So far, Delta 9 Cannabis Inc. (CVE:NINE) is the only Licensed Producer in Manitoba and has partnered with Canopy Growth (TSE:WEED) to meet demand
SmallCapPower | November 10, 2017: Delta 9 Cannabis Inc. (TSXV:NINE), a Manitoba-based producer of medical marijuana, has had a spectacular first four days of trading, opening at $1.50 a share on Monday and closing at $2.89 on Thursday for a 93% gain thus far this week.
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The Delta 9 Cannabis IPO came in after the Company completed its previously-announced reverse takeover transaction on November 1, 2017. Prior to the reverse takeover transaction, the Company was known as Delta 9 Bio-Tech.
Delta 9 Cannabis was the fourth company in Canada licensed to legally grow and sell cannabis. The Company received its license to grow medical cannabis from Health Canada in December 2013, and a license to distribute in April 2014. It now operates a retail cannabis clinic on River Avenue in Osborne Village. The money raised from its IPO will allow Delta 9 Cannabis to expand from the 15,000 square feet of production space it currently uses to fill entirely its 80,000-square foot facility. Production capacity is expected to increase from the current 1,000 kilograms per year, to 17,000 kilograms of high-grade cannabis by 2020.
Through this IPO, Delta 9 Cannabis has raised $5.2 million by issuing 8 million shares at a price of $0.65. Additionally, the Company plans to raise $25 to $30 million, through a mix of debt and equity, over the next number of months to meet the rising demand for its products.
Just two days after the IPO, the Province of Manitoba announced the framework regarding adult-use cannabis production, distribution, and retail. The framework is much less restrictive than what is planned for neighbouring Ontario. Delta 9 Cannabis is the only producer that currently has a license in the province to sell medical marijuana. Additionally, Canopy Growth Corporation (TSX:WEED) has recently partnered with Delta 9 to meet demand in Manitoba. This partnership with Canopy Growth will allow Delta 9 Cannabis to expand its retail presence outside the province. Due to this not so restrictive rule in the province, we could see a lot of demand make its way to Manitoba, which could mean significant growth opportunity for Delta 9 Cannabis going forward.
Disclosure: Neither the author nor any of the principals at SmallCapPower, or their family members, own shares in the company mentioned above.
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