Shares of Neptune Wellness Solutions (NASDAQ:NEPT) rose nearly 19% today after the company announced that it had received a license from Health Canada to begin processing cannabis. (The Motley Fool contributor George Budwell announced the news before the company did.) The license allows the company “to handle dried cannabis, to manufacture and purify cannabis extracts and cannabis oil, and to sell its services to other license holders.”
Put another way, the sub-$300 million company, which specializes in extracting active cannabinoid compounds from raw cannabis, can begin commercial operations in the marijuana space. Can the tiny company deliver and exploit the broad suite of emerging opportunities…
As of 12:31pm EST, the stock had settled to a 13.1% gain.
Management has laid a promising foundation in recent years. Neptune Wellness Solutions has strategic relationships with Canopy Growth Corporation and Lonza. The business is on track to grow its annual processing capacity to 200,000 kilograms of cannabis by March 2019, up from just 30,000 kilograms of cannabis today. That will make it one of the largest cannabis processors in Canada. With a processing license now in hand, the company can begin to sell that extra capacity and significantly diversify its customer base.
President and CEO Jim Hamilton also stated that the company is currently seeking a second license from Health Canada allowing it to sell cannabis products directly to consumers and patients. That would further diversify revenue away from its current services-focused platform.
The cannabis processing license from Health Canada marks an important milestone for Neptune Wellness Solutions, which to date has…
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