One of the most exciting themes for those looking to capitalize on the changing global cannabis industry is the rollout of Canada's Marihuana for Medical Purposes Regulations (MMPR). Health Canada, which oversees Canada’s national medical marijuana program, has issued licenses to 23 companies, several of which trade or are soon expected to trade publicly. PharmaCan Capital Corp., which is based in Toronto, has made investments in 5 of Canada’s current Licensed Producers. The company, which just went public on the TSX Venture Exchange under the symbol MJN, is led by Paul Rosen, its President and CEO.

Alan: Thank you, Paul, for taking the time to tell us about PharmaCan Capital and congratulations on your recent listing. Before we discuss your company, can you tell us about your background?

Paul: I was born and raised in Toronto, where I reside with my family. I earned a degree in economics, followed by a law degree from the University of Toronto. I practiced criminal and constitutional law in Canada for a number of years, and I remain a member of the Law Society of Upper Canada. I have also played a leadership role in the development number of companies and became the President and CEO of PharmaCan in March 2013.

Alan: Why did you decide to enter the MMJ industry?

Paul: I entered the medical marijuana industry as it provides a unique combination of opportunity, entrepreneurial spirit and the ability to deliver a plant with incredible therapeutic properties. While I have had previous success starting and building companies, PharmaCan provided the extra opportunity to be a stakeholder in the development of an important new industry that will improve the quality of life for so many Canadians. I could not be more passionate, excited and committed.

Alan: Can you describe the efforts you have made thus far? What has been your process to whittle down a list of nearly 1000 potential investments to select the ones that you believe offer the best opportunity?

Paul: Since its inception, PharmaCan has evaluated over 500 investment opportunities in Canada from the approximately 1,100 applicants that have sought MMPR licenses. Of the 8 investments PharmaCan has made to date, 5 are amongst the 23 companies that are currently licensed by Health Canada. As a first step, PharmaCan seeks to invest in strong management teams that share its passionate commitment to exemplary governance and industry stewardship. Moreover, PharmaCan conducts rigorous due diligence on every aspect of potential investment, including the company’s business plans, management capabilities, financial projections, production facility and capital structure.

Alan: Congratulations on this tremendous success rate! How did you pull this off?

Paul: We have been fortunate to invest in great companies with great people. We also had the benefit of investing very early, with our first investment, Peace Naturals, made before the MMPR had even been published. PharmaCan sensed the significant investment opportunity within the industry and quickly established itself as the go to financier for companies within the MMPR. This is a testament to the hard work put in by the PharmaCan team and the commitment we all share in building a best-in-class company.

From this, PharmaCan has uniquely positioned itself to have likely visited and met with more companies seeking licenses than anyone, other than Health Canada. We have always done exactly what we said we would do which, combined with our commitment to governance and collegiality, has distinguished PharmaCan within the industry. We have a great deal of respect for both the regulator as well as for many of the outstanding companies that we have become colleagues with, regardless of whether PharmaCan has invested in them or not. And if the definition of luck is when preparation meets opportunity, then I am happy to say that we have enjoyed some good fortune along the way as well.

Alan: Can you describe each of your investments?

Paul: PharmaCan has made several significant investments in companies licensed under Canada’s MMPR. PharmaCan has created a diversified portfolio of investments as it seeks to fortify and accelerate the growth of the most advanced network of medical marijuana companies in Canada. Our current investment portfolio includes 5 companies licensed under Canada’s MMPR.

Peace Naturals was the first new company in Canada to be awarded an MMPR license to cultivate and sell in October 2013. They are located in Ontario on 95 acres of land. They are near completion on the construction of two new production buildings, which will give them a combined total of 42,000 square feet. Because of the size of their property, and their good standing in the community, Peace Naturals has the ability over time to add over 1,000,000 square feet of facilities at their current site. Peace Naturals has proven to be innovators in patient care and have an incredible commitment to quality.

Whistler Medical Marijuana Company (WMMC) is an already an iconic brand based in an iconic destination. WMMC received their license to cultivate and sell in February 2014. The company’s culture is deeply derived from where they live. WMMC has a passion for growing certified organic medical marijuana. Whistler has completed construction of their phase 2 production areas and expect to have their new rooms licensed in the near future. This will expand their facility to 12,000 square feet. They have visibility to a total of 35,000 square feet at their current location.

In the Zone is located on 14 acres of beautiful land in the Okanagan Valley of British Columbia. PharmaCan recently closed on its acquisition of the company and the associated land. We are in the midst of executing a strategy aimed at making In the Zone one of the best run and most substantial producers of medical marijuana in Canada.

ABCann is located in Ontario and operates out of a 14,500 square foot building located on 1.5 acres. Their facility is one of the most state of the art and technologically advanced medical marijuana facilities in the world. They are overwhelmingly committed to the ideal of creating a standardized medicine from the cannabis plant. When they start shipping product I believe they will become one of the most respected and successful producers in Canada.

Hydropothecary is located in Quebec, and is situated on 80 acres of land. Their current licensed greenhouse facility is 7,000 square feet, and they are under construction on a new state of the art 35,000 square foot greenhouse. They anticipate having their license expanded to include selling in the near future. Their management team is incredibly talented and driven, and we anticipate long term success for this great company.

Our other investments are in companies that are fully built out and are awaiting their pre-license inspection. They include Vert Medical (Quebec), Evergreen Medical (Vancouver Island)) and CannMart (Ontario). We remain committed to do everything we can to assist each of these companies as they wait patiently in the hope of licensing in the near future.

Alan: How would you contrast investing in PharmaCan to investing in an individual licensed producer?

Paul: PharmaCan has made a series of significant investments in licensed producers, which, when taken together, provide investors with an interest in 1.6 companies who are licensed to produce. This provides investors with a larger exposure than if they just invested in a single producer. Moreover, given its diversified portfolio, PharmaCan helps to de-risk investing in the medical marijuana industry.

Alan: As it relates to your investments in companies with pending applications, what is your outlook there? More broadly, what do you think is holding up Health Canada, which seems to have really slowed down its final inspections?

Paul: Health Canada has done an excellent job in initiating and overseeing the MMPR program. This includes their commitment to ensuring affordable access of medical marijuana, quality assured and safe products for patients to consume, as well as rigorous security requirements to eliminate the potential for abuse. On all these fronts, Health Canada has done an incredible job. There are now 23 companies across Canada licensed to produce quality assured medical marijuana in safe and secure commercial environments. Through their oversight, Health Canada is creating the bedrock conditions necessary for the evolution of a successful program that succeeds in the long term. As a major investor in this industry, we take great succor from that. Further, if you examine the verifiable expansion plans under construction for of the 23 licensed companies, it is reasonable to project that there will be sufficient supply from these producers to meet the long term demands of a growing patient population.

I do think that over time we likely will see more licenses granted and I remain confident and hopeful that our three current pre-license investments will remain in good standing. We continue to support all of them with the same confidence we had that led to making the investments originally.

Alan: Let's talk about the stock now. You have been structured as a private investment fund. How much capital have you deployed? What is your ownership stake, and how much will be held by your current investors when the stock begins trading publicly on the Toronto Venture Exchange?

Paul: PharmaCan is a merchant bank and serves as a holding company for its diverse portfolio of investments. As we are undertaking only a public listing, we will not be issuing any shares from treasury as part of this action but the TSX-V listing will enable PharmaCan’s shares to be freely traded between investors. Our current investor base represents a good split between institutional and retail investors with a strong component from U.S. based investors. Moreover, Management’s interests are completely aligned with that of all of the shareholders as we continue to build long-term value in the company.

Alan: It seems to me that your stock will be somewhat of a closed-end mutual fund. Is this the right way to think about your company?

Paul: The best way to describe PharmaCan is that it is a merchant bank dedicated to the medical marijuana industry in Canada. PharmaCan has created and will continue to fortify Canada’s only national portfolio of MMPR licensed producers. For investors, PharmaCan offers an excellent investment opportunity to gain exposure to this dynamic space. PharmaCan’s approach, including its expertise, governance and diversified portfolio, help to mitigate some of the inherent risks associated with investing in this space.

Alan: Will PharmaCan Capital restrict itself to Canada, or do you have plans to make investments in other countries? I assume that investing in cannabis will be the sole focus?

Paul: PharmaCan remains focused on investing in Canadian companies operating or seeking to operate under the MMPR. PharmaCan continues to see strong opportunities within this space, as it continues to have a robust investment pipeline as well as significant organic growth opportunities within its existing portfolio. PharmaCan remains committed to expanding upon its regionally diversified national portfolio of best in class licensed producers.

Alan: What do you see as the biggest obstacles you face as you execute your business plan?

Paul: As an optimist, I never see obstacles, I see opportunities. Of course, there are inherent responsibilities that come with being a good steward of other peoples capital and I keep the trust instilled in me at the forefront of all my decisions and activities. However, PharmaCan sits at the center of this incredible emerging industry and our passion is to continue the development of the best governed and most efficacious medical marijuana program in the world.

Alan: Investors have a lot of choices in the cannabis sector. What do you see as the rationale for choosing to invest in PharmaCan Capital?

Paul: Governance, diversification and opportunity. PharmaCan is the only investment opportunity in Canada that has meaningfully de-risked investing in the medical marijuana industry by creating a diverse portfolio of licensed producers across Canada. PharmaCan’s management team and Board are committed to ensuring strong governance practices within each investee. PharmaCan has been active in the sector for several years and has a proven track record of success. PharmaCan continues to see unique and strong opportunities within the MMPR, as it continues to have a robust investment pipeline as well as significant organic growth opportunities within its existing portfolio.

Alan: Thanks, Paul, for taking the time to discuss PharmaCan. We look forward to your progress as a public company.

Paul: Thank you. It is an exciting time for both PharmaCan and the medical marijuana industry in Canada.

For more information on PharmaCan Capital:

• Corporate website
• Filings
• In The Zone
• The Peace Naturals Project
• Whistler Medical Marijuana