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Alternate Health to gain from the growing market of medical marijuana

The waves of legalized recreational marijuana in Colorado, Washington, Canada and now California have sparked a ‘Green Rush’ in the cannabis industry, but Alternate Health (CSE:AHG) CEO Dr Jamison Feramisco reminds investors not to forget about the market potential of the medical side of the business.

“The key to leadership in medicinal cannabis is constant innovation in the scientific research that puts the patient’s needs first,” says Feramisco. “Alternate Health takes a value-added approach, investing in the clinical studies and patented technology that turns cannabinoids, like CBD, into real medicine.”

The diversified healthcare company – which has patent rights for CBD delivery systems for sublingual tablets and transdermal patches and offers education programmes, electronic medical records (EMR) software and toxicology laboratory analysis – started trading on the Canadian Securities Exchange in January. Two months later it joined the US markets on the OTC bulletin board.

Feramisco brings experience in delivering profitability, strategic mergers and acquisitions and innovation in healthcare as the co-founder and president of Texas-based Apri Health – a healthcare data analytics company, formerly known as Transfuse Solutions. Feramisco is a graduate of the University of Texas at Southwestern Medical School with a Ph.D. in Molecular Genetics and Biochemistry.

Alternate Health stands to gain from the growing market of medical marijuana.

There are about 40,000 patients with prescriptions for medical marijuana in Canada, according to Health Canada. Over the next 10 years, the number of these patients is expected to grow to more than 450,000.

The group’s Alternate Health Media division offers education programmes for training healthcare professionals and physicians in the use of cannabis to treat medical conditions.

The Cannabidiol Certification Programs have been approved by the American Medical Association (AMA) and address all facets for the use of marijuana’s two active chemicals that have medical applications – cannabinol (CBD) and tetrahydrocannabinol (THC).

CBD and THC are considered useful substances to manage pain, and are also prescribed by some physicians for conditions including glaucoma, epilepsy and anxiety.

In January, the company announced the first continuing medical education course for practitioners on the endocannabinoid system, the body’s reaction to CBDs.

The video-based course, accredited through the University of Louisville and approved by the AMA, provides an overview of the endocannabinoid system and the role it plays in the different functions of the human body.

“Doctors and medical professionals have been waiting for a proper medical education program to provide details for this emerging medicine,” says Feramisco. “This program is the culmination of many years of investigation and research, coupled with a substantial investment in production to create a quality and highly necessary education program for doctors and healthcare practitioners.”

Cannabis tablets as an alternative to traditional smoking

Alternate Health has acquired the commercial rights to patents for developing and manufacturing sublingual tablets that include CBDs and/or THC.

The sublingual tablets can be rapidly absorbed into the body in less than three minutes. The company said it recognised the need for a more efficient way to use medical cannabis than the traditional smoking and ingestion methods.

Sentar Pharmaceuticals in March granted Alternate Health an exclusive 10-year agreement for global nutraceutical license rights to its patented sublingual delivery systems to administer CBD and THC in tablet form.

The company paid Sentar 850,000 common shares for the renewable license agreement.

The California marijuana Industry is estimated to grow to $25bn per year and is set to eclipse $50bn by 2026, Alternate Health said, citing USA Today.

“Alternate Health is uniquely positioned for licensing their manufacturing pharmaceutical grade delivery systems of CBD and THC healing products in this fast-growing new marketplace,” says Feramisco.

“Alternate Health facilitates the development of organic, safe and healthy medicines through our patented delivery systems to patients around the world, and the California market represents a significant starting point for us.”

Leader in electronic medical records software

Alternate Health describes itself as a leader in software applications and processing systems to the medical industry.

Its Alternate Health Technology business includes VIP Patient, electronic medical record (EMR) software that allows doctors to register patients and document their diagnosis and generate insurance recoveries with up-to-date billing codes.

The CanaCard Patient Management System tracks patient data and prescriptions while ensuring regulatory guidelines and financial transparency. It is a complete EMR, managing controlled substances like medical marijuana with an interface between patient, doctor and licensed provider.

“Alternate Health’s proprietary EMR systems give doctors, patients and producers the tools to manage prescriptions and dosages in a safe and transparent way,” says Feramisco. “This software is a key asset in the management of Alternate’s CBD delivery systems, while providing us with valuable feedback and clinical data.”

Alternate expands its labs division

The group also has an independent clinical lab in San Antonio, Texas, under the banner of its Alternate Health Labs business, which specialises in toxicology and blood testing services.

The lab receives and assesses the blood and urine of patients from across the United States and then supplies the results to physicians so they can diagnose and treat diseases and medical conditions.

In March, the company agreed a deal to expand the business through the acquisition of a 20% stake in Clover Trail Capital, a Texas-based investment company.

Clover Trail, which owns a 40% holding in Sun Clinical Laboratories, has investments in labs that conduct toxicology and blood studies for hospitals, private insurance groups and clinics.

Feramisco said: “It is an excellent opportunity for us to grow and increase the effectiveness of Alternate Health Labs, already a leading source of revenue for us and a key part of our strategy to fundamentally advance patient care.”

This story was originally published at www.proactiveinvestors.com on May 11, 2017 and featured in The CSE Quarterly.

Learn more about Alternate Health at http://alternatehealth.ca/ and on the CSE website at http://thecse.com/en/listings/life-sciences/alternate-health-corp.

iAnthus Capital bordering on big things

The movement to legalise cannabis in a majority of US states is drawing interest from an expanding list of companies, as entrepreneurs sense opportunity in a market where growth is virtually guaranteed.

Currently, 29 US states have legalised the use of full-strength medical cannabis, with eight of those states allowing recreational use of the drug as well.

In all, 43 states allow some degree of cannabis use, meaning 93% of Americans live in a state that allows consumption.

According to the latest industry data, direct legal cannabis sales totalled US$7bln in the US in 2016 and by 2020 will reach around US$22bln.

However, although this looks like a good opportunity for businesses, the fact that cannabis is still illegal on a federal basis in the US makes it difficult for entrepreneurs to finance their operations.

This is where Canadian Securities Exchange-listed iAnthus Capital Holdings Inc (CNE:IAN, OTCQB:ITHUF) has stepped in.

“You have a strange anomaly in the US where cannabis is legal at the state level and illegal at the federal level,” says Hadley Ford, chief executive of iAnthus Capital.

“Citibank and Bank of America aren’t making any loans to cannabis operators, and the Goldman Sachs and Morgan Stanleys of the world aren’t taking anyone public.”

iAnthus, however, raises capital in Canada, where cannabis is legal for medical use at both the federal and provincial levels, and puts the cash to work in the US market.

That market is growing at a compound annual rate of over 30% so the returns on investment have the potential to be significant.

iAnthus, which has raised over C$50mln since its founding, has been putting money to work in Colorado, Vermont, New Mexico and Massachusetts, and is also in discussions pertaining to other high-growth markets.

TGS deal

In early February, iAnthus announced a strategic partnership with The Green Solution (TGS), a big player in the US cannabis industry.

TGS operates 12 dispensaries and integrated cultivation and processing facilities in the state of Colorado and has generated over US$150mln of cumulative revenue since its inception in 2010.

“The chance for us to work with TGS on strategic opportunities is very exciting,” said Ford. “TGS is a leader in cannabis and we look forward to seeing what we are able to do by working closely together.”

As part of the strategic relationship, TGS will provide iAnthus with retail expertise and advice on investments in Massachusetts, Vermont, New Mexico and Colorado.

iAnthus is providing a US$7.5mln credit facility to TGS which will be used to fund the build out of additional store locations. The facility runs for one year and carries an interest rate of 14% during the first four months, escalating to 23% thereafter.

To finance the credit facility, and also to provide cash for general corporate and working capital purposes, iAnthus closed a bought deal private placement at the end of February which raised gross proceeds of C$20mln. The deal was structured as a convertible debenture with an 8% coupon and convertible into common shares at a price of C$3.10 per share.

The stock, which also started trading on the OTCQB in early April, is currently changing hands for around US$2.00.

“If you are an investor, there are very few industries where you can pretty much have guaranteed top-line growth of 30% for the foreseeable future,” Ford points out. “There are not many ways for the public to play that opportunity. We believe iAnthus provides an easy way for investors to invest in multiple operators across high-growth states in the US.”

Ford says the group has put over US$19.1mln to work to date, and he thinks the opportunities for investors “look outstanding.”

Massachusetts interest

Aside from being excited about working with TGS in Colorado, Massachusetts is also high on Ford’s radar.

At the start of March, iAnthus said construction had begun on a state-of-the-art cannabis cultivation and processing facility for affiliate Mayflower Medicinals, Inc., a Massachusetts non-profit and cannabis dispensary licence holder.

The 36,000 square foot facility in Holliston is expected to have annual production capacity of 8,700 pounds, with the ability to supply over US$35mln of medical and retail sales. The company has spent US$2.1mln of the approximately US$10mln it will need to build out the cultivation, processing and store locations. “We have the necessary cash on our balance sheet today to complete the project,” notes Ford.

Ford calls Massachusetts the “Colorado of the East, but with less competition.” Mayflower has been awarded two of its three licences by the state, including one of the three dispensaries currently approved to open in Boston. A Boston ordinance provides that no other dispensaries can be opened within a half-mile of any dispensary currently approved by the City.

Ford believes that operations in Massachusetts should start generating revenue in the fourth quarter of this year.

Political risk limited

The election in November last year which made Donald Trump US President included referendums in a number of states on legalising cannabis in one form or another.

Even so, some people question the heightened political risks to the US cannabis industry caused by Trump’s presence in the White House.

Ford, however, plays down such fears, seeing no material change with Trump in power from the environment under President Barack Obama. “Obama could have decriminalized cannabis. He didn’t,” notes Ford.

Ford says the real issue is not one of politics, but of economics, with states like Colorado seeing a big tax boost and the cannabis industry serving as an important jobs provider.

“Nothing is going to stop the forward motion of the industry at this point,” Ford explains. “It doesn’t make sense politically, doesn’t make sense economically, and there just aren’t the federal resources available to roll back the progress that has been made in 29 states.”

iAnthus reported a small loss last year, but as it puts its capital to work it should ultimately see the business turn very cash generative. “When I look at some of the opportunities we have in the pipeline, the future looks very rosy from our perspective,” Ford concludes.

This story was originally published at www.proactiveinvestors.com on May 11, 2017 and featured in The CSE Quarterly.

Learn more about iAnthus Capital at http://www.ianthuscapital.com/ and on the CSE website at http://thecse.com/en/listings/life-sciences/ianthus-capital-holdings-inc.

Drone Delivery Canada readies proprietary drone fleet to speed delivery to rural communities

For Canada’s remote communities the reality of receiving packages from automated delivery drones is a lot closer than many might think.

Commercial deliveries are set to begin at some point in late 2017 with Toronto-listed Drone Delivery Canada (CSE:FLT) taking to the air.

Ontario-based DDC will be among the first ever commercial operations once it secures final approvals from Transport Canada in the second half of next year.

Chief Executive Officer Tony Di Benedetto sees rural Canada as an ideal proving ground for its scalable drone-based business model.

He points out there are over 1,800 isolated communities strewn over a sparsely populated landscape. It is not only a sizable market opportunity for DDC, but it also represents an opportunity for the Canadian authorities to better connect areas that are otherwise off the grid.

For investors, meanwhile, DDC presents a low-priced option on what is predicted to be a very substantial technology industry.

Broker Macquarie estimates the size of the entire private drone industry (which could include agricultural applications, infrastructure inspection, surveillance and surveying as well as parcel delivery) will expand ten-fold to around US$60 billion by 2020.

As an early mover DDC is not as recognisable as the likes of Amazon or Ratuken – customer-facing online retailers that have both been working on drones.

But when DDC’s technology is deployed in late 2017 it will be established as a revenue generating pioneer.

What exactly is Drone Delivery Canada

There are two elements to DDC’s technology.  A proprietary operating system – which will route, track and manage fleets of delivery drones – is perhaps the most significant element; the company’s intellectual property.

The Company has also, by necessity, developed its own drones, though Di Benedetto says that as more advanced third-party drones become available the company will be open to using those.

“We’ve had to develop our own prototypes to commence flying, because they simply don’t exist, you can’t go on the market and go buy delivery drones, they’re not there,” he says.

“Eventually, over time I’m sure people are going to create delivery drones and we’re not locked in to the ‘airframe’ design.

“Our logic is transportable. So if a better airframe emerges in six months we can essentially take our logic and transpose it and now we have a different vehicle for our fleet.

“It is no different than a traditional courier today – they have trucks and cars, and they switch between brands, sizes and specs.”

DDC’s drones can presently carry between 7lbs and 10lbs at a time over a 200km operating range.

They have been tested and, subject to regulatory approval, are ready to go.

Progress toward initial delivery operations through late 2017 will be the key catalyst for investors in the coming months as DDC works to prove the commercial concept.

It recently secured licences to test the technology, and is now awaiting full flight status from Transport Canada, anticipated in third or fourth quarter.

Scalability will be key

The scale of early operations will be driven by the sentiments of two key stakeholders, the Canadian regulator and the initial appetite of customers.

“We will slowly ramp ourselves up, it is about taking proper steps at first,” Di Benedetto explains.

“We’re working with a variety of different clients; we have quite a big roster of clients that we’re engaged with.

“Our clients are large organisations with substantial locations and requirements. We’re not delivering for ‘Joel’s pizza shop’ … they [our clients] are very large corporate and government organisations.”

As the delivery system is proven and confidence builds the company expects it will be able to scale up quickly with drones embedded into its clients’ existing operations.

The drones will be deployed on location for DDC’s clients, which reduces the need for ‘bricks-and-mortar’ type capital spending and as such Di Benedetto says it is “very, very scalable”.

“It is an incredibly elastic model,” he adds.

“It is a high-earning, recurring revenue business. The business operationally produces a lot of cash.”

“Clients would contract us for ‘x’ amount of deliveries per month, and it is a recurring revenue stream from then on. There’s a setup charge and integration fees to get the technology enabled in the client’s environment.

“Once it is installed and integrated we then oversee the operation of the fleet. We are essentially ground control for the client.”

Once it is sufficiently large in terms of client orders, DDC will have the option to contract third-party manufacturing for the drones. This would be another important milestone in the development process.

It is quite clear that DDC is presented with a very significant market opportunity.

It is an early mover with a disruptive technology that could transform the transport and logistics business.

The big question, however, is how quickly and effectively the small-cap company can seize the initial opportunity?

There’s still a long road for it to navigate, and it all starts with final regulatory approval.

Investors will want to watch out for progress towards this pivotal regulatory milestone, as well as any commentary from the company on its commercial tie-ups and contracts.

This story was originally published at www.proactiveinvestors.com on Nov 28, 2016 and featured in The CSE Quarterly.

Learn more about Drone Delivery Canada at http://www.dronedeliverycanada.com/ and on the CSE website at http://thecse.com/en/listings/technology/drone-delivery-canada-corp.