Licensed Producer Internal Documents Show 250 Per Cent Mark Up on Cannabis

Cannabis Life Network has obtained another internal licensed producer investor document, this time for Ontario-based Emblem Cannabis Corp.

The documents offer an interesting look into the current, and projected future, business of one of the country’s medical cannabis producers.

Emblem describes itself as “a company that has the potential to generate over $100 million in revenue, led by a team of Health Care & Pharma Executives who have built & run multi-billion dollar companies.”

The company is divided into three divisions — Emblem Cannabis, their production facility; Emblem Pharmaceutical, which develops “new dosage forms of cannabinoid medication,” such as gel caps, sprays, trans-dermal patches and pills; and Growwise Health, a network of eight medical clinics that sign patients up for the licensed producer that Emblem says averages “50+ patient orders per week.”

Emblem Pharmaceutical president John Stewart, is the former CEO of Purdue Pharma Canada, which, “launched 11 new products, including OxyContin.”

In 2012, the Ontario government removed OxyContin from the Ontario Drug Plan, in an attempt to reduce the 2,500 deaths between 2011 and 2014 as a result of opioid overdose.

In May, 2012 U.S. Senate Committee on Finance sent Stewart a letter that stated there was growing evidence that pharmaceutical companies like Purdue were partly responsible for the “epidemic” of opioid related deaths “by promoting misleading information about the drugs’ safety and effectiveness.”

“In 2007, top executives from Purdue Pharma, the original manufacturer of OxyContin, one of the most notorious and heavily abused painkillers, ‘pleaded guilty…in federal court to criminal charges that they misled regulators, doctors and patients about the drug’s risk of addiction and its potential to be abused.'” the letter read.

As a result of the court case, Purdue was ordered to pay $600 million in fines, “one of the largest amounts ever paid by a drug company in such a case,” according to the New York Times.

In the licensed producer document, Stewart praised the natural benefits of medical cannabis and is stated to have invested $900,000 into Emblem.

Cannabinoids and other components of marijuana have real therapeutic value,” Stewart is quoted as saying.

Emblem’s director of operations, Stephen Dinka, was the previous operations manager/grower for Prairie Plant Systems, Canada’s first licensed producer.

A 2007 study comparing tobacco smoke to smoke from Prairie Plant Systems cannabis found  ammonia “at levels up to 20-fold greater than that found in tobacco” and hydrogen cyanide “at concentrations 3–5 times those found in tobacco smoke.”

Emblem, with a production facility in Paris, Ontario, began harvesting cannabis in March, 2016 with sales beginning in July, under the company’s grow operations manager Graeme Montrose.

Montrose is listed as trained as a University of Guelph horticulturalist who has worked in greenhouse vegetable production for over 12 years. According to Montrose’s LinkedIn account, nine of those years were spent at Hazel Farms in “organic and conventional production of specialty tomatoes.”

The documents also look at the licensed producer’s production costs and output.

The company says that it eventually expects a 71 per cent margin on cannabis with production costs at $1.52/gram, and costs of $2.08/gram including expenses such as packaging, amounting to price point of around $7 to $8/gram for medical patients.

Emblem expects to post net losses of $865,864 in the third quarter of 2016, $591,769 in the fourth quarter and $609,619 in the first quarter of 2017 before experiencing its first net profit of $235,592 in the second quarter of 2017.

The company expects to begin selling oils in 2017, with an expected revenue from the extract product of $2.9 million in the first 12 months, selling a 60ml bottle for $135 with a 90 per cent operating margin.

In the second quarter of 2018, Emblem said it will launch “full scale pharmaceutical production” of liquids, gel caps, oral sprays and inhalers with its full scale production also reached in 2018 — an annual production of over 16,000 Kilograms.

Emblem also sees the majority of its growth coming from the recreational market.

“Both the Canadian federal government and the provinces need to find new ways to maximize revenue including the taxation of recreational marijuana,” the document states. “Consequently, the Canadian Government will be highly motivated to shut down illegal dispensaries.”