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I haven’t spent more than five minutes looking at Peace Naturals in all the time I’ve been writing about the medical marijuana space, mostly because they’re private, partly because growing med-weed is a tough slog.

I met with PN’s CEO Mark Gobuty last week for breakfast (I had the malted waffles with chantilly cream and fresh berries – great choice) at the request of a couple of broker folks. For what reason? No idea. But hey, no harm in waffles and a story.

Having sat for a few hours and kicked the ever loving crap out of the Peace Naturals history and plans for the future, I came away intrigued.

For the uninitiated, PN was one of the first companies to get itself a medical marijuana license in Canada under the MMPR program. They benefited from going in among the first (the company was founded in 2010), but that benefit has also hampered them a little as rules have changed, standards have shifted, and on occasion they’ve found themselves under the wheels of that constant ebb and flow of what’s expected.

PN has had recall issues. That’s what almost everyone in the market space remembers about them. The most recent issue was based on their product having a little too much THC in one sample, something that some companies would boast about.

“We tested the rest, found no problems. But it made us better. Less likely to have that issue reappear,” says Gobuty.

Gobuty gets that he has a PR problem on this topic, which I think is part of why he wanted to meet me. He needs folks to refocus a little on what PN is doing, not what’s been said about them. And they’re doing some interesting stuff.

First and foremost, the company is working with nursing homes to integrate medical marijuana into resident care. This is not a ‘the CEO signs off on it so all seniors get weed’ kind of arrangement, more it’s a ‘CEO signs off on it, then we meet with the families of the residents that the facility team thinks would be good candidates, educate them on what it all means, sign up those that are into it, then they can vape in peace’ kind of deal.

This is big. First, because it’s allowing them to get some data on how patients react to the treatments, being as they’re essentially administered by in-house pharmacies. Second, there are some BIG care companies out there that could ramp this up quickly. Third, you’re talking recurring revenue with trained help at the patient end.

It’d be better if the patients could take a pill rather than smoke, but one step at a time.

An increase to grow capacity at the Peace Naturals facility was recently approved by Health Canada, giving the company the ability to make more use of their space.

And PharmaCan bought into the deal, taking 27.4% ownership of the company as part of their own vertical integration plan.

They’re also working on some non-cannabis retail product lines that follow the Peace Naturals ethic and, when extracts etc. are legalized, would make for a crazy great entry into that market. Gobuty has experience on that end, in the functional foods space, having developed more than a few brands in the Tier 1 Consumer Packaged Goods space.

And if that’s not enough, the company recently took a chunk of MedCanAccess, once the company most likely to pop at IPO, now a patient referral tool for the company and planning big things.

But PN needs a little dough to work through all these avenues. They’re convinced they’ll be break even soon. To go public before that point (I advised) would see them slump into the public space with the wind out of their sails, courtesy of the recall and Canada’s general weed blah right now, so don’t expect and RTO/IPO until maybe early 2016.

But expect it.

I hear others have given the Peace Naturals tires a kick recently. Tweed –[stock_quote symbol=”TWD.V”]– has been doing the rounds, looking for patients to buy, and Pharmacan –[stock_quote symbol=”MJN.V”]– is said to be looking for a liquidity moment on one of its investments to prove value to investors and future targets.

I have no vested interest in saying so, but I like Gobuty, and I like his ideas for Peace Naturals’ path forward. Growing will be strictly a ‘lock down your own supply’ business soon enough and he’s working on ensuring there’s a value add option or two to make use of his own stock.

And if you can open a market with the aged, you’re far closer to opening it with insurance companies, health care companies, long term care facilities… and the people who sign the forms for the aged.

Peace Naturals is in the process of raising a little cash to move forward, which is a nice opportunity for an accredited type to get a piece in the chance that there may be a liquidity event soon that presents a nice profitable exit.

At worst, you get a chunk of a company that, I think, is doing the right things at this stage of their existence and is penetrating a good niche. At best, ‘thank you for the Tweed dough, I shall now eat steak.’

Thanks to Hugo Kotar and Paul Pedersen for the invite. Let’s do it again some time, Mark.

Disclaimer: ALWAYS DO YOUR OWN RESEARCH and consult with a licensed investment professional before making an investment. This communication should not be used as a basis for making any investment.

Chris Parry

Chris Parry is a two-time Webster Award winning journalist who has been featured in the pages of The Vancouver Sun, The Province, National Post, Spin, Hollywood Reporter, FHM, Stuff, and Stockhouse. He was the first business journalist to identify and focus on the move to marijuana as an investment opportunity, and started Equity.Guru as a venue for honest, no punches pulled coverage of the North American public markets.

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