that later), the Toronto Stock Exchange is sitting on their necks and giving them noogies.
I called NSP about the trade halt this week because they’re trying to raise $1.75m to upscale production and lock down licensing, and CEO J. Craig Goodwin was doing exactly what I expected he would – sympathising with investors, chomping at the bit to get to work, but refusing to get into it about what’s causing the delay at the exchange.
“They’ve got a job to do, I get it,” he said. “We’ve been answering any and all questions, whenever they come in, and we’re happy to answer any others they might have. They want to know exactly what we do and how we do it but, yeah, I’m getting a lot of calls from investors and brokers asking when they’ll be done.”
Meanwhile, NSP is running trails on using their product in pet food, with a study at the Alberta Food Development Centre. They’re also getting grants from the National Research Council for their work which has all the makings of a Canadian success story based on what’s been found to date.
To be added later to the mix: The same tech can work for canola and algae markets.
Want to know more detail? Okay, let’s get pointy headed for a second.
The key to the tech is, and I quote, “micro encapsulation liposomal technology” that takes the omega to the intestine which allows it to stay intact when it hits the bloodstream. That means the effects peak longer, which is how it gets from the chicken to the egg.
Or, in people, to all areas of your body that can make use of it.
Also worth noting, current omega supplies come from fish. You don’t have to be an aquarium scientist to know that’s not a sustainable source. Fields of prairie farms growing hemp omega, however, are.
Farmers dig growing hemp. It’s profitable. It’s in demand. It doesn’t screw up the soil. It doesn’t require pesticides and chemicals. It’ll grow in harsh conditions.
And did I mention it’s profitable?
It’s also freaking amazing from a nutrition standpoint. From the NSP website:
- Hemp is the most digestible plant based protein on earth.
- Hemp contains all the essential amino acids required for human health.
- Hemp is perfectly balanced with the 3:1 ratio of Omega 6 and 3.
- There are no known allergies to hemp
- Hemp is suitable for those unable to eat gluten, sugar, dairy and nuts.
- Hemp is an ideal alternative protein source for vegans and vegetarians.
- Hemp contains more required amino acids than milk, meat or eggs.
- No pesticides or herbicides are required to grow hemp.
- Hemp is an excellent source of dietary fiber.
They ain’t lying. Even Dr Oz says so.
So why the fear that they’re secretly going to start a Hells Angels chapter, slip purple kush into breakfast cereal and run an FITX-styled pump and dump? If any company we track in the sector is less likely to be caught dealing the sticky icky, I don’t know of it.
And yet, on the front page of their website you’ll find the words, “NSP and its partners are building an expanding portfolio of patents (issued and pending) and proprietary intellectual property focused on the commercial uses of
Cannabis Sativa, industrial hemp, and
cannabinoid (CBD) compounds in a broad spectrum of applications.”
That’s not a typo. They are. The company has entered into a partnership with
Boreal Technologies Group, which is located at UBC, and which is exploring CBD infused pharma and nutraceuticals.
“In partnership with Boreal Technologies and Full Spectrum Laboratories, Naturally Splendid is bringing to market a comprehensive suite of CBD-related market-disruptive technologies, including CBD water solubility – a major breakthrough that facilitates major advances in the production of CBD-based medicines and supplements,” says the website.
This is where the TSX gets the vapours.
“What happened last year was, someone on a messageboard said ‘NSP is getting into the weed business’, and the stock jumped. It was wrong, but the jump certainly caught our attention,” says Goodwin. “So we started looking at what was happening in the space, and what, from a scientific and nutritional perspective, possibilities existed there.”
The founder of Boreal is Florida-based Charlie Brink, who invested $15m into that company, has invested in two earlier NSP private placements, and will take a substantial chunk out of the next one. He has also, at various points, bought as much as $1m in NSP stock on the open market.
Brink was behind
Mona Vie Energy Drinks, which brought acai to US prominence and went from zero to $3b in revenue in just three years.
Since then, Boreal has also put together the world’s largest MMJ DNA database, with over 12k strains laid out, mapping their genomes and figuring out what does what. Brink’s partner, David Race, was an ops manager at Pfizer. He too is part of NSP.
These are serious people. And they are bringing monumental heft to this story which, a year ago, was a couple of prettily packaged retail products trying to find supermarket space but, today, is on the brink of something big.
I’ve never not said Naturally Splendid was best of breed. Time for the exchange to treat them as such and let slip the dogs of science.
--Chris Parry
https://www.twitter.com/chrisparry
FULL DISCLOSURE: Not a Stockhouse client and don’t have a position. Just dig it when a company does what it promises.