Welcome to "Into the Weed," The Fly's recurring series focused on the stories impacting cannabis stocks. In this edition, The Fly conducted an exclusive interview with Keith Strachan, co-founder and vice president of MediPharm Labs (MLCPF), a Canadian cannabis extractor that produces purified, pharma-grade cannabis oil and concentrates for advanced derivative products. In the interview, Strachan talked about the company, competition, cannabis legalization, and much more. Here are some of the highlights:
ADDING VALUE: Strachan said the company is “pretty unique” noting that there are 120 licensed producers in Canada, 117 of which have a “cultivation aspect” to their licenses, meaning many of the companies are vertically-integrated. He said MediPharm decided to focus on one point on the value chain where it thought it could add the most value. “That for us was concentrate manufacturing,” he said. “With the background in pharmaceuticals and healthcare, we really saw the opportunity to be manufacturing both crude cannabis concentrates as well as working on downstream processing to isolate and fractionate novel cannabinoids.”
COMPETITION: As far as competition goes, Strachan said he does not see a lot of competition as the demand is so large and the amount of licensed producers trying to meet that demand is still ramping up. “I think that there is still a long ways of a lot of us here in Canada having a piece of the very large pie that we’re having trouble accommodating as an industry at the moment,” he said. Strachan added MediPharm is the only licensed producer in Canada solely for concentrate manufacturing but there are some publicly-traded companies awaiting licenses with a similar business model. “We definitely would welcome them into the industry with open arms just as an opportunity to collaborate both on a business standpoint but also on a regulation standpoint,” he said.
CANNABIS LEGALIZATION: Looking at legalization on a federal level, Strachan said MediPharm sees Australia as “maybe a next big country to regulate on an adult use market.” The VP said, “Their medical program has been progressing very quickly, some of their politics align very closely to those of Canada and their regulations are from a similar commonwealth country point of view.” He noted that MediPharm has submitted an application in Australia and the company is building a manufacturing facility there to work with cultivators. Strachan said some smaller countries in Central and South America might also come on line with similar legislation and MediPharm is also looking forward to the progression of medical cannabis throughout Europe. When asked about legalization in the U.S., Strachan said, “I think that right now the problem would be the difference from the state-to-state models being so different from one to the other…we don’t have any business operations just because of the uncertainties around the federal regulation.”
GLOBAL EXPANSION: Following the allowance of cannabis imports and exports from Canada, Strachan said MediPharm 100% plans to expand. He noted the application in Australia and said as more European markets come on line, MediPharm would like to do something similar in opening a site for future operations there. “From a geographic standpoint as well as a regulatory standpoint, I think it’s good to operate in some of the jurisdictions that you’re selling to rather than just be a pure export play here from Canada,” he said.
CHALLENGES: Strachan said he thinks the biggest challenge facing the cannabis industry currently is “scaling up.” The VP said, “When you look at concentrate manufacturing, the art or the science of making cannabis concentrates really was born in the basements and garages of past pot cultures,” he said. “There’s been some great work there but it’s now transferring that to an ability to do it on a repeatable basis that customers can trust and find accountable as well as doing it at a scale where the purification is the exact same every single time.” Strachan said MediPharm is working to mitigate that challenge and has started to bring in machines more traditional to pharmaceutical manufacturing to have more of a closed-loop automated system and process much higher volumes.
OPPORTUNITIES: Going forward, Strachan said he sees a big opportunity in “the purification and the fractionation of cannabinoid.” He said everyone is familiar with THC and CBD but he sees an opening in other cannabinoids and their uses. “Here at MediPharm we have the methodology to fractionate and isolate things like THCV, CBN, CBG, and a lot of these are smaller, more novel cannabinoids that we don’t see on as frequent a basis,” Strachan said. “I think the big opportunity is taking those, manufacturing them at scale and getting them out to different clinical trials so researchers globally can figure out what are the best therapeutic uses.”
OTHER CANNABIS STOCKS: Publicly traded companies in the space include Aurora Cannabis (ACB), CV Sciences (CVSI), CannTrust Holdings (CNTTF), Canopy Growth (CGC), Cronos Group (CRON), General Cannabis (CANN), India Globalization Capital (IGC) and Tilray (TLRY).
Changed to MEDIF
+ (+0.00%)
Aurora Cannabis
-0.33 (-4.08%)
CV Sciences
+ (+0.00%)
CNTTF
+
Canopy Growth
-2.34 (-5.09%)
Cronos Group
-0.63 (-6.42%)
Trees Corporation
+ (+0.00%)
IGC Pharma
+ (+0.00%)
Tilray
-17.5 (-12.53%)