LAS VEGAS--(BUSINESS WIRE)--Medican Enterprises Inc. (OTCBB:MDCN), a company seeking promising pharmaceutical and other business opportunities in the emerging medical and recreational marijuana sector, today has provided shareholders with an update on its corporate accomplishments and business development plans in a shareholder letter from Chief Executive Officer Kenneth Williams. It reads:
With 2015 underway, we at Medican are looking forward to a year of growth, building on the foundations that were laid in 2014. We continue to investigate and pursue new business opportunities based on the liberalization of U.S. state laws governing both medical and recreational marijuana use as well as last year’s changes in the federal laws governing cannabis use in the Canadian medical system.
A recent report from Chardan Capital Markets noted, “Annual marijuana consumption in the US is estimated in a range of $30 billion to $60 billion, growing between 6% to 8% annually. These estimates are mostly based on the National Survey on Drug Use and Health survey conducted by RTI International under contract to the U.S. Department of Health & Human Services and then adjusted for assumed under-reporting of consumption. So although marijuana consumption can only be estimated in a very wide range, it is a substantial market, probably as large, or larger, than consumption of cigarettes (excluding excise taxes) and about 20% of the size of the alcohol market.”
In recent weeks, we announced two proposed real estate acquisitions in Arizona that would represent our initial entry into the U.S. market and will, if we close such acquisitions, provide us with revenue in the near future. Why Arizona? The medical marijuana business there is booming. After legalization by a referendum in 2010, dispensaries began opening in 2012. In 2013, the state’s 85 dispensaries sold 3 tons of medical marijuana. In 2014, that figure was 10 tons, more than a three-fold increase in volume.
In December 2014, we signed an agreement to acquire a 67,000 square foot facility in Phoenix, Arizona. The company plans to lease it as a marijuana growing and warehouse facility to licensed growers. The industrial building sits on 2.55 acres of industrial zoned land. The anticipated final purchase price for the property is $2,340,310 and a closing is planned during the first quarter of 2015 pending, among other closing conditions, a variance to zone the building for the cultivation of marijuana.
The acquisition of this property will launch our real estate and leasing services business under which Medican would lease real estate that is outfitted with turnkey solutions for legally compliant growing facilities to licensed growers. At current market rates, the property is estimated to produce annual lease revenues of approximately $1,400,000.
In January 2015, Medican entered into a purchase agreement to acquire a 7,200 square foot retail and commercial property in Phoenix, Arizona. The property is currently leased through August 2018 to an Arizona state licensed medical marijuana dispensary. Per the purchase agreement, the lease agreement will be assigned to Medican. The rental amount of the current lease is in excess of $200,000 annually, triple net. The lease provides for two five-year tenant renewal options. The lease rate increases at 3 percent per year or CPI, whichever is greater.
Total purchase price for the property is $2,250,000, which Medican expects to pay through a combination of mortgage debt and an $850,000 convertible promissory note secured by the property. The property’s value has been appraised at $2,385,000 and was substantiated by an independent appraiser, Kalinowski & Associates. The closing for the purchase of this property is expected to occur on or before January 31, 2015 and if the closing occurs as anticipated, it would mark our entry into the dispensary leasing business, which is one of the marijuana sector related business opportunities that we are exploring.
To properly expand our American footprint, we established Medican (US) Systems Inc. in September 2014. Medican (US) Systems is our wholly owned subsidiary handling our operations in the United States medical marijuana and recreational marijuana sectors. Medican (US) Systems operates out of Las Vegas, and it has three basic functions:
- To seek investments in commercial real estate which it can lease to marijuana growers in states where growing is legal;
- To provide dispensary management and professional consulting services to the medical marijuana and recreational marijuana sectors; and
- To offer a broad range of leasing and financing solutions to dispensaries, kitchens and cultivation centers.
To lead the US subsidiary, we appointed Drew Milburn Chief Executive Officer of Medican (US) Systems, who has more than 10 years in the marijuana sector. He has founded and operated medical cannabis dispensaries and worked closely with caregivers, medical professionals, and government officials of all levels to build safe, high quality and high-grade products and services in more than five states. He is widely recognized as an expert in the industry and has consulted for businesses, government officials and enforcement agencies in both Canada and the United States.
While Arizona is the main focus of our US subsidiary, we continue to explore opportunities in those jurisdictions where cannabis is legal, either for medical or recreational use. Colorado, Washington State, Oregon and Alaska have all legalized recreational use, and nineteen other states plus the District of Columbia permit medical prescriptions for marijuana. Each of these is a potential market for us to enter.
During the second half of 2014, we identified several other potential candidates for acquisition, and we are in our due diligence process regarding two targets in the Colorado market. We will keep you apprised of developments here as events warrant.
We are also in the process of getting more involved with projects on native lands. We anticipate being in a position to make an announcement outlining our strategy in that regard in the near future.
There are also opportunities to explore in Canada. In 2014, Canada changed its regulations on medical marijuana allowing regulated firms to produce and sell to patients with prescriptions. There are now 15 fully authorized licensed producers and 8 cultivation only licensed producers of medical marijuana. We actively explored Canadian marijuana related business opportunities in 2014, including a potential investment in a licensed grower and the acquisition of hydroponic growing technology, and given that the Canadian regulations cover the entire country, we think there will continue to be potential opportunities for Medican in Canada in 2015 and beyond.
We are very excited about the prospects for Medican on both sides of the border in 2015, and we believe that our shareholders have every reason for optimism in the coming months.
Ken Williams, CEO
Medican Enterprises Inc.
About Medican Enterprises, Inc.
Medican Enterprises is a company seeking promising pharmaceutical and other business opportunities in the emerging medical and recreational marijuana sector. Through its subsidiaries, Medican is seeking to invest in businesses associated with the growing, marketing, research and development, training, distribution and retail sale of medical and recreational marijuana, both in the United States and Canada. For more information visit: www.medicaninc.com.
Cautionary Note Regarding Forward-Looking Statements
This press release and statements of representatives of Medican Enterprises, Inc. (the “Company”) related thereto includes forward-looking statements within the meaning of the U.S. federal securities laws. Forward looking statements are statements that are not historical facts. Such forward-looking statements are subject to significant risks and uncertainties that are subject to change based on various factors (many of which are beyond the Company's control), which could cause actual results to differ from the forward looking statements. Such statements may include, without limitation, statements with respect to the Company's plans, objectives, projections, expectations and intentions and other statements identified by words such as "projects," "may," "will," "could," "would," "should," "believes," "expects," "anticipates," "estimates," "intends," "plans," "potential" or similar expressions. These statements are based upon the current beliefs and expectations of the Company's management but are subject to significant risks and uncertainties, including those detailed in the Company's filings with the Securities and Exchange Commission. Actual results (including, without limitation, the results of the Company’s efforts to acquire and integrate the dispensary property as described herein) may differ from those set forth in the forward-looking statements. Except as required by applicable law, the Company expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company’s expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based.