Pure Global Possesses the Right Traits to Succeed in the Highly Competitive Canadian Cannabis Sector
Written by: Michael Berger – Technical 420
The cannabis industry has been trending higher and has been coming of its lows following the opening of the recreational cannabis market in Canada. The reversal has been significant, and this is a trend worth watching.
Canadian cannabis producers have been under considerable pressure during the recent sell-off and we are monitoring how these companies trade from here. Although the weakness was prevalent throughout the entire cannabis sector, some companies were under more pressure than others and we think that this creates a unique opportunity.
When looking at the cannabis sector, it is important for investors to focus on companies that possess the right traits. When we are looking at companies, we are looking for businesses that are attractively valued, that are led by a management team with a proven track record of success, and that represent a differentiated opportunity when compared to its peers.
Pure Global Cannabis Inc. (PURE.V) (PRCNF) is a company that meets these criteria and today, we have issued an update on the growth-oriented life sciences cannabis company. Although Pure Global has come well off its October lows, the shares have fallen more than 30% from its September highs. The size of the decline is even more significant when you look at what the company has accomplished over the last few months and we are monitoring how the team continues to execute.
Pure Global is in the early innings of a major growth cycle and is levered to the Canadian cannabis market via its wholly owned subsidiary, PureSinse, a licensed producer under Health Canada’s ACMPR. PureSinse’s Brampton campus houses facilities for vertically farmed cultivation, R&D, extraction, manufacturing, and distribution. The company will produce branded and white-labeled cannabis products for the medical, pharmaceutical, wellness, health & beauty, natural health, food & beverage, and recreational legal markets with uniquely formulated and purified concentrates.
Last week, Health Canada completed the physical on-site inspection that is required to issue a Sales License to PureSinse. This was an important development and the company expects to be granted a Sales License in the near future. Possessing this license will allow PureSinse to supply and sell cannabis products to the medical and recreational market in Canada as well as focus on international opportunities.
Pure Global plans to be prepared once Health Canada grants PureSinse a Sales License and plans to launch a new user-friendly eCommerce website that is in final stages of development. The company will be offering residents living in the Greater Toronto-Hamilton Area a same-day delivery option and we are favorable on this. The granting of a Sales License will be a major milestone and will create countless new revenue generating opportunities for the company and we will be monitoring this.
PureSinse is in the middle of a major expansion and continues to install vertical farming cultivation systems equipped with automated controlled growth environments for its Phase 2 and 3 expansion. Once the expansion is complete, PureSinse will be able to produce a significant amount of cannabis and Phase 2 is anticipated to be fully operational by summer 2019, with Phase 3 expected to be completed shortly after.
The smokeless product market represents a significant opportunity and we are monitoring how Pure Global capitalizes on this. The company recently acquired CO2 extraction equipment and vape pen cartridge filling equipment and this is expected to be a big part of the business. We are favorable on the cannabis oil opportunity due to the increasing demand, the premium pricing, and the better margins
When it comes to investing in cannabis companies, it is important for investors to look into the strength of the company’s management team. Investors want to look for management teams that are comprised of experienced executives that have diverse backgrounds and that are experts in their respective field.
Pure Global is led by a management team with proven track record of success and this is an important part of the story. Last month, the Canadian cannabis producer significantly strengthened its management team through the addition of three employees to help with company’s operations and the production of expanded PureSinse offerings.
We find these additions to be significant and will monitor how the team executes from here. Pure Global hired Sandra Couto as Clinical Affairs Lead, Cheryl Pim as Director of New Product Development, and Joseph Choi as Controller.
Couto will drive the clinical and scientific objectives of Pure Global’s investigational and medical partnership programs. She will also build a cross-functional clinical portfolio of relationships internally and with external partners. Pim will lead and coordinate the design, launch and management of a range of pharmaceutical, cosmetic, and health and wellness products. Choi will add strategic vision and will be instrumental in deploying comprehensive and scalable corporate accounting and financial management systems.
Pure Global’s focus on strengthening its senior leadership team is significant and we are favorable on these additions. The company expects these additions to play a key role in operations and to help advance the company’s initiatives and products.
In late September, PureSinse entered into a multi-year agreement with Appletree Medical Group Inc., whereby Appletree will participate and provide lead investigators for the purposes of a real-world evidence-based research study. Appletree is one of the largest multidisciplinary community medical groups in Canada, serving more than 700,000 patients from its 35 medical centers in Ottawa and the Greater Toronto Area.
Together with Appletree and a leading Clinical Research Organization, PureSinse is launching a large-scale, peer-reviewed study on the efficacy of medical cannabis in the treatment of certain medical conditions. The study will examine which cannabis strains and cannabinoid-terpene combinations provide improved therapeutic results for conditions such as neuropathic pain, insomnia, and anxiety disorders, as well as their effectiveness in reducing dependence on opioid medications in patients suffering from chronic pain disorders.
The observational data will guide the development of targeted pharmaceutical and wellness products. At the same time, the study will seek to provide the Canadian and international medical communities, as well as public health agencies, with relevant and valuable insights into the potential therapeutic effects of cannabis.
The study will ultimately allow physicians to make better decisions for prescribing cannabis from reputable, peer-reviewed clinical data, while providing valuable insights for developing unique cannabinoid-based pharmaceutical products. We are excited by this opportunity and believe that this relationship helps differentiate Pure Global from its peers. We will monitor this unique study and will see how it adds value to the company.