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Cannabis Clinics/Data Leader Expands Network, Adds Diagnostic Tool

Jeff Nielson Jeff Nielson, Stockhouse
1 Comment| March 28, 2019

Click to enlargeCB2 Insights Inc (CSE: CBII, Forum) is a new name to investors in the cannabis space that is quickly becoming familiar to the Stockhouse audience. The Company was originally introduced in a feature article from February 26, 2019.

That article alerted investors to CB2’s new listing on the CSE, debuting on March 6, 2019. However, while this is a new public listing, this is not a new Company.

Founded in 2014; CB2 has already established the largest multi-state network of cannabis clinics in the U.S. The Company recorded 2018 revenues of roughly $11 million. CB2 has expanded its network of clinics with a new acquisition. More on this later.

Along with its clinic operations, CB2 is also very active in cannabis data. The synergy between cannabis clinic operations and cannabis data collection is obvious. With 28 clinics in 12 U.S. states, CB2 has the largest patient registry of medicinal cannabis users in the U.S. In turn, this registry is the foundation for producing comprehensive empirical evidence with respect to the use of medicinal cannabis.

Because of a century of cannabis Prohibition, such data has previously been unavailable. It has enormous value to not only cannabis cultivators serving the medicinal cannabis market, but also for cannabis biopharma companies seeking to develop cannabinoid-based drugs, health insurance companies, medical institutions and practitioners, and various levels of government. CB2 recently published a “Real-World Evidence” report on the use of medicinal cannabis to target mood disorders.

On March 27, 2019; CB2 announced an entirely new and innovative application for its wealth of cannabis data, “the industry’s only medical cannabis specific Clinical Decision Support (“CDS”) tool.” Prad Sekar, CEO of CB2 Insights clarified this news for investors.

“For the past 4 years, we have worked toward simplifying the process for a physician to determine the appropriateness and potential efficacy of medical cannabis as an option within a patient’s treatment plan. We are now in a position to benefit from the aggregated and anonymized data gathered from more than 300,000 patient visits in a clinical environment along with the hundreds of clinical trials and observational studies that are collectively used to power our CDS tool. Clinicians can use this point-of-care application to help them incorporate cannabis as a treatment option into their practice and create improved access for patients who can benefit from cannabinoid therapy.”

(click to enlarge)

For 2019, CB2 is targeting revenue growth from $11 million to $20 million. On March 20, 2019; CB2 took its next step in meeting that target via the acquisition of MedEval Clinic LLC. MedEval is a “medical cannabis evaluation and education center group”. Included in this business model are operating cannabis clinics in two U.S. states, one located in Arizona (serving Phoenix) and two in Colorado. MedEval reported 2018 revenues of approximately CAD$1 million. An additional release clarified the terms of the deal.

Once this acquisition closes, CB2 will be operating in a total of 14 U.S. jurisdictions, with management estimating that this new acquisition will increase overall patient volumes by approximately 10%. CEO Sekar put this acquisition into context for investors.

“As we continue to bolster our leadership in controlled, uniform data collection related to medical cannabis therapy, this acquisition not only increases our data pool but has an accretive lift to our financial performance. Colorado plays a vital role in medical cannabis data, representing a very mature recreational market which also sees medical cannabis patient counts continue to grow.  Additionally, Arizona’s untapped market presents a number of opportunities for our Company, as the state is primed for growth in the medical cannabis space.”
Two takeaways for investors. The MedEval acquisition is immediately accretive to operations through its existing clinic revenues. Perhaps more importantly over the longer term, this is a valuable puzzle-piece in enhancing CB2’s data collection operations.
Of equal importance is the Company’s track record in building its clinics business. CB2 acquired Canna Care Docs in 2017, and it has become the foundation of CB2’s clinic network. Since that time, management has increased patient counts by more than 20% and boosted profits by more than 125%.
As an artificially “new” industry (thanks to Prohibition), the cannabis sector has decades of growth potential ahead. On the medicinal side of this industry, this means cultivating the correct strains of cannabis to treat the thousands of medical conditions that are already being targeted for the therapeutic use of cannabis. It means pioneering hundreds (thousands?) of new cannabinoid-based drugs – to augment the depleted drug pipelines of Big Pharma.
To get there, the medicinal cannabis industry needs continued growth in cannabis clinic operations to meet the surging demand for medicinal cannabis use. And the cannabis industry needs more-and-better data.
The mission of CB2 Insights is to be an industry leader in facilitating both of these objectives. With these latest announcements, the Company has taken two significant steps in executing this mission.

FULL DISCLOSURE: This is a paid article of Stockhouse Publishing.

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