Mackie starts Aleafia Health at buy; PT $1.75

Mackie Research initiated coverage of Aleafia Health (TSXV:ALEF) with a “buy” rating and price target of $1.75. The stock closed at 51 cents on June 12.

Aleafia runs the largest network of referral-only medical cannabis clinics in Canada. The company’s business strategy includes physicians registered with the company’s affiliate clinics that have access to a vast medical cannabis database, derived from over 40,000 patients, writes analyst Greg McLeish.

Medical cannabis therapy is an evolving science, so this experiential knowledge helps ensure physicians make recommendations that have been proven effective through historical data, helping avoid treatments based on trial and error, he added.

In addition, Aleafia owns two state-of-the-art cultivation facilities, enabling development of a refined set of medical cannabis strains, tailored to meet the specific needs of its patients, he added. “By cultivating its own product, Aleafia Health will ensure standardization and quality of its treatments, as well as a shortened seed-to-patient time.”

In May, the company signed an agreement to acquire a 160,000-square-foot automated greenhouse in the Niagara region of Ontario for $9.6-million. “This is a transformational transaction for Aleafia and will increase funded production capacity to more than 38,000 kilograms a year,” Mr. McLeish said.

The company expects to have the facility in production by late third quarter of 2018, with first cultivation forecast in the first quarter of 2019, he added.


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