Canabo Medical (CMM.V) rapidly expanding cannabis referral clinics and data haul

01/18/2017

Canabo Medical (CMM.V) announced this week that it was opening more clinics in its chain of cannabis referral centres. This is relatively small news, but bigger news than you know.

Canabo Medical runs clinics that your doctor send you to when he or she doesn’t know what the hell to prescribe to your cannabis-desiring sick-ass self. The company now has 12 clinics across Canada, with locations in Toronto, Barrie, Ottawa, Hamilton, Halifax, St.John’s, Moncton, Kingston and Edmonton all open. A recent deal announced with an Alberta company will ramp that up quickly.

Personally, I think the Canabo business model is in my top three in the cannabis sector today, and will soon be considered some of the smartest thinking in the space. The newly announced clinics are verifying, for me, that the company is legit and expanding quickly, much more so than the $8m they raised before Christmas when Aphria (APH.V) bought in at $1.40 per share (you can buy it at $0.84 right now, which is a steal), or the 7500 patient observational study announced before that.

Canabo is legit because it will drag the entire sector, producers, processors, researchers, academics and more, kicking and screaming into legitimacy.

HOW?

Let’s start from the olden days.

The cannabis space started out as a pretty simple enterprise; you planted it, you grew it, and then you buried your face in a pound of cocaine and gunned down your enemies while shouting “say hello to mah li’l friend!”

Then it legalized and the formula switched to; you planted it, you grew it, and you sold it to a handful of patients who had gone through an arduous process of pre-qualification and ecommerce signups and learning how to vape and dealing with being told there was no product left.

We’ve progressed somewhat since then, but only a little. Canadian doctors still won’t prescribe weed for the most part, with some 95% not willing to make a guess at the dose, strain, and supplier best suited to a patient.

In fact, my own doctor, progressive as he is, certain as he is that weed is a good tool to fight a number of ailments, won’t prescribe it because it hasn’t gone through the trials needed to give him definitive information on how it is best used, and for what.

This has been Canadian cannabis’ bottleneck for several years now. Your doctor wants to help, but doesn’t know how, and the industry wants to sell you weed, but hasn’t done the work to make the doctor comfortable.

Canabo Health (CMM.V) is the first, and the only, company to emerge to identify and attempt to fix this problem.

Canabo is who your doctor needs to call when he or she can’t help you. Because Canabo has over 40 doctors on staff, in clinics across Canada, who are not only trained in the prescription of cannabis, but in proper dosage, in monitoring your condition as you use the medicine, and in making changes to your treatment as you go based on your feedback.

They won’t see you unless your doctor sent you. And when your doctor sends you, he sends your health records along for the journey.

THIS IS KEY.

Look, I can walk into a weed clinic on any street corner in Vancouver and a ‘medical professional’ behind the counter will sell me weed.

“I’m a registered nutrician and fully versed in Bulgarian head massage. You should buy the Purple Crotch Stomper. It’ll help with your acne.” – A dispensary medical professional, probably.

Thanks, Dr Nick.

Canabo does it differently. Canabo wants you to get the weed you need (as opposed to the weed you want), in a way that will be effective for your ailment (assuming you have an ailment), in a dose that will help you and not bleed your bank account dry, and it’s up to you to figure out who you want to buy from.

That’s right – Canabo isn’t selling weed for participating LPs, they’re prescribing you – and then they’re taking your health records, with your permission, and they’re extracting up to 400 points of data out of them.

That data is the golden fleece of the global weed industry. If you’re a Supreme or an Aurora or Dr Filberstein at the clinic down the road or a Professor Glubernickel at Princeton’s biotech lab or Daddy Warbucks, CEO at Big Pharma Inc., you want data when you develop new products and new treatments and new research and new platforms and new uses of CBD, THC and everything in between.

Most companies, when they go do ‘trials’ with their new products, sign up 50 folks to take their stuff for six months and if three of them show promise, that’s something they’ll write about. But that’s bullcrap.

Canabo brings to the table (at the time of writing) data from over 15,0000 patients, with more coming on all the time. You need arthritis patients? Canabo has thousands. You want to know if a given strain works well with arthritis? Canabo has that data, it just has to be extracted. You want to know if that strain causes anxiety? Ask Canabo.

And while they’re accruing that data, they’re feeding it back to their doctors.

“Hey docs, we’ve just gone through the data and found Purple Crotch Stomper is not as effective at dealing with PTSD as It’ll Be Okay Kush, please adjust treatment plans accordingly.” – A Canabo executive, probably.

HOW DOES CANABO MAKE MONEY?

  1. They charge a consult fee when their doctors see you to figure out whether you should be prescribed cannabis treatment: The relevant provincial health service covers that, like they would if you went in looking to get a boil lanced. You should really get that looked at.
  2. They provide information and consulting services to companies, growers, product developers, academics and more. You want access to their massive bank o’health data? You’re going to pay, because nobody else has such a thing, let alone one this big.
  3. They train doctors as to how to provide the level of service to cannabis patients that they should be providing. No more guesswork. Cutting edge information on dosage and strain and efficacy.

WHY WOULD APHRIA OVERPAY FOR CANABO STOCK?

Easy answer: They didn’t. Aphria chose to buy a massive slice of Canabo because they know what Canabo is accruing is worth way more than the current share price. Aphria could have bought bits on the open market over several weeks, and only would have succeeded in raising the share price to the same $1.40 they ended up at – or higher. They got a good piece of the action for a price they believe makes sense going forward, and that will prove a prudent purchase.

What they wanted was access to that data. Now, Aphria has a first look at the good stuff. They can figure out which strains are proving popular and/or effective, they can see what strains work well with what demographics, or with what ailments, and they can grow to suit. For $8.4 million, it’s a smart move, and not the first such move Aphria has made. Their early $7.5 million purchase of a piece of CannaRoyalty (CRZ.C) stock gives them first look at some 22 assets of IP, brands, and products that company has a piece of and can duly license out.

IS CANABO LEGIT?

To me, the last few paragraphs answered that question. Look, you’re a smart guy. You know how to read a balance sheet and you look at trends and news and where the market is, and you can see for yourself if you think a company is a worthwhile investment of your time and money.

But Aphria’s team of due diligence folks kick the everloving crap out of your due diligence. If I’m on the fence about whether there’s upside on Canabo, I’m either smarter than Vic Neufeld and his team (who turned Jamieson Laboratories into one of the world’s largest nutritional supplement sellers), or I’m a lot unsmarter and I should take what they’re doing as a signal.

Canabo said they would be opening more clinics, and this week they did. I’ve talked to execs at the company who tell me that’s just the opening whimper of one long and loud song that you’re going to be hearing a lot of this year, as they expand across the Great White North. The idea is, they’ll be talking to your doctor, making it clear they’re a legitimate medical provider aiming to help said doctor make the right call for their patients, and the great Canadian bottleneck of weed will finally open up to allow not only patients to get what they need, but for researchers to have access to the greatest single weed user database in modern times.

Hells bells, ladies, that’s sexy.

— Chris Parry

FULL DISCLOSURE: Canabo Medical is an Equity.Guru marketing client, and we’re very proud of the fact.

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Comments 6

  1. David says:

    You mention CMM is in your top three weed plays, what are your other two?

    • Chris Parry says:

      Really like CannaRoyalty and think it’s way undervalued. Marapharm is also interesting to me right now, but want to see how Nevada plays out on a regulatory standpoint.

  2. Larisa says:

    Any idea what’s up with CMM? The chart broke the past couple days (not in the direction one would hope to see lol). Still bullish or has something significant changed recently for their future prospects? Thank you, sir!

    • Chris Parry says:

      I think it’s an opportunity. With these juniors, sometimes it only takes one early guy trading out of his position for a profit to shovel a share price for a week.
      I like the deal a LOT, right the way past a buck.

  3. William says:

    So why is the share price dropping like a rock?

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