Legalization in Canada, how are things there?
Canada’s new Marijuana for Medical Purposes (MMRP) regulations will replace an existing out-of-date system and potentially open the door to publicly traded cannabis producers.
The new law will let doctors, nurses, dentists, and other medical professionals write medical declarations for patients to use marijuana for many types of ailments without the lengthy questionnaires and red tape associated with the prior system.
Starting in April, medical marijuana patients in Canada are barred from growing their own medicine thanks to a law passed last year. All cannabis has to be produced from a licensed supplier.
Under the new law, medicinal cannabis users will not be able to produce their own marijuana but instead must buy through a limited network of production and distribution companies.`
Furthermore, the new system permits licensed producers to set their prices without any government restrictions, raising concerns for patients.
Canada’s medical marijuana market is expected to grow from $179 million to $1.34 billion over the next ten years, according to Health Canada, with the patient population jumping from 41,384 to 308,755. With only 13 licensed producers approved to date, investors in OrganiGram have a unique opportunity to capitalize on the growing demand at a very early stage for the industry.
The company also has first-mover advantage as one of only 13 licensed producers approved by Health Canada to date. Often times, the first entrants into an industry can gain control of resources that followers may not be able to match. Canadian medical marijuana patients are a prime example, since they would likely be hesitant to switch providers after establishing a relationship.
OrganiGram plans to expand its total production square footage from 115,000 in 2015 to 235,000 by 2016, driving revenue from $2.2 million to $88 million and before-tax profits from to $15 million to $42 million, according to Mr. Arsenault. With Canada’s patient population expected to rise from 41,384 to 308,755 over the next ten years, these estimates could move even higher.
If Canada ultimately decides to legalize recreational marijuana, the company would also be well positioned to capitalize on the growing demand with its large production footprint, quality control processes, and existing relationship with the government.
Being the only Licensed Producer east of Ontario and over 700 miles from of any other LP's could also prove beneficial.
Moving forward, management aims to ramp up sales from 2,800 customers generating $10.7 million in revenue and $3.1 million in profit in 2015 to nearly 17,000 customers generating $63.2 million in revenue and $33 million in profit by 2018. These figures appear to be reasonable given that the patient population is expected to bloom to over 300,000 by 2024, according to Health Canada.
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I am free because I know that I alone am morally responsible for everything I do. I am free, no matter what rules surround me. If I find them tolerable, I tolerate them; if I find them too obnoxious, I break them. I am free because I know that I alone am morally responsible for everything I do.