MediPharm Labs Launches White Label Platform

MediPharm Labs Corp. has launched a white label solutions arm in a bid to capitalize on the impending legalization of edibles and other concentrates.

MediPharm is a B2B supplier of ready-to-sell CBD oil and concentrates for the medicinal and recreational marijuana markets. It has the capacity to process 100,000kg of dried cannabis flower per year, and by the second quarter of 2019 it should have expanded that to 250,000 kg.

It has now launched a “full-service solution” for companies interested in the sector, including formulation, processing, packaging, and distribution. It is targeting non-cannabis companies that want to exploit growing consumer demand for cannabis.

Edibles, beverages, vapes, and topicals are set to be permitted in Canada later this year and MediPharm wants to position itself as the market leader for cannabis concentrates.

Building Up a Sizeable Inventory

The firm has purchased 5,000 kg of dried cannabis in the past two weeks in addition to its usual procurement strategy. It said this “large volume purchase” is designed to strategically position MediPharm to significantly increase sales of concentrates.

MediPharm claimed it has already secured its first white label customer and it said it is in active discussions with others in a bid to build up this new side to its business. It aims to have a sizeable inventory in place by the time the market opens up later this year.

“As extraction specialists, we are diligently executing on ramping up operations ahead of the legalization of concentrates-based vapeables, topicals and edibles this fall, and for our upcoming EU GMP certification, that we expect will significantly increase the size of our addressable market,” said chief executive Patrick McCutcheon. “We continue to aggressively build our inventory to enhance sustainable, uninterrupted high-margin private-label production and maintain our leadership position in the global cannabis industry value chain.”

Q4 Results Imminent

MediPharm stock has increased 186% since Dec. 18, 2018.

MediPharm has been on a tear this year amid a raft of interesting announcements. Its share price was $1.20 on Dec. 18, 2018, but it increased to $1.93 by Feb. 12. Then it shot up 34.2% overnight to $2.59 after it announced a $34.7 million deal with an unspecified North American producer to supply it with private label purified oil.

Then it hit record highs of $2.95 on Feb. 25 after announcing its first ever international sales agreement, a deal to supply Australian distributor AusCann with private label cannabis derivatives.

The stock has continued to steadily increase since then and it opened at $3.41 on Monday, Apr. 1, following news of the white label arm. That represents an increase of 186% since Dec. 18.

The firm will announce its Q4 and full year 2018 financial results on Wednesday.

Potential for Future Growth

It also announced that the board has approved a grant of stock options to purchase an aggregate of 791,000 common shares in the capital of the company at an exercise price of $3.34 per share, the closing price on March 29, for a five-year term expiring March 29, 2024.

The stock options were granted to employees of the Company and are subject to any necessary regulatory approvals.

MediPharm has outperformed the market this year after securing several large contracts and that bodes well for the future as it bids to grow its new white label arm and emerge as the market leader in B2B oil and concentrates.

It already has agreements in place with James E. Wagner, Emerald Health, Indiva, The Supreme Cannabis Company, and TerrAscend, but there is a great deal of potential for further growth. Concentrates are set to be huge in Canada going forward as they have captured a significant market share in California, and MediPharm is already ahead of the curve in this sector.

Large producers may take extraction in-house, but there should remain a sizeable collection of producers for MediPharm to target. It is also interesting to see it diversifying into offering distribution for non-cannabis companies.

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The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Capital 10X hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.

Martin Green
Martin Green is an experienced journalist with a strong focus on the cannabis, alcohol, and gambling industries. He is particularly interested in the political issues affecting the global marijuana trade, and he has a keen focus on regulation changes and legal topics. He holds a BA English Literature, MA Creative Writing and a National Qualification in Journalism diploma. He has worked in journalism since 2009 and written for a broad range of newspapers, business titles and magazines, including The Sun, The Metro, The Journal, Livestrong, Drinks Retailing News, Harpers, Sportsbook Review, Vital Football, Essex Live and Surrey Live. Address: 682 Indian Road, Toronto, Ontario, M6P 2C9. Phone: 416-721-8257.
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