Novus First Mover Advantage Show Signs of Success As It Enters Canadian
Initial Analysis Reveals Canada Leads World In Cannabis Regulation
Novus Acquisition and Development, Corp. (OTC Markets: NDEV), through its wholly owned subsidiary WCIG Insurance Services, Inc., is a diversified insurance entity in health, liability, annuity and accident, and, the nation’s first carrier/aggregator offering a cannabis health plan, today provided five reasons for its entrance into Canada, so shareholders will be on familiar terms with the benefits of Novus’ “First Mover Advantage” in the Canadian market.
Canada is leading the way as an emerging country in the legal cannabis industry. Novus management projects that Canadian will be an emerging force in the legal cannabis sector. Canada’s program is federally regulated, while America relies on separate state programs that vary significantly. In Canada we don’t see the impediments that many cannabis businesses are experiencing in the American market, making Canada less cumbersome on delivery, marketing and consumer appealing cannabis health insurance benefits.
Novus as a “First Mover” with its expansion efforts into Canada has received positive feedback from many cannabis businesses and expects to engage with several of them as it initiates its business model in the provinces. Listed below are reasons why Novus decided to enter into Canada and what shareholders can anticipate as Novus attains market share in the country.
Reason 1: Greater Consumer Consumption
In our assessment we utilized Canada’s Medical Marijuana Purposes Regulation (MMPR), a governing body that regulates the medical marijuana industry. The assessment on our Canadian roll out is based on the analysis of the MMPR, and Canadian Healthcare departments but one very important factor is, these assessments are conservative in nature and this corresponds with Novus’ approach into the region.
Each Canadian cannabis user will pay on average $10 per gram, on an average consumption of 0.68 grams of dried marijuana per day for medical uses (248 g/year) equating to $206 per patient per month, ($2,480/yearly). Estimates are that the average daily dosage of medical marijuana in Canada is about 0.68 grams per healthy patients and 3 to 4 times higher in less healthier patients.
A annualized increased market sales calculation is the same model in pharmaceutical modeling rate and is calculated:
· 2017 estimated and on track at 92%,
· 2018, estimated at 68%, and,
· 2019 estimated at 74%
The reader should take note that the decrease of market penetration rate suggests faster growth of the total number of registered users than the growth of the number of clients actually possessing medical marijuana cards.
If an individual is prescribed medication in Canada, private medical and/or provincial health insurance will routinely cover the majority of the costs. If that same person has a “medical document” and orders medical marijuana from one of Canada’s federally licensed and regulated producers, they are currently expected to pay for it out of pocket. These statistics alone represent a qualifier for the approximate 12 million Canadians cannabis users who have to use their own funds from their Health Savings Accounts to purchases cannabis meds and have those funds deducted from their annual tax bill, and consumer consensus indicates this is not a deterrent.
Reason 2: No Insurance Reimbursement From Insurance
According to Mackie Research, a leading Canadian investment firm, there is no procedure in place for Canadians to be reimbursed by insurance companies when using medical marijuana. Medical Marijuana doesn't have a drug identification number (DIN) and this is a major factor inhibiting medical marijuana producers. Medical marijuana is regulated under the MMPR whereas typical prescription drugs are regulated under the Food and Drug Act. To obtain a DIN, the new form of medical marijuana would need to go through the full Health Canada approval process like any new drug.
To date there are not any companies that will pursue this path. It is possible that insurance companies may reimburse patients for using medical marijuana via corporate health plans in the future. Our conclusion is that Novus has the “First Mover Advantage” giving us the upper hand on branding and as the future go to health plan for Canadian citizens.
Reason 3: Market Size
Deloitte estimates the base retail market value of recreational marijuana could be up to $8.7 billion with ancillary services up to a total market size of $22.6 billion.
As the Canadian marijuana market continues to follow a similar trend to the Colorado market after full legalization, early data has presented that the sales of recreational marijuana will not affect the medical market, which is to be projected at 40% of total annual sales. While the recreational market is expected to represent 60% of sales. Early indicators show supply shortages are likely in 2018 and will force consumers to pay a minimum 40% higher price tag, finally settling to approximately 25%-30% higher consumer costs, leaving Canadians seeking ways to save money on their medical purchases.
Reason 4: Market Fluidity
In general, higher quality cannabis garners higher per gram prices across provinces, prices for low quality cannabis are still somewhat higher. Disparities in prices are the effect of quantity discounts in the calculation of standardized prices, given that there is much more variability in the quality of smaller purchases. We foresee deficiencies in availability and/or deliverability of meds during harsh Canadian winters, this poses a problem for the consumer user experience. Novus has taken this into consideration and focusing the vendor mix on the assemblage our Provider Network with reliable producers, manufacturers and couriers systems coupled with our automated patient portal will make Novus MedPlan a value to Canadian consumer user experience.
The market size of medical versus recreational is similar to the California with Novus strategy is a conversion recreational users to medical users based on savings on taxation and with medical we are confident that we can achieve this, once supply shortages are exhausted. Washington State went from a shortage of marijuana when recreational sales began in 2014 to a supply glut in just six months with pricing only decreasing by 20%.
We determined that most cannabis purchases by Canadians will be around medium (41%) or high (56%) quality a spread of $7 to $10 per gram respectively, with very few users reporting purchasing low quality grade cannabis (4%) approximant $5 per gram. This indicator shows that Novus patient/members will be averaging $250 to $300 per monthly transactions.
Reason 5: Patient Market
In entering the Canadian market we went under the same assumption as we learned in Arizona, our target audience of approximately 1 million potential Canadian patients, mainly a greater portion of our data comprising of patients are government employees, military veterans, police and utility employees, who are heavy consumers of medical cannabis due to its effectiveness in treating pain and Post Traumatic Stress Disorder (PTSD), consuming approximately 3 grams daily or equating to $900 per month making up approximately 40% of the market.
Projected Market Share
Canada's healthcare system is publicly funded socialized health insurance plans that provide coverage to all Canadian citizens. It is publicly funded and administered on a provincial or territorial basis, within guidelines set by the federal government.
However within our assessment Canada still has gaps in the healthcare plans and with aforementioned indicators Novus will fill the healthcare gaps to attain market share. Primarily there is one influential factor that makes it easier to operate than the U.S., is that medical marijuana is federally legal and with approximate 1 million Canadian users currently registered and Novus being a “First Mover”, our assessment is in the region of 5% market share potential with health plans that start at $24.95 to $69.95 per month with potential increases to be proven.
Government Stats: https://news.lift.co/mmpr-market-statistics-to-aug-2016/
Trudeux video: http://globalnews.ca/video/rd/587757123890/
Latest Market Data: https://www.canada.ca/en/health-canada/services/drugs-health-products/medical-use-marijuana/licensed-producers/market-data.html
Investor Analysis: https://www.theglobeandmail.com/globe-investor/investment-ideas/research-reports/article29573050.ece/BINARY/Medical%20Marijuana_4-8-2016.pdf
Novus Acquisition & Development Corp. (NDEV), through its subsidiary WCIG Insurance, provides health insurance and related insurance solutions within the wellness and medical marijuana industries in states where legal programs exist. Novus has developed its infrastructure within many lines of the insurance business such as, health, property & casualty, life, accident and fixed annuities.
Novus medical cannabis benefits package will work as outside developers and will not cultivate, handle, transport grow, extract, dispense, put up for sale, put on the market, vend, deliver, supply, circulate, or trade cannabis or any substances that violate the United States law or the Controlled Substances Act, nor does it intend to do so in the future and will continue to follow state and federal laws. The statements made about specific products have not been evaluated by the United States Food and Drug Administration (FDA) and are not intended to diagnose, treat, cure or prevent disease. All information provided on these press releases or any information contained on or in any product label or packaging is for informational purposes only and is not intended as a substitute for advice from your physician or other health care professional. Once a push notification is competed the transaction is solely between the state-licensed dispensary and the registered patient.
The state laws are in conflict with the federal Controlled Substances Act. The current administration has effectively stated that it is not an efficient use of resources to direct federal law enforcement agencies to prosecute those lawfully abiding by state designated laws, allowing the use and distribution of medical marijuana. However, there is no guarantee that the current administration, nor any future administration, will not change this policy and decide to enforce the federal laws strongly. Any such change in the federal government's enforcement of current federal laws could cause significant financial changes to Novus Medical Group. While we do not intend to harvest, distribute or sell cannabis or cannabis related products, we may be harmed by a change in enforcement by federal or state governments.
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This release includes forward-looking statements, which are based on certain assumptions and reflects management's current expectations. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations. Some of these factors include: general global economic conditions; general industry and market conditions and growth rates; uncertainty as to whether our strategies and business plans will yield the expected benefits; increasing competition; availability and cost of capital; the ability to identify and develop and achieve commercial success; the level of expenditures necessary to maintain and improve the quality of services; changes in the economy; changes in laws and regulations, includes codes and standards, intellectual property rights, and tax matters; or other matters not anticipated; our ability to secure and maintain strategic relationships and distribution agreements. Novus Medical Group disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Chairman and CEO