|So it stands to reason we’d start seeing public companies emerge who are unafraid to use the word cocaine in their press releases.
Well, maybe a little afraid.
Safe Supply Streaming Co. Ltd. started trading on the Canadian Securities Exchange (CSE) as of today, under the trading symbol SPLY. CEO Bill Panagiotakopoulos emphasizes that the safe supply ecosystem is ‘not just a business but a movement, in response to the global shift of accepting and embracing all drugs, due to the failure of existing prohibition policies.’ He says Safe Supply is positioned strategically to act swiftly on initiatives, focusing on impact and building a future that is profitable, sustainable, and responsible due to its robust financial footing and experienced leadership team. He wants his company to to be a steadfast voice and champion in the sector, utilizing the leadership team’s expertise to be a first mover in the emerging global opportunities within the safe supply ecosystem. He says SPLY’s mission revolves around contributing responsibly to ending the war on drugs and is investing in and incubating companies leading the third wave of drug policy reform, and they’re developing facilities to analyze, manufacture, and distribute psychoactive compounds (including from the coca plant), investing in research and innovation to maximize potential and minimize harm from these medicines, and constructing clinical infrastructure to ensure safe, responsible access and treatment.
All of the above, the whole entire paragraph there, that’s code for ‘we’re going to do medical cocaine.’
They don’t say the word because they’re scared of what people will say in response to it, but ‘including from the coca plant‘ is the tell. We are exactly where we were with Satori Resources back in the day, when they claimed to be ‘exploring opportunities in the science, wellness, mining, healthcare, recreation, and pharmaceutical’ industries but couldn’t bring themselves to say ‘weed’ (though the BUD ticker symbol was a bit of a billboard of their intent).
Other companies have been less frightened of their intentions in the new cocaine economy, like the rarely traded former-Vic Neufeld joint, HYTN Innovations (HYTN.C), stating clearly earlier in the year they’re hoping for a Health Canada license adjustment that would bring them the ability to trade in MDMA, LSD, ketamine, and cocaine. That announcement came in March, shortly before former Aphria (TLRY.T) honcho Neufeld walked the plank, so who’s to say if they ever get what they were asking for. It could be the de-Vic’ing was required by Health Canada to move forward, or it could be a sign that license isn’t coming and VN saw no reason to continue the ruse.
Currently, HYTN do run the gamut of the usual cannabis licenses, and put out some fine products in that sphere, but it’s clear they REALLY see other drugs as their path forward and a quick look at their finances show they had $80k in cash left and $140k in accounts receivable at the end of June, with a $400k operating loss per quarter. They’re trying to raise a million bucks at $0.10 per share, while the stock is selling at $0.085 on the open market. Unless I’m missing something, it looks ‘grym’ for HYTN.
Pharmadrug (PHRX.C) would love to be in the cocaine space, at least in terms of synthesizing the stuff, but its efforts to commercialize DMT through research and clinical trials have hit a financial dead end, and it can barely get its stock over half a cent as it actively ‘assesses strategic alternatives.’
The Board of Directors is assessing strategic alternatives to be able to yield maximum shareholder value for its cepharanthine and N,N-Dimethyltryptamine (DMT) programs which management believes is being significantly undervalued by the markets at this current time. Possible avenues include potential entries into joint ventures in order to add intellectual bench strength, scientific program synergies and short to mid term financial flexibility. Management has already begun discussions with several companies, although there is no guarantee an agreement will be reached. PharmaDrug’s intention is to keep operational control of its cepharanthine and DMT programs.
Though clinical trials are going ahead, they’re being performed by another company that picked up a controlling interest in the subsidiary holding the asset, for $300k. Former Aurora Cannabis boss Terry Booth is an advisor, though he doesn’t appear to have brought them any market weight.
Elsewhere, I’ve been hearing a steady drumbeat from private companies that are talking about getting into the cocaine space as soon as retail investors get a bit less frightened of their own shadow, but the kicker here is, all of these companies – every single one of them – is late to the game.
WHO’S ON FIRST
While Safe Supply is looked at by many as being the first through the wall, another pubco touched on the cocaine space long before Safe Supply, when it press released that it had received a Health Canada dealers license for – wait for it – cocaine. Adastra Holdings (XTRX.C) got itself in talk radio trouble earlier in 2023 when it accurately reported the government had allowed it to hold, process, and supply (to hospitals and research institutions, not the general public) 250 grams of cocaine, and the news media immediately ran to the most extreme translation of that information; that cocaine was a legal business now, that the company was dealing, and that dogs and cats were living together.
Adastra boss Mike Forbes put out a news release in February that stated, “Adastra Holdings Ltd.’s Adastra Labs Inc. received approval from Health Canada on Feb. 17, 2023, for its amendment to include cocaine as a substance that the company can legally possess, produce, sell and distribute.” The release would go on to state that the “amended license allows Adastra to interact with up to 250 grams of cocaine and to import coca leaves to manufacture and synthesize the substance,” but didn’t specifically point out that the license was for interacting with research institutions, hospitals, and the like, as opposed to shifting grams of coke to the general public.
Thus began a round of weirdness where politicians started blaming each other for a thing that wasn’t actually happening, and the tossing about of terms like ‘pump and dump’ and ‘lawsuit’ while plumbers and stay-at-home moms told talkback radio hosts about the downfall of civilization. The company clarified some days later that they weren’t actually a Mexican drug cartel, but rather a properly licensed research company, already doing a roaring trade in weed and very open to using other substances for proper future research, synthesis, compounding, and therapeutic ends in an effort to create a safe supply, but the media cycle already had its meat and the company stock dived.
Here’s the thing: When a new drug sector emerges, the usual gang of corporate suspects always jump aboard, papering the room with cheap stock of whatever shell they have lying around and claiming their market heft will bring about success. They did it with weed. The same people – Linton, Booth, Neufeld – did it with psychedelics, and now cocaine.
But Michael Forbes is one of those guys who has actually had real skin in the game from the outset. He piloted a needle exchange for the Centres of Disease Control and Prevention back in 2010. He’s a pharmacist who started and operated a chain of successful methadone clinics, so he’s seen addiction treatment up very close. In addition, he’s recently started a chain of longevity clinics, which is (trust me on this) the next big thing in the wellness space, and drawing big money clientele all over North America to clinics charging as much as $80k for services annually. His Ageless Living group has multiple bricks and mortar locations that I (did I mention I’m a 54 year old middle-aged grey-hair?) have seen first hand.
Forbes isn’t a markets player, rather he’s the kind of dude the government agencies LEAN ON, because he’s got first hand knowledge of addiction, addiction treatment, pharmaceutical development, and he’s clean skinned enough that he’s qualified for his weed licenses but ALSO a current cocaine ‘dealers license,’ which all of these other companies are hoping to get.
Safe Supply has positioned itself to brag that it will, one day, work within the law when the laws become available to work within, but Adastra is there right now. Forbes is respected enough by Health Canada that they already gave his company a license the other guys hope to get over the next year plus.
No, that license doesn’t let him sell eight balls to brokers (which is, let’s face it, where the real money will be), but it does let his company begin formulating compounds that can be put forward as a responsible forward movement in the suddenly very fucking important quest for safe supply.
Cocaine, back in the 70’s and 80’s, didn’t ruin lives because it was super profitable in its pure form and, though definitely habit forming, at least wasn’t stepped on with a variety of household bleaches and rat killers for added profitability. As a legitimate medical treatment, it was, for a long time, way back in the day, the go-to. But the realities of modern illegal drug dealing mean the stuff that most users partake in today is an absolute mess of filler, much of which is toxic, and an increasing amount of which is fentanyl.
If we’re moving toward a future where the government can make available a safer, less addictive, inexpensive alternative to cocaine and other drugs, including those doled out with a prescription, it’s going to be guys like Forbes that provide the framework to do it.
To quote him, in that infamous press release last February, “Harm reduction is a critically important and mainstream topic, and we are staying at the forefront of drug regulations across the board. [..] We pro-actively pursued the amendment to our dealer’s license to include cocaine back in December, 2022. We will evaluate how the commercialization of this substance fits in with our business model at Adastra in an effort to position ourselves to support the demand for a safe supply of cocaine.”
I’d like to quote him more directly, but when I called and asked if he could talk to me about cocaine, he said only, “I talk to Health Canada about cocaine. I talk to the government about cocaine. I talk to researchers about cocaine. I don’t talk to journalists about cocaine because it’s a nuanced business that, as things stand currently, kills way too many people precisely because of small mindedness and sensationalism getting in the way of harm reduction. If it’s going to ever be better, it won’t be from people talking up how they’re getting into the cocaine business, but from people quietly and legally doing the work of harm reduction and safe supply, and I’d tell anyone looking to back that goal with their hard earned money to look very deeply at the track records and licensing of those involved.”
Big talk, but do the numbers back him up?
Actually, yeah, kinda. From their last financials:
- Revenue of $10.9-million in Q2 2023, compared with $3.6-million in Q2 2022, representing an increase of 205 per cent;
- Revenue experienced a 15-per-cent increase from Q1 2023 to Q2 2023;
- Gross profit of $2.6-million in Q2 2023, compared with $1.1-million in Q2 2022, representing an increase of 135 per cent.
- Operating expenses as a percentage of revenue decreased from 42 per cent in Q2 2022 to 21 per cent in Q2 2023;
- Cash position as at June 30, 2023, increased to $2-million, an increase of $103,000 from March 31, 2023.
On the shelf:
- In-house brand Endgame ranked No. 1, No. 3, No. 4 and No. 5 of the best-selling concentrates in Alberta.
- In-house brand Endgame ranked No. 2 and No. 3 of the best-selling concentrates in British Columbia.
- In-house brand Endgame ranked the third-best-selling vapour pens in Ontario.
- In Q2 2023, 15 new SKUs for in-house brands were accepted for listing across Ontario, Alberta, and Newfoundland.
And, the kicker of the entire fucking story:
- On Aug. 1, 2023, Health Canada issued a renewal of the company’s controlled drugs and substances dealer’s license No. 6-1360, which remains valid for the period from Aug. 1, 2023, to July 31, 2026.
Yeah. That’s right. That cocaine dealer’s license, that all the others want to get for the first time, and that he doesn’t want to brag about, has been renewed for three years.
Public company cocaine is here. It’s a thing. But only one company has it, and it’s the one company that doesn’t feel the need to brag about it.
— Chris Parry
FULL DISCLOSURE: No companies mentioned in this article have commercial agreements with Equity.Guru, and we own no stock in the companies mentioned.