Shares of Namaste Technologies (TSXV:N) dipped on Tuesday after the company confirmed a strategy to enter the Canadian adult-use cannabis market.
On Tuesday (August 28) Namaste informed its shareholders the company would enter the recreational cannabis market after previously holding off on its decision to do so.
The company cited “uncertainty” around the federal and provincial adult-use cannabis plans as its reason for staying outside the margins in terms of preparation for this new market, with legalization set to begin in Canada on October 17.
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Sean Dollinger, CEO of Namaste, said in the press release the company waited to see how the legislation would pan out in Canada for the sales of recreational cannabis.
“Although we are not a cultivator, we do see significant market share for the company in providing highly valuable technology platforms to the recreational market,” he said.
Namaste’s main business is the service of its NamasteMD portal for medical cannabis patients. Through this service, and its mobile apps, the company can sign up patients seeking medical license for consumption and sell them LP product directly.
In March, Dollinger told the Investing News Network (INN) his estimation for the number of patients enrolled in the NamasteMD service would be 5,500 by the end of 2018.
The executive also revealed the company will be using its partnerships with Canadian licensed producers (LPs) to create a new brand for the company.
Namaste has gotten its hands on cannabis product this year through various supply agreements with other LPs like GTEC Holdings (TSXV:GTEC), Bonify and Tetra Natural Health, a division of Tetra Bio-Pharma (TSXV:TBP).
The company confirmed it will develop a new “private-label line” of cannabis with premium product into the medical and the adult-market. Using the supply agreements, the company is now waiting for the approval of the sales license for its subsidiary Cannmart.
Namaste wants to seek online recreational cannabis sales as provinces open their legal markets. The company expects to use its same day delivery service initially in Toronto and other major Canadian cities.
Share price for Namaste dropped following the decision by the company to pursue an entry into the recreational cannabis market in Canada. After the markets closed on Tuesday the company’s stock was priced at C$1.79 per share, a 4.79 percent decrease from its previous closing price.
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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: GTEC Holdings is a client of the Investing News Network. This article is not paid-for content.