With Canada’s industrial-scale cannabis growing industry getting increasingly crowded, newcomers need to stand out in a big way to able to thrive, rather than just survive.
The best way to do this is to offer “premium quality” cannabis and value-added extracted products at reasonable prices. But what does this actually entail when virtually every industrial-scale grower in Canada claims have the best cannabis?
One way is to be an organic grower – which is a sure-fire way to commanding top-tier prices for a superior product. However, is difficult to produce in large scales commercially.
Alternatively, it is now technologically feasible to grow cannabis that is even “better than organic”. So says Malay (Mel) Panchal, a pharmacist and successful entrepreneur who is the founder and CEO of
Pure Global Cannabis Inc. (TSX.V: PURE, OTC: PRCNF).
His Ontario-based company, which has been flying under the radar of most investors, is pioneering a method for cultivating cannabis without any need for chemically-toxic pesticides and herbicides.
Unlike conventional cannabis growing methodologies, the company’s technological breakthrough does not to even use soil (which can be adulterated with heavy metals and organic pathogens) and utilizes tightly controlled growth environments with very high biosecurity measures.
This automated technology leverages vertical farming and technologies developed by enables the growing of 3 to 5 times more plants than with conventional growing within the same square footage -- a strategy the company terms “multi-ponic”.
The company even has a patent pending with respect to this revolutionary, pesticide-free model for indoor cannabis cultivation.
The purity of this growing process is designed to ensure that cannabis can be cost-effectively grown to pharmaceutical-grade consistency.
Also, the company’s Canadian flagship operating division, PureSinse, is expected to begin sales to medical patients and legal adult consumer markets soon after Health Canada has granted it a Sales License, which is anticipated in the coming weeks. Such a milestone event not only represents a major de-risking event but it also promises to be a significant value catalyst for the company’s share price.
Innovating “Pure” Adulterant-Free Cannabis an Accelerated Timeline
Meanwhile, the company’s near-term focus is rolling out its disruptive business model in Canada as proof of concept. This involves its flagship 41,000 square foot campus in Brampton, Ontario. This encompasses a vertically-farmed cultivation, a high-volume extraction and processing facility, and an R&D laboratory for developing formulations and testing.
The company will also produce branded and private label post-derivative products for the wellness, food & beverage, natural health, and pharmaceutical industries, with its own in-house manufacturing, as well as leveraging third party co-packagers.
Introducing One of the Most Innovative Producers in Canada
Pure Global isn’t just another greenhouse cultivator. Led by its award-winning plant geneticist and horticulture specialist Chief of Production, Nader Gheshlaghi, PhD, MSc, the company has designed Canada’s first patent-pending “multi-ponic” cultivation system.
This was created to ensure cost containment. After all, the cannabis sector is growing increasingly competitive. So companies and analysts have become obsessed with cost per gram. This is with good reason – the cost of production is an incredibly important metric for all businesses, and the ultra-competitive cannabis space is no exception.
Yet this is only part of the story. As companies strive to keep costs to a minimum, product quality can suffer. The lowest cost production is often poor quality. Yet there is little advantage to producing a low-quality, undifferentiated product that few consumers wish to purchase.
Furthermore, as the industry moves toward derivative products, it is cannabinoid and terpene content that matters – not flower weight. This is why we really like this aspect of the Pure Global story.
By utilizing the state-of-the-art system that the company has developed and by cultivating under targeted-spectrum LED lights, Pure Global is not only able to achieve extremely low costs, but is able to also produce a premium product with maximum cannabinoid content – all while avoiding the use of pesticides.
In fact, the company is only using organic fertilizers and will seek organic certification. This should help it to capture the larger margins associated with premium-quality and organic products.
A Rapidly Growing Footprint
The company is headquartered in Canada, where it recently completed phase one of building-out its flagship facility in Brampton, Ontario. Phases two and three are under development and are expected to be complete for licensing in Q1 2019, and Q2 2019, respectively. The facility is designed to delivery at least 8,000 kg/yr of premium cannabis once the full vertical farming system is implemented.
The Brampton facility is also strategically located, a mere 35 minutes from downtown Toronto and a shorter drive to the Toronto International Airport.
Pure Global is perfectly poised to launch a diversity of value-added downstream cannabis products in these untapped marketplaces. They include all manner of oil-based derivatives such as vape pen cartridges, tinctures, topicals, and infused foods and beverages under several market segment targeted brands. (See the schematic below.)
Deploying Cannabis 3.0
Pure Global has the benefit of learning from the mistakes made by its predecessors. This has enabled it to develop a business model on the forefront of the industry which is moving away from a cultivation focus and millions of square feet of production.
Rather, the industry is shifting to post-derivative manufactured products and distribution. In this regard, Pure Global is formulating unique products for sale in the medical and consumer markets, as well for future export.
An Eye on International Markets
Canada represents the first G-7 country to legalize cannabis on a national level, not only for medical use, but also for recreational consumer use. However, the market is relatively small when compared to Europe, South America, the U.S., and Asia. Pure Global believes that Canada has set in motion a powerful trend that will spread around the world as regulated markets realize that the benefits or medical and adult use legalization far outweigh the risks.
Already over 30 countries have medical cannabis laws and are looking to import legal medical cannabis. To prepare for this inevitability, Pure Global sees Canada as a springboard to develop a business model and products that can be replicated and deployed into international regulated markets. For this the company will need robust co-manufacturing and distribution partners which it is currently organizing.
Targeting the Global Pharmaceutical Market
With deep bench strength in the pharmaceutical arena, the company is preparing to submit application for numerous products with the aim of selling them in pharmacies via a Drug Identification Number (DIN).
Since the additional of phytochemicals to the drug list, the pathways to cannabis-based drug development have multiplied. Accordingly, Pure Global is identifying certain therapeutic areas in which it will develop targeted therapies.
Once approved in Canada, these products can then be more easily approved in international jurisdictions. Which is because DIN itemization enables better insurability by private and public health benefits payers.
Investment Synopsis
To recap, Pure Global has a market cap of less than CDN $50 million, making it one of the least expensive industrial-scale cannabis start-ups on Canada’s capital markets. Although new to the public markets, the company is still pre-revenue and has some unique attributes that will give it a leg above its peers.
A key takeaway for investors involves the competitive advantages of Pure Global’s patent-pending approach to cultivation. This innovation should allow the company to sell pesticide-free, premium-grade cannabis and value-added extractions, such as oils – all at premium prices.
Further to this is the company’s its focus on formulating and manufacturing of post-derivative cannabis products for the medical and consumer markets, the company is also developing a strong distribution capability to service the needs of regulated retailers, pharmacies, hospitals, long-term care facilities, and nursing homes.
By sourcing supply from numerous large, medium, and micro licensed products, the company will become a conduit of processing and distribution for its branded and white label products.
In this regard, Pure Global is very capably led by a team of seasoned pharma-industry experts and world-renowned specialist in plant genetics, and commercial-scale greenhouse horticulture.
Another major value driver comes in the form of a pending sales license. Its arrival (which is believed to be imminent) promises to be a powerful catalyst for the company’s share price.
Given the fact that Pure Global has executed its business plan to date on an expedited timeline, we are confident of this company’s ability to achieve a number of major milestones in the coming months. This includes the imminently expected issuance of a sales license for its first eight Canadian medical cannabis product lines.
Hence, the advent of plenty of other positive news flow in the coming months should add further impetus to Pure Global’s share price while also building plenty of intrinsic value into the company’s growing market capitalization.
About the Author: Marc Davis has a deep background in the capital markets spanning 30 years, having mostly worked as an analyst and stock market commentator. He is also a longstanding financial journalist. Over the years, his articles have also appeared in dozens of digital publications worldwide. They include USA Today, CBS Money Watch, Investors’ Business Daily, the Financial Post, Reuters, National Post, Google News, Barron’s, China Daily, Huffington Post and AOL.