Introducing Experion (TSX-V: VIR)
Written by Jeff Siegel Green Chip Stocks
A few weeks ago, Canopy Growth Corporation bought the rights to buy Acreage Holdings once
the US lifts the prohibition on cannabis.
The deal is worth $3.4 billion, and without a doubt represents one of the biggest acquisitions in
the North American cannabis space. This won’t be the last one, either.
That being said, in addition to big companies buying other big companies, some of these bigger
players, such as Canopy Growth, Aphria, and Aurora, are also scooping up smaller producers as
they continue to build their arsenals of licensed grows.
In the future, I suspect a lot of cannabis will be imported from places like Colombia and Brazil.
But given the slow pace of regulation, it’ll likely be at least three to I’ve years before we start to
see that unfold in any meaningful way. This is especially true in the early stages of development
as countries that choose to legalize will want to limit imports in an effort to keep the majority of
production – and profits – within their own borders.
Now there are a number of smaller producers in Canada and the US that I believe will be
acquired this year and into 2020. Finding the ones that are ripe for the picking, however, isn’t so
easy, as so many are quite overvalued at the moment.
There is one, however, that’s trading at a fair discount to its peers, and that’s a company called
Experion is a licensed cultivator and processor of medical and adult-use cannabis in Canada. It
is also producing topicals that will be ready for the Canadian market once those products are
approved for sale later this year.
Why I like it:
– Strong balance sheet
– No debt
– About $7.4 million in cash
– More than $7 million in assets
– Is a sponsor of one of the first Phase II and III clinical research studies for post operative
pain reduction and the most advanced clinical drug studies in Canada
– Sells the only legal full spectrum micro-dose pill in Canada
– Has an agreement with a pharmaceutical distributor to import and export medical
cannabis throughout Germany
– Is an approved supplier of adult-use cannabis throughout British Columbia through the
British Columbia Liquor Distribution Board.
– Recently commenced capsule sales through a partnership with Aphria, Inc.
Strong management team
The last part of this list is one of the reasons I like Experion.
The truth is, we don’t often invest in companies. We invest in management, and this has worked
well for us when you look at some of the stocks we’ve invested in, such as Canopy Growth
Corporation, MariMed, and Innovative Industrial Properties.
Make no mistake: Experion’s management team is top-notch. Especially CEO Jay Garnett, who
founded Seattle’s Best Coffee Canada in 1993, and expanded it across the country until it was
acquired in 2003 by Starbucks for $72 million. Garnett was also the CEO of Steaz organic teas,
which was ultimately acquired by the Mexican food and drink distributor giant, Novamex.
Although the amount of the deal was never disclosed, I’m sure Steaz didn’t come cheap.
This guy’s no slouch.
Also on board is CFO Kamini Hitkari, who is the former vice president of Strategic Finance at
Aurora Cannabis, one of the biggest cannabis companies in the world.
Now Experion is actually owned by a company called Viridium Pacific, which trades on the TSX
Venture, under the symbol “VIR”. And that’s how we can get exposure to Experion.
Although there is some risk with a stock this small, and thinly-traded, the operation is solid. And
to be honest, I just like the idea of picking up some of these smaller players in anticipation of
continued M&A in the space.
Given Experion’s management team, assets, sales deal with Aphria, strong balance sheet, and
cheap share price, it’s certainly a prime target for acquisition.
So let’s buy a little Viridium Pacific below $0.60 a share.
More to come …