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Milestone for Leading Cannabis Extractor: LABS listed on TSX-V

Jeff Nielson Jeff Nielson, Stockhouse
0 Comments| October 17, 2018

Click to enlargeThe cannabis industry is an emerging sector, with vast commercial/industrial potential that equates to decades of future growth and investment opportunities. However, as new entrants rush into this space, the sector may start looking a little crowded to some.

Those investors will be looking for companies that can clearly distinguish themselves from their peers. One Company that meets this criterion is MediPharm Labs Inc (TSX: V.LABS, Forum). MediPharm distinguishes itself from other cannabis companies both by what it is and what it has done.

LABS is a cannabis extraction specialist, with industry-leading processing capacity in Canada. As an extraction specialist, the Company has two primary components to its business model: Contract Processing and White Label services.

In pursuing its specialty, MediPharm has achieved a distinction unique to the Canadian cannabis industry. LABS is the first cannabis company to be licensed by Health Canada as a Licensed Producer (LP) of cannabis oils – but without having already acquired an ACMPR cultivation license.

Innovation. Its what investors expect from cannabis companies that choose to specialize in a particular niche: setting the standard as these new cannabis sub-sectors evolve.

Many cannabis companies have incorporated full “seed to sale” vertical integration into their business model, and there are merits to that approach. But there is an equally strong argument to be made for specialization, especially with respect to product development. President and CEO, Pat McCutcheon addressed the Company’s “absolute focus”.

MediPharm has the distinction of being the first company in Canada to become a licensed producer for cannabis oil production without first receiving a cannabis cultivation license. This absolute focus means we are not distracted by cultivation like other LPs so we can deploy all our resources to become leaders globally in extraction, purification, and isolation of cannabis elements with appropriate investments in technology and expertise in extraction, chromatography, formulation, all within ISO and cGMP critical environments.

Vertical integration is a business strategy centered around attempting to capture all available revenue streams throughout the supply chain of a particular industry. Specialization is a strategy centered around being the best.

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Senior Quality Technician monitoring the distillation process at MediPharm Labs’ Barrie, ON facility.

The Company’s corporate goal is to be not merely the Canadian leader in cannabis extraction, but also a global leader. In this respect, MediPharm’s investment in expert extraction capabilities speak for themselves. The laboratories and manufacturing facilities have been built to European GMP (Good Manufacturing Practices, or essentially pharmaceutical-grade) and ISO standard clean rooms and critical environments. With current extraction processing capacity of 100,000 kilograms per year, this is already Canada’s #1 cannabis extraction company. However, plans are already being advanced to boost this capacity to 250,000 kilograms per year by Q2 2019, and funding for this expansion is in place.

To complement this increasing scale, MediPharm is moving into Australia. Construction of a state-of-the-art extraction facility located near Melbourne is already underway. The facility will be approximately 1,000 square meters in size, equipped to produce the same pharmaceutical-grade cannabis oil as is currently produced in LABS’ wholly-owned 70,000 square foot Barrie, Ontario facility. This will become an important import-export hub for MediPharm Labs in this emerging region for cannabis.

This leads to products. With its contract processing, MediPharm supports Licensed Producers through a tolling service whereby dry cannabis is processed and purified, resulting in pharmaceutical-grade cannabis oil extracts. Parallel to this are the Company’s White Label services. Via a joint venture model, LABS formulates, commercializes and distributes advanced cannabis-derived products. Both avenues of this contract manufacturing can be applied to all regulated cannabis concentrate products.

Making this specialized business model even more attractive to investors is that MediPharm’s business is already at the fully operational stage: a wholly-owned, purpose-built facility, extraction equipment installed, the operations team is already in place, and the Company has 3,000 kg’s of dried flower in inventory. The company has been extracting oil since June 2018 in anticipation of legalization on October 17th.

For investors looking for additions to their cannabis portfolio, MediPharm Labs is also a new publicly listed company. LABS commenced trading on the Venture Exchange on October 4, 2018 via an RTO. This means that while MediPharm has advanced (extraction) operations, it still represents an early-stage opportunity versus other industry leaders with much greater market caps.

Click to enlarge

As the cannabis industry continues to evolve, more and more cannabis companies are focusing on higher margin, value-added production. As the new Canadian industry leader in cannabis oil extraction, Medipharm will attract considerable interest from cannabis investors.

FULL DISCLOSURE: Medipharm Labs Inc. is a paid client of Stockhouse Publishing.

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