Safe Supply Streaming Co Ltd. (CSE: SPLY, FSE: QM4) has announced the closing of its previously announced seven percent stake acquisition of Safety Strips Tech Corp. The company paid $50,000 cash and 3,000,000 common shares at CA$0.10 in Safe Supply, for a total value of $350,000. The common shares have a four month and one day hold period.
With the acquisition comes exciting progress in Safe Supply’s efforts to commercialize its new portfolio company, particularly alongside receipt of its innovative packaging solutions, and late-stage discussions with two major U.S. retailers.
According to its website, Safe Supply was started to "help build the post-war on drugs world and capitalise on an incredible opportunity." British Columbia has "become the most progressive jurisdiction in the world bringing an end to the drug war" and Safe Supply aims to invest in and incubate companies operating in the safe supply ecosystem. This will allow them to "create a tightly woven fabric of synergies that generate short-term revenues to Safe Supply while also maximizing value accretion as our investee companies grow."
As more jurisdictions decriminalize and legalize psychoactive compounds, Safe Supply will jump on emerging opportunities, while also acknowledging the "incomparable" positive social and health benefits. It will operate, advise and invest in several areas, including production, import and export, science and innovation, education, clinics and distribution, and testing and analytics.
Safety Strips can be utilized by drug users to check whether drugs contain fentanyl – and at what level. CBC reported in January that fentanyl was detected in 85.3% of toxic drug death investigations in British Columbia during 2023.
Recently, an ecstasy-for-medicine advocate raised $100 million in a Series A private stock sale, as reported by The Wall Street Journal. The Multidisciplinary Association for Psychedelic Studies (MAPS), which is a leader in the movement fighting for legalization of psychedelics, required the funds for the final stages of its application for regulatory approval, a process which, according to Bloomberg, "requires lengthy clinical trials to test their efficacy and risks for specific conditions."
MAPS has focused on the potential uses of MDMA, as ecstasy is sometimes known, in the treatment of post-traumatic stress disorder.
In November 2023, CNBC reported that psychedelic medicine companies had "become a hot spot for the market" and shared an interview with Blake Mycoskie, founder of Toms Shoes, in which he shared some of the therapeutic benefits of psychedelics.
The Catalyst
While working towards this acquisition, Safe Supply Streaming CEO Bill Panagiotakopoulos has been actively involved in discussions with several different levels of government in Vancouver, pushing for the integration of Safety Strips in key locations such as addiction centers and shelters.
The acquisition of Safety Strips is a prime example of Safe Supply Streaming’s model of assembling a diversified portfolio. It’s hoped that early investments such as this will generate immediate revenue, which will help position the company for sustainable growth while there are further regulatory developments.
Safety Strips CEO Geoff Benic said: "We are resolutely focused on commercializing our business and building a CPG brand that earns consumer trust. Our goal is to 'own the shelf' in our industry, committing to aid governments and communities in their harm reduction efforts. Our rapid progress, from early packaging arrival to promising retailer discussions in the U.S., heralds a promising future for Safety Strips and its mission.”
The company expects to announce its first few investments in companies in the coming weeks and months. Though these investments will be relatively small cash value, they will have significant torque as the companies are well-positioned for explosive growth.
As an advisor, the company is likely to earn a fee for service equity at an "attractive valuation."
Safe Supply describes itself as "the first venture capital firm actively deploying capital in the third wave of drug reform.” Its executive management team is comprised of first movers in cannabis and psychedelics, and the company itself is a first mover in deploying capital in these emerging industries.
As there’s almost no one else operating actively as Safe Supply is, it’s left with the "pick of opportunities."
ATAI Life Science (NASDAQ: ATAI), which uses a similar approach to Safe Supply and is incubating numerous companies in the psychedelic sectors, achieved a peak valuation of $3.3 billion.
RIV Capital (former Canopy Rivers) (CSE: RIV) invested in and incubated companies in the cannabis industry, and achieved peak valuation of $1.1 billion.
Ownership and Share Structure
Safe Supply is headquartered in Vancouver, British Columbia. It has a market cap of $13 million, and 70 million shares, as well as 8.8 million options.
Its monthly burn rate is between $100,000 and $150,000. There are currently no shareholders that are likely to liquidate.
Management and insiders own 3.66% of shares; the rest are retail.
