E Overview Of Emerald Health Therapeutics, A Growing Cannabis Producer In Canada

As many of you know, Canada’s move towards legalization started a few years ago and next year should be one of the most exciting times to be an investor in the cannabis industry. In the past year, the Canadian cannabis sector has seen some tremendous gains and that trend should continue into 2018 as recreational cannabis will become legal all across the country. 

While the valuations for many of the licensed producers who are publicly trading may still seem high, the recent pullback in stock prices from the peak earlier this year was warranted. After any strong move up in valuations, a period of consolidation is needed and is very healthy price action.  It allows the stock price to find a natural level that the market sets during a basing period before the next move up or down. 

Given that 2018 will be the year for Canadian cannabis, the market will be paying attention to the sector and the licensed producers (LP) in Canada who are publicly trading. By the summer of 2018, the demand for recreational cannabis should set in and sales from licensed producers in Canada will start to see strong numbers. As this happens, the share price for the LPs could see a rise as more investment demand comes into Canada. 

While there are over 50 LPs in Canada, not all of them are publicly traded and there are many factors to consider when comparing them and their valuations. However, size of the facility does play an important factor and growing in a greenhouse can greatly reduce the cost to produce a gram. 

One of the companies we recently spoke with was Emerald Health Therapeutics, the 8th company in Canada to be to be issued a licensed producer status. Being an early LP that is planning on huge expansions, they could become one of the world's largest producing facilities of cannabis. With the potential of up to 5 million square feet that could yield more than 1 billion dollars in sales, you may want to add Emerald Health Therapeutics (TSX:V EMH; OTC: EMHTF) to your watch list.

Overview of Emerald Health Therapeutics

As early pioneers of medical cannabis in Canada, the company prides itself on providing safe, efficacious, and clinically proven, high-value cannabis products that enhance the health of Canadians across the country. Emerald is a vertically integrated, seed to sale enterprise that combines competencies from decades of experience in pharmaceutical development with expertise in large-scale greenhouse growing. 

When looking at any company, an investor should look at the management team to see if they have the experience and expertise to build and manage a large scale company. Emerald’s leadership team is experienced with pharmaceutical drug discovery, development, production and distribution. You can view the company’s board and management team online, but for now we will look at the executive chairman and president.

Having Avtar Dhillon, MD as executive chairman for Emerald brings a level of confidence and credibility to the company which many licensed producers in Canada don’t have. As a life sciences entrepreneur with more than 20 years of experience building public companies, he is experienced in mergers and acquisitions, leading innovation in scientific, engineering and farming enterprises. 

Securing government grants and NGO funding in excess of $75 million, he also oversaw raising over $250 million for Inovio (Nasdaq:INO) during his tenure as its President and CEO.  He led the company turnaround from $10 million to $1 billion, and also during that time Inovio completed several licensing deals with global pharma leaders Merck (MRK), Wyeth (now Pfizer) (PFE) and Roche (RHHBY). Before joining Inovio he was Vice President of MDS Capital Corp. (now Lumira Capital Corp.), one of North American’s leading healthcare venture capital organizations. Dhillon practiced family medicine for over 12 years. He has a BSc (Honours) in Human Physiology and an MD from the University of British Columbia.

Bin Huang, PhD, MBA, Emerald's President and CEO, is an executive leader with over 30 years of experience in life sciences. Her career began with Allelix Crop Technologies, where she spent six years as a plant research scientist. For a number of years Huang was the President and CEO of Cytovax Biotechnologies, a Canadian biotechnology company. Following that, she led WEX Pharmaceuticals, a subsidiary of publicly listed CK Life Sciences International (Holdings) Inc. (HKG: 0775), as President and CEO. Bin has a PhD in Plant Cell Biology from the University of East Anglia, UK, and an MBA from the University of Toronto.

A dedicated and experienced team will make help any licensed producer excel as a leader in the cannabis industry, especially one that is well versed in life sciences and growing. While the company does have a great amount of pharma experience, more studies and clinical trials have to be done by all companies before they can claim making a particular drug for a specific ailment; this is usually a requirement by Health Canada and for FDA approval. Emerald intends on running human studies to observe certain outcomes and prepare scientific papers that may provide defendable observations. This may help medical practitioners become much more comfortable in prescribing an Emerald product that has consistent dosing and displays certain characteristics that they think today may be beneficial for conditions like pain, insomnia, anxiety, etc.

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Disclosure: This article is part of a new “UnderCovered” series of exclusive articles featuring companies with limited coverage. Authors are compensated by TalkMarkets for their time, and ...

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Joe Black 2 years ago Member's comment

What would you say are the top five cannabis stocks to invest in?

InvestInMJ 2 years ago Author's comment

Hi Joe, you can sign up for our newsletter, we review and discuss opportunities there. Soon, we will be starting a subscriber based paid newsletter where we will provide more coverage on the sector.

Carl Schwartz 2 years ago Member's comment

Sounds like this could be a profitable investment. Will be taking a closer look at #EmeraldHealth $EMHTF.

Bill Johnson 2 years ago Member's comment

I have been curious about this space but am too old to learn new tricks easily. What are some trust worthy sources to learn more about investing in cannabis (in addition to TalkMarkets and your own site of course). And what other marijuana stocks would you recommend besides $EMHTF?

InvestInMJ 2 years ago Author's comment

We have many of the Canadian Licensed producers list in our Grower directory on our site, many of the are publicly traded... see http://www.investinmj.com/directory/growers for more details. We are starting to build out a comparison chart so visitors can evaluate the various companies, see www.investinmj.com/.../licensed-producers-comparison. Our focus at #IMJ has been on the Cnd side because of federal support, but we will be providing more coverage on US opportunities soon, sign up for our newsletter. To learn more about the industry, you may want to attend conferences, webinars and meetups, check out http://cannabisconference.ca As for recommendations, we are research analysts and provide coverage on the sector, we are not financial advisers. We will be starting a subscriber based newsletter soon, it will be a paid newsletter that will share opportunities and more in depth coverage.

Bill Johnson 2 years ago Member's comment

Thank you.

Michele Grant 2 years ago Member's comment

I never understood the craze for investing in #cannabis companies. It has to be one of the riskiest investments there is. Too new with too much uncertainty.

Duanne Johnson 2 years ago Member's comment

Yes, investing in #cannabis can be risky, just like any other investment. But I think we can all agree that this space as a whole will benefit from increasingly greater demand and interest, making the investment less risky than you'd think.

What I find encouraging is that Emerald not only has plans to aggressively expand, but with $40 million in the bank, they actually have the money to do it. That coupled with their unnecessarily low valuation makes this company particularly attractive to me. I'm bullish on $EMHTF.

Duke Peters 2 years ago Member's comment

Agreed.

InvestInMJ 2 years ago Author's comment

In Canada, the risks are greatly reduced as the Federal Govt is moving towards legalization, the US can be risky given the Govt stance on #cannabis. The risk in Canada is more on the company valuations being so high, competition and the increase in the number of licensed producers expected in the coming years.

Michele Grant 2 years ago Member's comment

Thanks for the clarification. I admit I am not familiar with the Canadian market nor factored the differences in the two government's stances.

Dan Jackson 2 years ago Member's comment

Yes, but the greater the risk, the greater the rewards.

Kurt Benson 2 years ago Member's comment

#EMHTF sounds very promising.

Alexis Renault 2 years ago Member's comment

Thanks for a great article Vin. I had no idea there were 50 competing companies in this space though! Do you expect this number to drastically decrease over the next few years and will #EmeraldHealth be one of the last such companies standing?

InvestInMJ 2 years ago Author's comment

There are over 50 licensed producers (LP) of marijuana in Canada, many of them in various stages of licensing. I believe that the number of LPs will increase over the coming years as we move towards legalization next year and demand increases. While we see more LPs coming into the market, the companies with newly issued producer status may find it difficult to compete with the established ones and raising capital at high valuations could be more challenging for them. Over the next few years, I expect a lot of mergers and acquisitions in the MJ space and the sector will end up with a few big leaders and many smaller producers. Emerald is on my watch list and if the JV progresses and can build scale in the greenhouses, then they could have a good chance of being one of the larger producers. You can visit our site and sign up for our newsletter for updates and opportunities in the cannabis sector, www.investinmj.com

Danny Straus 2 years ago Member's comment

How does the #marijuana outlook differ in the US vs. Canada?

Barry Hochhauser 2 years ago Member's comment

Good read. Keeping my eyes on $EMHTF.