Namaste Technologies (CVE:N) is a global technology leader in the cannabis space, selling vaporizers and other accessories for consumption of medical cannabis through its 30 e-commerce websites across 20 countries. Despite the buzz around the legalization of recreational marijuana in Canada, the company continued to focus on the medical side of cannabis until very recently. However, now that there is clarity regarding the rules and regulations that will govern the recreational cannabis market, the online retailer has taken a proactive approach to capitalize on this vast opportunity. In this note, we discuss how Namaste plans to tap into the upcoming recreational cannabis market in Canada. We currently have a price estimate of $7.00 per share for Namaste Technologies, which is higher than its market price. View our interactive dashboard – Namaste Technologies’ Price Estimate – and modify the key drivers to visualize the impact on its valuation.

Provide Authentication Of Products And Supply Chain Integrity

In June 2018, Namaste entered into a three-year exclusive partnership with YPB Group Ltd., an Australia-based product verification and customer engagement company, to provide product authenticity, provenance and supply chain integrity to its customers, both manufacturers and medical patients. The partnership will enable sellers on Namaste’s platform to mark their products with a ProtectCode using YPB’s Connect platform to ensure the authenticity of the cannabis being bought by the patients. Further, the customers will have an option to track the location of the purchased products through YPB’s Secure Supply Chain tracking system. This means that YPB’s technology will enhance customer confidence through the sale of authentic products, while ensuring safe and timely delivery of these products. Further, Namaste will utilize the customer data generated from the smartphone scan of these products and use it for further analysis through YPB Connect.

With this partnership, Namaste plans to offer secure distribution of recreational cannabis online and in provincially operated dispensaries once it becomes legal in October. YPB’s superior authentication technology, coupled with Namaste’s age and identity verification, and facial recognition technology, will enable the latter to offer a safe protocol for online sale of cannabis, which is not being offered by any other player at the moment. This is likely to establish Namaste as the trusted source of authentic cannabis products in all its markets.

In addition to this, Namaste aims to offer other technology integrations, such as same-day delivery service, through its partnership with Pineapple Express. While this same-day delivery service is currently operational only in Toronto, the fourth largest city in North America, Namaste plans to gradually roll-out the service into other major markets across Canada, including Vancouver and Winnipeg. This will allow the company to further establish its dominance in the online cannabis market and enable it to achieve its objective of becoming the Amazon of Cannabis.

Private-Label Line Of Cannabis Products

Namaste plans to actively pursue opportunities in online recreational cannabis sales within federal and provincial rules and regulations. While the company will procure and sell only medical cannabis consumables through its new marketplace, CannMart.com, it aims to capture a notable portion of the recreational cannabis market by providing highly valuable technology platforms to its LP partners. Furthermore, through its strategic partnerships with these LPs, the company will develop its own private-label line of cannabis products. This will be a unique offering of premium strains and products that will be targeted at both medical and recreational markets. For this, the company has already cemented several agreements with a number of reputed LPs in the last couple of years, which will enable it to supply continuous and high-quality cannabis products through its platform. For instance, the company announced a wholesale supply agreement with Bonify Inc., a Manitoba-based ACMPR LP, to develop private-label strains of cannabis for the mixed market. Further, under the agreement, the company will offer a wide range of Bonify’s medical cannabis products through its platforms.

In conclusion, we believe that with a number of proven platforms and cutting-edge technology, coupled with its strong partnerships with LPs, Namaste is well placed to not only maintain its leadership position in the online medical cannabis market, but also capture the upcoming recreational cannabis space.