The emergence of medical cannabis as a viable commercial market requires several key caveats such as product quality and quantity – but there is an additional aspect that remains key: authenticity.
YPB Group (ASX: YPB) plans on delivering just that for the medical cannabis industry in Canada just as the industry is entering its twilight moment with full-blown legalisation just around the corner and several dual-listed companies jostling for position to secure a share of the fledgling industry.
YPB is an anti-counterfeit and customer engagement solutions company that wants to help medical cannabis companies provide a stamp of authenticity to their products and their dealings with customers.
The company signed its first “Australian made” client in the form of UGG Australian Made Since 1974, the manufacturer of premium quality, UGG boots at its workshop in southeast Queensland.
Within medicinal cannabis, YPB has just signed a three-year master supply agreement with Namaste Technologies, an emergent cannabis producer in Canada, which will see the two companies working together to leverage Namaste’s suppliers across the global cannabis industry and particularly those accessing Namaste’s large and growing e-commerce customer base.
In April this year, Namaste announced its record-breaking quarterly sales of C$5.6 million, an increase of 195% compared to the same quarter in the previous year – a clear sign that medical cannabis monetisation is taking off in Canada, and potentially, so too in Australia in the foreseeable future.
YPB says the project is likely to be a “major revenue contributor” to its balance sheet in excess of A$1 million per year, with Namaste agreeing to make an investment in YPB as part of the deal. Namaste has said it will invest US$100,000 in new YPB shares at A$0.035 per share supplemented by an additional one-year option to invest a further US$100,000 at A$0.035.
“With YPB’s solutions, Namaste intends to become the trusted source of authentic cannabis products in all our markets by encouraging all producers to mark their products with YPB’s ProtectCode,” said Sean Dollinger, chief executive officer of Namaste.
“Further, the ability to engage directly with customers who have scanned a YPB protected product to confirm authenticity will serve the rapidly growing cannabis community more effectively. Our investment in YPB equity highlights our intent to maximise this opportunity for the mutual benefit of Namaste and YPB shareholders,” said Mr Dollinger.
Burgeoning cannabis industry in Canada
Namaste is a global leader in the sale of all elements of medical cannabis consumption and aspires to become the world’s “one-stop shop” for medicinal cannabis products for both growers and consumers.
The company has seen immense growth in its internal operations (and its share price) over the past year with a current valuation of C$384 million. Its shares are currently trading at around C$1.40 per share compared to C$0.22 in October last year which further underscores the surge in the commercial viability of Canadian cannabis companies, advancing to grab market share as part of a “cannabis consumer land grab”.
Both the medical and recreational cannabis markets are entering pivotal phases of strong growth and are in the early stages of development into much larger and commercially significant entities backed by softening regulations and the removal of government prohibitions.
In Canada, Namaste has built a fully integrated e-commerce hub whereby patients and medical cannabis users can be seamlessly connected to doctors and a range of high-quality cannabis products, cannabis cultivators, cannabis brands and cannabis consumption systems.
According to Namaste, its e-commerce sites obtain over 600,000 monthly visits and wields a “rapidly growing” database of 1.5 million users. The growing infrastructure has led to Namaste seeking to secure greater authenticity for its products with YPB selected as its chosen partner.
Namaste and YPB have said they are working towards a shared strategy to leverage Namaste’s market position to ensure all its vendors and suppliers along the cannabis supply chain mark every product sold with a YPB ProtectCode aligned to YPB’s Connect platform. The move is expected to enhance trust in the legitimacy and integrity of the industry via a “certainty of authenticity”.
Namaste will also achieve a broader view of industry-wide consumer habits as smartphone scan of products to confirm authenticity generates data for analysis via YPB Connect. Furthermore, Namaste plans to use YPB’s Secure Supply Chain tracking to ensure visibility of exactly where and when products are within the supply chain.
“YPB could not find a better partner with whom to participate in the expected rapid growth of legal cannabis consumption. Namaste’s footprint offers YPB exceptional global access with ease of execution at low cost and its adoption of our technology is recognition of the power of product authenticity to build customer trust, relationships and numbers,” said John Houston, executive chairman of YPB.
He added that “this is YPB’s single biggest opportunity yet and we will work closely with Namaste to ensure conversion to real shareholder wealth.”