Investors looking for a cannabis stock with upside should be looking squarely at Maricann Group (CSE:MARI), Canaccord Genuity analyst Neil Maruoka says.

On Tuesday, Maricann announced it had signed an agreement to provide cannabis to Ontario’s oldest pharmacy chain, Lovell Drugs.

“Pharmacists’ expert understanding of polypharmacy equips them as the standard of care for all patients,” Maricann CEO Ben Ward said. “We believe that our medical cannabis initiative to distribute cannabis directly to patients, with pharmacists as their primary source of counselling and information is the better way,” said Ben Ward, chief executive officer of Maricann. “Until pharmacists are permitted to distribute cannabis products to patients directly, as is the case with all other pharmaceuticals, we believe this distribution model will provide an effective interim solution.”

Maruoka says that while this deal isn’t particualrly big, it is part of a larger strategy that makes Maricann attractive.

“Lovell operates ~12 pharmacies across Ontario), we view this deal to be a good fit within Maricann’s broader medical strategy,” the analyst says. “Together with Maricann’s previously announced partnership with McKesson (and its IDA and Guardian brands), we believe these pharmacy relationships provide the company with a true patient acquisition strategy to grow its registered customer base. Under the agreement, Maricann will implement a medical cannabis education and access program that will facilitate the fulfillment of medical cannabis to Lovell’s patients. We believe that Maricann’s pharmaceutical development approach, including the anticipated introduction of standardized capsules and VesiSorb formulation technology through the acquisition of Nanoleaf, could layer nicely into an eventual distribution platform through these major pharmacy retail chains.”

In a research update to clients Tuesday, Maruoka maintained his “Speculative Buy” rating and one-year price target of $4.25 on Maricann Group, implying a return of 82.4 per cent at the time of publication.

Maruoka thinks Maricann will generate EBITDA of negative $14.9-million on revenue of $4.0-million in fiscal 2017. He expects those numbers will improve to EBITDA of positive $1.9-million on a topline of $23.0-million the following year.