Chemesis International (CSI.C) closed its all-shares deal to acquire controlling interest in Puerto Rico based GSRX Industries today.

Medical cannabis is legal in Puerto Rico, but recreational use cannabis is still illegal. You can’t buy it in stores and pubs like you can in Amsterdam, and there’s the whole process of getting a doctor to sign off on your “need” for cannabis.

The official site for weed in Puerto Rico states:

The first criteria patients must meet to apply for a medical marijuana card in Puerto Rico is having a qualified medical condition. The state has included several disorders and symptoms including cancer, Parkinson’s disease and ALS, among others. The required steps are similar to those in many U.S. states:

1. Make an appointment with a physician registered to recommend cannabis with the MCRB.
2. The doctor must confirm the patient’s diagnosis and fill out a recommendation form.
3. The patient then fills out an application and all forms found on the MCRB website.
4. They turn in their paperwork in-person to the MCRB, along with an application fee and proper identification.
5. Once approved, they must return to the Medicinal Cannabis Regulatory Board to pick up their card and choose a medicinal cannabis establishment to access their medications from.

It looks like doctors are turning away people all the time, but if it’s anything like Canada was prior to legalization then they probably aren’t. Even in Canada, you could go in and say your eyes hurt and you need weed, and they would charge you $10 for their time. If that doctor wouldn’t do it then go find one that would. It’s probably the same in Puerto Rico.

That’s why it makes sense for Chemesis to lock down GSRX, because it adds to their holdings and gives the company another avenue to make, distribute and sell their products through their dispensaries.

“With the completion of this acquisition, Chemesis adds to its asset investment portfolio, and also gains further access to decades of management experience in retail, operations and manufacturing. This combination of asset investments and talent will allow Chemesis to realize efficiencies throughout its processes, and is expected to increase operating margins throughout the company’s supply chain,” said Edgar Montero.

Here’s what GRSX adds to CSI’s portfolio.

• Five operational dispensaries in Puerto Rico, which operate under Green Spirit Rx brand with locations in Dorado, Carolina, Hato Rey, Fajardo and San Juan.
• An additional five prequalified dispensaries in Puerto Rico with locations in large tourist centres and dense populations. Each dispensary is in various stages of development and construction.
• A fully licensed cannabis distribution centre in Point Arena, Calif. The distribution centre is expected to service over 400 dispensaries in northern and central California.
• The Green Room, a boutique dispensary located in Point Arena, Calif., that has been owned and operated since April, 2018.
• The Green Room, a 4,500-square-foot large-scale dispensary located in Palm Springs, Calif. The dispensary is currently undergoing renovations and expects to open by calendar first quarter of 2020. With over 10 million annual visitors, Palm Springs has become one of the most popular destination cites in California for tourists all over the world.
• Retail CBD (cannabidiol) stores in Texas and Tennessee, with products such as creams, balms, tinctures, pet products, face masks, vape pens and soft gels.

GSRX has also recently submitted a business plan to the City of Riverbank, California, aiming to start a retail location there. They also signed a long-term lease with a landlord for 2,600 square feet of building space, which they hope to use to build a strong customer base for both medical and recreational use products.

QuickStrip Opportunity

Technically, Puerto-Rico’s regulations ban anyone who isn’t a terminal patient or received permission from a state-designated committee. It isn’t the THC, but instead the risks associated with lung cancer. Therefore, any other method of ingestion from transdermal patches to vaping were perfectly allowable. So CSI partnered with Rapid Dose Therapeutics (DOSE.C) to manufacture the Quick Strip.

Here’s what we wrote about Quickstrips:

You pop it under your tongue and it dissolves in seconds, like breath-strips. The company equates onset time to be close-to taking the chemical intravenously, and they’re conducting controlled trials to demonstrate QuickStrip’s effectiveness and consistency.

If this were California, nobody would care. It would be an easily dismissed, carbon-copy of other products on the market, but Puerto-Rico, with its tighter regulations, is a different story altogether.

—Joseph Morton

Full Disclosure: Chemesis is an equity.guru marketing client.