One of the most exciting dynamics in the cannabis space is the implementation of new regulations governing medical marijuana in Canada. A failed system of a state-run monopoly (MMAR) is being replaced by a new system beginning 4/1/14 (MMPR), which will allow many producers, while at the same time prohibiting medical patients from growing their own cannabis. This is one of the more compelling themes for those interested in cannabis stocks, as I recently described.
Enertopia (OTCQB:ENRT), which has made some investments in growers seeking a license with Health Canada, is one of several companies seeking to capitalize on the changes in the Canadian MMJ market. I reached out to CEO Robert McAllister to learn more about his company's plans.
Alan: Thanks for taking the time to tell your story to us, Robert. Before we get into ENRT, can you tell us about your own background and how you got to where you are today?
Robert: Hi Alan. My background has been focused in the small and micro cap stocks since the 1990s. Being up here in Canada, the focus was mostly on mineral and resource stocks. After the November 2012 US Presidential Election, I started watching the MMJ sector and saw the growing excitement and opportunity. When the Canadian government announced the new system in October 2013, I knew the time was right to move into the MMJ sector.
Alan: It seems to me that Canada's new system, which will be effective 4/1, is essentially de facto legalization. How do you view the overall market in Canada over the next few years?
Robert: Not sure I would call the new system de facto legalization. But every person who can get a prescription for MMJ is legal to have a specific amount in their possession, depending on their prescription. In Canada, if you do not have a MMJ prescription, it is still against the law to possess. But it's really rare to be busted for smoking a joint in most areas. The Canadian police chiefs have asked for a simple fine being levied for possession under one oz. if you do not have a MMJ prescription.
The big wild card in Canada is the Federal election in May 2015, where the Liberal party is actually running on the platform of legalization of marijuana in Canada if elected.
Alan: My understanding is that you are investing in growers. Can you tell us about the history of the company, as well where you are in terms of the regulatory process?
Robert: Yes. We have invested in two growers, the World of Marihuana Productions Ltd (WOM) in Mission, BC. They have upgraded their facility and are awaiting the Health Canada site inspection. The second grower, The Green Canvas ("TGC"), is located north of Regina, Saskatchewan. This facility is likely several months away from a Health Canada site visit, but we are expediting the construction process to be ready as soon as possible.
Alan: What will be your production capability initially, and what is your near-term go-to-market strategy?
Robert: The WOM facility has a production foot print of 4,000 square feet. This facility is to get our team up and running. Both the WOM and TGC have been signing up patients for the new system as we have been anticipating a Health Canada site visit before the April 1st changeover date.
Alan: Are you expecting to be able to increase your production beyond your initial goals?
Robert: Yes. Our initial footprint is to increase dramatically from 4,000 square feet to our currently announced 59,000 total square feet of usable production space when we include the potential full build out of the TGC facility. We are looking at other facilities, as we are focused on attracting and gaining market share as we build out in Canada.
Alan: What is your current capital structure?
Robert: We currently have 81,831,262 issued and outstanding shares, 3,205,000 options and 18,845,790 warrants.
Alan: Finally, then, potential investors in the cannabis space have many choices. Why should they consider your company over other alternatives? Also, what's the best place for potential investors to learn more about Enertopia?
Robert: Great question. We have taken the model of taking majority interests in respected growers who have a passion for quality and good business practices. This allows them to focus on growing the product.
Enertopia is allowed to focus on MMJ awareness for new patients as we go across Canada to let current and new MMJ patients know about WOM and TGC as our current producers of choice. All patients can be confident in knowing that Enertopia stands behind the product.
Investors can visit our website at enertopia.com for all our news and presentations. They can feel free to email me at firstname.lastname@example.org, or send me their phone number and I will call them directly, or they can call my office 250.765.6412250.765.6412.
Alan: Robert, thanks so much for your time. I know my readers will really appreciate what you have shared, and we at 420 Investor look forward to hearing about your progress. Best of luck to you and ENRT.
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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.