Emerald Health Expands into Analytical Testing and Import/Export -- CFN Media

SEATTLE, WA, Aug. 07, 2018 (GLOBE NEWSWIRE) -- CFN Media Group (“CFN Media”), the leading agency and financial media network dedicated to the North American cannabis industry, announces publication of an article covering Emerald Health Therapeutics Inc.'s (TSX-V: EMH) (OTCQX: EMHTF) recent acquisition of a dealer license from Abattis Bioceuticals Corp. that enables it to compete in emerging market verticals. Canada’s cannabis market is projected to reach more than C$22.6 billion over the coming years, according to Deloitte, driven by the legalization of adult-use cannabis later this year. In addition to cultivation, this growth is fueling many other areas of the industry, including product development, analytical testing, and imports and exports. Investors may want to keep an eye on these areas as potential opportunities ahead.

Licensed Producer vs. Licensed Dealer

Most investors are familiar with Licensed Producers, or LPs, under the Access to Cannabis for Medical Purposes Regulations, or ACMPR. LPs are permitted to cultivate, process, and sell medical (and soon recreational) cannabis into the legal market, as well as export cannabis flower to international markets. However, there are some important limitations to the license that inhibit product development and import/export opportunities.

Licensed Dealers, or LDs, under the Canadian Controlled Drugs and Substances Act step in to fill some of these gaps. LDs are permitted to import and export cannabis oils and resins, as well as prepare the manipulation, formulation, dosage form, strength or package size of cannabis products, including mixtures with other additives, controlled substances, and non-controlled substances. These capabilities make the licenses extremely valuable.

There are less than 50 licensed dealers throughout the country compared to more than 100 licensed producers authorized by Health Canada. Many licensed producers have been acquiring dealer licenses as a way to export higher value medical cannabis extracts rather than just cannabis flower. For example, Canopy Growth Corp.’s Tweed Inc. acquired a dealer license back in December 2016.

Recent deals highlight the value of a dealer license. In May, 2018 Auxly Cannabis Group Inc., formerly known as Cannabis Wheaton, announced the acquisition of DoseCann Inc., a late stage licensed dealer applicant based on Prince Edward Island. The stock transaction carries a price tag of up to $38 million, with a little wiggle room based on milestones achieved.

In June, Aurora Cannabis Inc. announced a proposed stock transaction worth $115 million to acquire Anandia Laboratories Inc. Based in British Columbia, Anandia is recognized as an industry leader, one of the largest and most established cannabis labs in the country.

Emerald Health Acquires a Dealer License

Emerald Health recently became one of the few licensed producers with a dealer license after acquiring the remaining shares of Northern Vine Canada Inc. from Abattis Bioceuticals Corp. for $2 million in cash and $4 million in stock. Northern Vine will continue to operate independently and is committed to serving all of its clients, including patient-growers and licensed producers that could potentially compete with Emerald.

“The acquisition of Northern Vine allows us to leverage its dealer license and research and development facility to advance our research plans to develop cannabis formulations supporting new products for both recreational purposes and to treat a broad spectrum of human conditions and diseases,” said Emerald Health CEO Chris Wagner. “The dealer license would also enable Emerald to cost-effectively source non-dried-flower cannabis products from suppliers in other countries.”

The move follows the company’s initial 53 percent investment in Northern Vine back in November 2017 for $2 million. In May 2018, the company increased that investment to 65 percent for an additional $2.75 million. The final acquisition includes the aforementioned payments, as well as a milestone payment in the form of common shares valued at $4 million if Northern Vine or Emerald receive gross revenue of $10 million from Abattis products.

When comparing the Emerald acquisition with those of Aurora and Auxly, noted above, it looks like Emerald got a pretty good deal. Auxly bought an applicant for a dealer license in Prince Edward Island for $38 million, while Aurora bought a larger established lab in BC for $115 million. Emerald’s price tag of $11 - $15 million for an established lab in the licensed producer mecca of BC offers value pretty much any way you look at it.

Looking Ahead

Emerald Health Therapeutics Inc.’s (TSX-V: EMH) (OTCQX: EMHTF) acquisition of Northern Vine puts it in an exclusive group of licensed producers with dealer licenses. These new capabilities will help supplement the company's existing cultivation operations that include a 50 percent stake in Pure Sunfarms -- and its 1.1 million sq. ft. greenhouse -- and its Agro-Biotech operation with a 75,000 sq. ft. facility.

For more information, visit the company’s website or download their investor materials.

Please follow the link to read the full article: http://www.cannabisfn.com/emerald-health-expands-analytical-testing-importexport/

About CFN Media

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Frank Lane

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