Emblem Corp. (TSXV:EMC) expects to increase shareholder value through product innovation, brand relevance, as well as access to patient and consumer channels
SmallCapPower | October 15, 2018: Emblem Corp. (TSXV:EMC) is a producer and distributor of medical cannabis and cannabis derivatives. Headquartered in Toronto, Canada, the Company expects to increase shareholder value through product innovation, brand relevance, and access to patient and consumer channels. Emblem Corp. is also the parent company of leading cannabis education services firm GrowWise Health Limited.
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On the back of an expanding product portfolio, as well as product innovation coupled with future growth drivers, such as medical & recreational cannabis, new product launches, and overseas expansion plans, Emblem Corp. appears well positioned to grow following the legalization of recreational cannabis consumption in Canada on October 17, 2017. Emblem has a current market cap of C$188 million with a price-to-book multiple of 2.3x.
Investment thesis
- Broad cannabis-based product portfolio
- Three-pronged distribution approach
- Strong patient acquisition strategy
Broad cannabis-based product portfolio
Emblem Corp. operates under three brands: Emblem Cannabis (production and distribution of cannabis products); Emblem Pharmaceutical (cannabinoids-based medical and pharmaceutical products); and GrowWise Health (cannabis education services to patients and physicians).
Emblem has a diverse product portfolio ranging from dried flower extracts, strains, capsules to oil and oil sprays. The Company offers premium cannabis flower strains such as Quantum Kush (THC 23-26%), Sour Kush (THC 16-21%), MK Ultra (THC 13-16%), Black Widow (THC 5.3-6.9%; CBD 8.8-10.9%), and High Voltage (THC 0.4%; CBD 12.5-18%). Also, Emblem launched four cannabis-based oils in December 2017, which had a positive impact on the Company’s top line.
Emblem is developing an oil-filled cannabis capsule formulation, which is anticipated to be released in Q4 2018, after approval from Health Canada. The capsules will contain Emblem’s cannabis oils in 2.5 milligram, 5.0 milligram and 10.0 milligram strengths.
Expanding its product lines, Emblem has entered into a licensing agreement with Dosecann, a Canadian licensed dealer developing medical cannabis solutions for cannabis-oil oral spray, which is expected to be launched in Q3 2018 after getting approval from Health Canada. Furthermore, Emblem signed an exclusive agreement with Canntab Therapeutics Inc. (CSE:PILL) for preclinical formulation, clinical development, regulatory approval, as well as manufacturing and commercialization of cannabinoid-based oral sustained release formulation to be launched in 2019. Through the agreement, the Company has rights over Canntab’s patents and technical knowledge for the development of a sustained release product.
Emblem launched its first oral dose-metered spray, Emblem Atmosphere, in September 2018. Atmosphere is available in four different formulations – 0:20 CBD Oil, 12:20 Balanced CBD Oil, 20:0 Indica Dominant Oil and 20:0 Sativa Dominant Oil. The Company will focus on product innovation and brand strengthening with the goal of becoming a world-class product leader in the marijuana market in 2019.
Three-pronged distribution approach
Emblem has a three-pronged approach for product distribution – medical cannabis, adult-use cannabis and international expansion. Focusing on the medical cannabis segment, the Company sells directly to patients through its current channel, as well as Shoppers Drug Mart (as and when available). With the adult-use segment, the Company highlights its high-value brands such as OCS, AGLC, and Fire & Flower etc. Emblem is making a foray into international markets via partnering with Germany-based Acnos Pharma, a pharmaceutical wholesaler.
Strong patient acquisition strategy
Apart from product development and selling, Emblem Corp. provides cannabis education to patients and physicians through its subsidiary, GrowWise Health. Having education centres across Ontario and British Columbia, GroWise operates in medical clinics where doctors are prescribing cannabis.
After issuance of a prescription, the patients are referred to GrowWise where they are counseled on safety, strain selection, etc. This way, Emblem gets better accessibility to patients directly.
Outlook and valuation
Emblem Corp. expects to increase shareholder value through product innovation, brand relevance and accessibility to patients/consumers. With a three-pronged distribution approach and strong patient acquisition strategy, the cannabis company’s prospects appear to be promising. Emblem trades at a market capitalization of C$188 million with a price-to-book multiple of 2.3x.
Disclosure: Neither the author nor his family own shares in the company mentioned above.
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