As announced today, True Leaf Medicine International Ltd. (CSE: MJ; Frankfurt: TLA) will focus on the development, production and sale of hemp based pet foods. While the potential of this new revenue source has been identified by management and appropiate measures are pursued at the moment, the company continues to work with Health Canada to receive a licence for the production of cannabis for humans medical purposes.
With 30 years experience in the pet nutrition market, True Leafs CEO, Darcy Bomford, sees a natural fit for his company to combine its current focus with products for pets as a natural extension of the mission to provide customers with enhanced quality of life. As per its latest press release (April 9), True Leaf is already in negotiations to combine those two areas going forward. Darcy Bomford commented as follows:
At True Leaf we are dedicated to improving wellness and quality of life. Given our management teams skills and background, and the steadily building market focus on value-added products around the cannabis sector, we find the pet industry to be both a perfect fit and an untapped niche market. There is a gap in the market for products that offer pets a better quality of life and hemp proteins and hemp seed oils offer genuine potential in this well-established space.
Consumer demand for pet food, health and wellness products, grooming and pet related accessories is growing at a rate of 4% annually. The overall market in Canada for pet related items is expected to grow to $8.3 billion by 2018. True Leafs management sees products that are most compatible with the companys mission in nutraceutical pet chews and supplements for the support of good pet health. Next steps include identifying manufacturing, marketing and research partners in Canada to develop those pet product lines, which the company expects to roll out in the fall of 2015.
Hence already in a few months, True Leaf may have developed marketable products that can be sold immediately generating cash flow as the regulations for hemp based products (without THC) are not as strict as being the case with THC-rich products, for which a licence is necessary. Appropiate newsflow during the next weeks is expected to have a positive impact on True Leafs market valuation as only few publicly listed companies, which aim at establishing themselves in Canadas medical marijuana market, have a serious focus on the hemp-based pet food industry. This may turn out as a company-making event for True Leaf generating regular cash flow, whereas the company represents the potential to penetrate this market first and advancing to a market leader in this growing health segment.
True Leaf has filed an application under Health Canadas Marihuana for Medicinal Purposes Regulations (MMPR) to become a licensed producer with a facility located in the Village of Lumby, BC. The company has passed through the preliminary and enhanced screening process of Health Canadas review and is currently awaiting a ready-to-build approval, which may be granted any day.
We continue to comply with the Health Canada application review process and have responded to eight Health Canada Requests for Additional Information to date. This initiative strategically addresses both our immediate, short-term need to establish brand and revenue while we wait for the outcome of our MMPR application to Health Canada, and helps define our long-term mission as the Quality of Life Company for both people and their pets, said Mr. Bomford.
Rockstone will soon publish a detailed analysis on True Leaf and the fundamental developments of the medical marijuana markets in Canada and USA. Further information on True Leafs plans can be found in their latest presentation.
The author, Stephan Bogner (Dipl. Kfm., FH), owns shares of True Leaf Medicine International Ltd. and thus would profit from a share price appreciation, whereas the author may sell those any time without notice. Neither Rockstone Research nor the author was remunerated or instructed by True Leaf Medicine International Ltd. to produce or publish this content. However, please read the full disclaimer within the full research report (available as a PDF below) as a conflict of interest exists with Zimtu Capital Corp. and none of this content is to be construed as a "financial analysis" or "investment advice".