Marapharm Ventures (MDM.C) continued to build its vertical integration when the company announced Monday that it had entered into an agreement to purchase a Medical Delivery Service with the express and limited purpose of to deliver, facilitate or coordinate cannabis transactions between qualified patients and caregivers.
The deal gives Marapharm access to patients in Rancho Mirage, California.
Rancho Mirage sits in Cochella Valley which connects Greater Los Angeles area to the West. The valley has approximately 500,000 residents with an additional 3.5 million annual conventioneers and tourists.
According to the news release, Marapharm has purchased 80% of the shares of Moringa Cooperative with 20% ownership remaining with the founders who will continue to operate the business.
The delivery service currently does business as MedicalDriveBy, but a name change is being considered.
Under terms of the agreement, a further $300,000 U.S. additional funds may be required for more delivery vehicles, expansion and working capital.
Getting product delivered to your door is a necessity for some patients using medical marijuana and a desired luxury for anyone else wishing to purchase marijuana for recreational purposes.
Marapharm’s foray into this business segment shows forethought. The legalized cannabis sector is no longer just about product.
As corporatization and consolidation sweeps the mostly fragmented sector, we are seeing a shift in emphasis from cultivation to service provision.
We saw a similar shift in computers. Giants like IBM took a backseat to Microsoft when the computing space matured and hardware could be produced easily and cheaply the world over.
It wasn’t just about the product, it was about how you could serve it or utilize it. Cloud computing is a prime example of this on-going trend.
Legalized cannabis is going through the same evolution.
Sure, producers are still important and will play a major role in the sector, but that part of the industry is about to be seriously consolidated, leaving only a relative few profitable players while the rest scramble for scraps.
Marapharm is hedging its success as company CEO, Linda Sampson, explained, “Delivery services for cannabis are a big profit business in other locations in the United States and we’re excited for our first one to be in California. Marapharm’s business model is to be part of the entire marijuana experience in different States and countries, to grow it, sell it and now to deliver it. This is great diversity!”
Marapharm Ventures is positioning itself to take full advantage of a legalized cannabis space predicted to be worth $50.0 billion by 2026 in the U.S. alone.
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