Canabo Medical (V.CMM): A cannabis business model that’s already far bigger than you know

data

My doctor is a little more progressive than most. He likes to take medication away from new patients, as an example, preferring to start from scratch and work on basic health, rather than tacking on one pill after another. He’s constantly on top of new trends in medicine, consults with insurers about new treatments they should consider, and touches base regularly through electronic means to see how things are progressing with a treatment.

But he doesn’t prescribe medical marijuana. That surprised me, when we talked about it.

“I know it helps,” he says. “But that’s not good enough for me to prescribe it as a treatment.”

That’s a problem for the many millions of North Americans who’d love to give it a shot and ditch the oxys and benzos. It’s a problem to the insurance companies, who’d love to pay for a little wed instead of hundreds of dollars of painkillers. It’s a problem for licensed producers, who are doing everything they can to present a consistent, quality product that doctors can prescribe. And it’s a problem for me, because I don’t want to go to an illegal dispensary and buy an untested product with no confirmed supply chain.

We all lose in this scenario, but the temptation to tell my doctor to just shut up and prescribe already is the wrong one, because he’s right to say no.

“If a medication is brought to the medical community as a viable medical option, it has been tested up and down, presented for trials, it’s run through the approval process for years, and it has a long list of side effects, information that tells me what it works well for, what it works badly for, what it doesn’t mix with, what types of people should or shouldn’t use it, and a lot more,” he says. “Medical marijuana doesn’t have that evidence. Everything is anecdotal. Trials that have been run are tiny and don’t prove what has to be proven. I’m not going to give a patient something I’m ‘pretty sure’ will work well. I want them to benefit from science and knowledge, and I haven’t seen enough of that work done yet.”

“Also,” he says, “I don’t want fifty people a day calling me for weed.” Fair point.

A lot of weed companies have claimed they’re going to change this state of play. Some are researching the right strains to deal with specific symptoms. Some are performing side research on their own products. And some oin the underground side make a lot of claims that they say they’ve seen work in practice, but which have no verifying data because, frankly, they’re all illegal.

Canabo is the hero medical marijuana needs. And the hero we deserve.

Canabo Medical (CMM.V) was a mystery to me until last week, when I finally sat down with execs from the company for details of their setup. No matter who I talked to, the first words out of their mouth were these:

“First, we should make clear what Canabo is not.”

It’s clearly a point that they’ve decided is their most important point, that they’re not a dispensary chain and they’re not referring patients to doctors for a fee.

They’re not doing business with folks who just want to get high, and they’re not paying someone to spin a sign out front to attract people in the door.

Canabo are doctors. For real doctors, not the ‘we have a chiropractor out back who’ll hook you up’ types. They employ some 40 doctors across Canada to handle patient referrals from your doctor who, like mine, doesn’t know what dosage to prescribe and what strain goes best with what and what works well for someone with anxiety and what works well for someone with back pain between the C6 and C7 vertebrae.

Canabo doctors do, because of one really important thing that changes the entire landscape, not just for their company and patients, but for everyone…

Big data.

When your doctor refers you to Canabo, your medical history goes with you. Canabo then, with your permission, adds up to 400 points of data to not just your file with them, but also to the Canabo research database.

It records how old you are, what symptoms you have, what medicine you’ve been taking and in what dosage and for how long and how you’ve responded to it. It records your height, weight, background, blood pressure, stress, where you live, whether you have kids, your gender, that thing you got over three years ago by hitting the gym every day, that issue you don’t talk about but that makes it hard to pee. All of it.

And here’s why: Because if you’re going to research what medical marijuana treatment should be used by a 45 year old female with type II diabetes and a history of high blood pressure, you need a sample size large enough to really know what works and how well. You could go the usual route for that academic path, talk to ethics boards, get some funding, spend six months looking for patients who’ll agree to help… or you could call Canabo, which has the medical data of 15,000 patients so far – and fast rising – and the permission from most of those patients to happily share that data for research purposes.

Take a second and think about that. When Bedrocan announced it was doing trials, they were doing so with maybe 40 patients. Canabo has 300x that number of patients to look at.

Added to which, as Canabo does the actual work of consulting with patients (for a fee paid by local health authorities), and prescribing what its data says is the best option, it then checks back with patients every three months or so to see how the treatment is going, thereby adding more data to the mix, and being able to constantly fine tune what their doctors are prescribing – and teaching to other doctors.

“We don’t send our patients to any one LP,” says Dr Neil Smith, Executive Chairman of Canabo. “We don’t take referral fees from them and don’t have any desire to. We make our money from consulting fees with patients, like any other medical clinic, and we send them to what our data tells us is the best strain, in the best dose, for that person in their life situation. All the LPs benefit from that, the doctors that referred their patients to us also benefit because we share the treatment information with them, and they can get more of a sense of what’s best practice. The patients benefit because they’re, increasingly, being able to move away from opioids, and our shareholders benefit because we’re fast growing a business with multiple revenue points that is actually making the industry better.”

When I talked to my doctor about what Canabo does, he was suspicious, as always. When I explained that the data was a two-way street, however, that he wouldn’t be sending patients into the abyss, and that there were no commissions being paid and no recreational smokers being admitted (“They just screw up the numbers,” says CEO John Philpott), he tilted his head and said, “Huh. That makes sense. That’s what’s needed. You need massive data that can be used the right way to prove what we all suspect. That’s what doctors need.”

I’ve worked with Veritas Pharma (VRT.C) for a while now, and like what they’re doing in using top flight academics to search through multiple strains for the one that, in clinical trials, is working best for pain, nausea and PTSD sufferers. Veritas has made connections with some of the biggest names in the cancer treatment sector in Canada so that, when they’ve completed their research, they can get it to those who need it quickly. That’s also needed.

But Veritas needs the sort of massive data Canabo has at its disposal. If they can roll through six million points of patient data and isolate pain patients and look at what strains they’re using and what’s being reported to work best, and see what side effects may be happening, and see what demographics are working best with it, and get quantifiable research done, their track to a future revenue phase shrinks immensely.

I like that Canabo has ten clinics, in Alberta, Ontario, Newfoundland and Nova Scotia, and plans for more (no doubt BC will be a target). I asked if they had plans for acquisitions, and they told me that’s a tough situation for them, “because the previous treatment history is important. If we took patients from an existing clinic that just writes scrips, we’d be having to treat those patients as brand new, so we could track the data properly.”

“We practice best standards from the top down, and go very detailed from the outset,” said Dr. Smith. “’This patient uses this strain for pain’ doesn’t give us enough depth. We need to dig deeper.”

Added to the offerings, the company has found a rich vein in consulting for other companies, be they marijuana related or not, on things such as how to set an HR policy on medical marijuana-using employees, something every major company needs right now, whether they realize it or not. If you have two employees using medical marijuana while they drive a forklift, do they need to be moved? Retrained? Tested before work? Fired?

These questions are baffling HR departments right now, and only Canabo has the data required to accurately and properly set such policies with any level of competence. Similarly, their data provides a service to the LPs themselves, so they can see what strains are most useful, most popular, most prescribed, and stock accordingly.

The key to this whole play is data, because data is needed to move the industry out of its stigma and into reliability, and because (and this cannot be overstated enough) NOBODY, anywhere, gets their hands on full patient data from doctors offices without a major fight.

Pfizer spends billions on trying to get access to patient data and hospitals, doctors and patients do their utmost to protect it from prying eyes. But the weed world is different because patients know that it’s an absence of data that is making it hard to get their weed. When Canabo says, “do you mind if we use your experiences and background information to research this better,” the vast majority say, “Do whatever you need, bro.”

The data they have now is not for resale, inasmuch as they’re not sending John Smith’s medical records to Aphria to help their sales team get in touch with you. Rather, it’s being used so they can say “this strain doesn’t work for people under 25 as much as it does in people 45 and up,” and “This strain works but it makes people with anxiety more anxious,” or “this strain works but makes it harder to sleep, according to the 400 patients we know are using it.”

Canabo is the Yelp of medical marijuana information, in that it has a great database but that database gets bigger with every passing month, and the data in it gets more accurate the more it’s used.

This is grown up weed. In fact, it’s not even weed. This is a tech company. It’s a health company. It’s doctors doing what only doctors should be doing, in a way that helps other doctors.

I’m proud to have started consulting with Canabo, to help get their story out, because this is an important story that goes beyond an opportunity to make money from stock. I want these guys to do well so that all others will do well in their wake.

— Chris Parry

FULL DISCLOSURE: Canabo is an Equity.Guru marketing partner and the author has bought stock in the company on the open market.

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