Pure Extracts Has Significant Leverage To Both The Cannabis and Psychedelic Sectors

Pure Extract Technologies Inc. (“Pure Extracts”) represents a differentiated growth opportunity that has attractive leverage to both the cannabis extraction and the psychedelics markets. We have a favorable outlook on how the business is approaching each of these markets and find this to be significant.

While most companies are focused on the cultivation and sale of cannabis and psychedelic products, Pure Extracts is focused on extracting the most valuable molecules from each substance. The margins that are associated with this facet of the business are high which we view as an attractive aspect of the story.

Pure Extracts has plans to submit its Dealer’s License application to Health Canada. The granting of the license would allow the Company to extract psilocybin for businesses that need the extract to conduct clinical trials. The current market price of extracted psilocybin is massive and it is not expected to decline anytime soon.

A Differentiated Growth Story to be Aware of

Another of the reasons we are excited about Pure Extracts is the diversity of the business. From cannabis vapes, tinctures and edibles to psilocybin, the Company is focused on extracting and selling key THC and CBD input products to other businesses. Pure Extracts is also immersed in the functional mushroom market and has positioned itself to become the premier commercialization and manufacturing partner for both functional and psychedelic firms.

During the last decade, there has been a substantial rise in demand for functional mushroom products and the industry has benefited from an increase in the number of people that are focused on the natural health market. Most functional mushroom products are powdered, and this format limits the amount of active ingredients that can be consumed. Through the extraction process, Pure Extracts can create a concentrated dose of active ingredients that can be accurately measured and consistently manufactured, which will open-up new markets with new consumers. By offering a differentiated process, the Company will be able to stand out from the competition and we expect this to play an important role in the success of the product.

Forms Strategic Relationship to Support Growth

One of the most exciting aspects of the Pure Extracts story is related to the consulting agreement that it has with Dr. Alexander MacGregor, Founder & CEO of Transpharm Canada Inc., the parent company of the Toronto Institute of Pharmaceutical Technology. Through the relationship, Pure Extracts has access to Transpharm’s fully compliant Health Canada licensed GMP manufacturing and testing facility.

The agreement accelerates Pure Extracts’ ability to formulate and develop new psychedelic therapies and thereby serve as the commercialization engine for extracting psychedelics for its partner companies. We believe that this will be a key driver of shareholder value over the long term.

As the Company works on obtaining a Dealer’s License from Health Canada, Pure Extracts will initially sell functional mushroom products and is applying to Health Canada for a Natural Health Products (NHP) site licence. Once the Company is granted the license, it will be able to buy, sell, test and produce psychedelics within an EU Good Manufacturing Practice (GMP) environment. The management team has been highly focused on forming strategic partnerships prior to its being granted a Dealer’s License and has signed several NDA’s with functional product firms to explore joint development strategies.

In the Middle of a Major Transition

Pure Extracts is in the middle of a major transition and the expansion into the psychedelic market is an extension of its extraction capabilities. Going forward, the Company will continue to be laser focused on rapidly scaling its hemp and cannabis extraction business and we will monitor how the management team is able to execute on this.

So far, Pure Extracts has been contacted by several functional and psychedelic mushroom companies to formulate and commercialize biomass for them. We believe that there will be strong initial demand for the Company’s services and will monitor how this side of the business is able to ramp up.

One of the additional reasons we are excited about Pure Extracts is due to the expectations that are associated with their operations. The Company expects the functional mushroom extraction business to ramp up later this year. The functional mushroom business will help Pure Extracts learn more about the different types of mushroom species and allow it to more accurately formulate them into other compounds that will ultimately make the psychedelics more effective.

An Opportunity that is on our Radar

Pure Extracts will be able to generate revenue on the cannabis side of the business as it continues to execute on the psychedelic and functional mushroom vertical. Over the long term, we expect the business to find substantial synergies between the cannabis and the psychedelic and functional mushroom divisions.

Later this Fall, Pure Extracts plans to complete a go-public transaction and this is an opportunity that we are closely following. When compared to other businesses that are focused on the psychedelic market, we believe that Pure Extracts represents a differentiated opportunity that has substantial potential catalysts for growth.

If you are interested in learning more about how Pure Extracts plans to disrupt the psychedelic industry, please send an email to support@mushroomstocks.com to be added to our distribution list.

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Authored By

Anthony Varrell

Anthony Varrell is Managing Director of StoneBridge Partners LLC. SBP continues to drive market awareness for leading firms in the cannabis industry throughout the U.S. and abroad.

Published at Tue, 14 Jul 2020 12:08:32 +0000

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