A deal between Canada’s largest pharmacy chain and an emerging cannabis supplier is getting the thumbs up from GMP Securities analyst Martin Landry.

On December 21, MedReleaf (MedReleaf Stock Quote, Chart, News: TSX:LEAF) announced that it had entered into a deal with Shoppers Drug Mart to supply it own branded medical cannabis products online.

“From inception, Medreleaf has been focused on setting the standard for patient care in our industry and producing consistent, high-quality medicine,” said CEO Neil Closner. “With this agreement, we look forward to making our award-winning strains available as the trusted provider of premium cannabis-based pharmaceutical products to the largest pharmacy retailer in Canada.”

Landry says this is an unambiguous positive for the LP.

“The selection of MedReleaf as a supplier to Shoppers is a definite positive,” the analyst says. “It validates MedReleaf’s ability to fulfill large order quantities. It also provides good exposure for the company’s brands as the products will be sold under the MedReleaf brand on Shoppers Drug Mart’s website.

In a research update to clients December 22, Landry maintained his “Buy” rating and one-year price target of $20.00 on MedReleaf, implying a return of 24.1 per cent at the time of publication.

Landry says this development is unlikely to negatively affect the rest of MedReleaf’s business.

Management expects little cannibalization from its current patient base as the company believes that Shoppers Drug Mart will broaden the industry patient base,” he says. “One can argue that upon legalisation, doctors may be more inclined to prescribe marijuana as some physicians are currently hesitant to prescribe medical marijuana.”

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