Novus Acquisition & Development MMJ MedPlan Network Is A Contender


Ryan Allway

August 5th, 2014

News, Top News


As the Green Rush continues to gain political and cultural momentum across the country, shockwaves are being felt by all the primary players, from suppliers to patients, as the rapidly growing marijuana (MMJ) sector blows through each successive regulatory barrier. Even though 23 states (including DC) have enacted laws to legalize medical marijuana, the sector remains highly fragmented.

Some plays to be considered by investors amid this “green” rush include biometric ID-driven pot vending machines developed by Medbox, Inc. (OTCQB: MDBX), consulting services provided by Hemp, Inc. (OTC: HEMP), or the development of cannabis-based medicines that Cannabis Science, Inc. (OTCQB: CBIS) provides. Some of these areas are relatively open to entry by new competitors and are more developed sector niches than others. Novus Acquisition & Development Corp. (OTC: NDEV) on the other hand, a developer of health insurance and related products for the MMJ sector, currently faces little completion due to the high barrier created by insurance regulations which vary from state to state, and the company is currently all set to implement their benefits package by the fourth quarter this year.

Cost Savings to Novus Patients Where Supply is Limited

The recent announcement by Novus that they are rolling out a patient-focused insurance product and benefits package care network named “Novus MedPlan”, via their Novus Medical Group, Inc. subsidiary, places the company at the forefront of the space as the first to offer patients a cost savings alternative to go along with their alternative cannabis and CBD-based treatments. By surmounting the obstacles that inhibit other insurance companies from tapping into this market, Novus’ network of patients, physicians and manufacturers/providers creates the capacity to deliver economy-of-scale benefits to all parties. The existence of a large facilitator network, like the one being created by Novus, can become a market-stabilizing force in and of itself that benefits all. Especially patients, who gain access to considerable healthcare cost savings, as well as reliably safe and quality products.

Novus MedPlan’s roll out, initially launching in Vermont and Arizona where Novus has gotten the green light, comes at an auspicious time when the top health official in Arizona has just added PTSD (Post Traumatic Stress Disorder) to the list of qualifying conditions which allow access to medical marijuana treatment. With 30,000 plus registered MMJ patients in Arizona alone and over 50,000 veterans that suffer from PTSD who now qualify, the potential customer base is well over 80,000 in just this one state. Novus CEO Frank Labrozzi was interviewed regarding sector growth and the prevailing market conditions in the various states, indicating that the company “anticipates Novus will be adding other major growth market states like Colorado, Nevada, Oregon, Washington and in particular California (over 750,000 medical marijuana users in the state according to NORML estimates), in mid fourth quarter. Labrozzi further indicated that Novus has been striking key supplier/provider deals that will fast-track Nouvs MedPlan in all the MMJ approved states.

Novus will be focused on providing value to patients in exchange for a nominal premium, thriving off of organic growth metrics resident in the network model itself. Furthermore, the company has first mover advantage with very little if any competition, given the high barriers of entry which exist for potential competitors in each state due to the daunting regulatory landscape. This choice set of market dynamics has Novus aiming to obtain, as well as maintain, a considerable lead in the space. A lead bolstered further by a strong patient-focused model that has the potential to really resonate with the end market and create a positive feedback loop, driving in more users.

One small grower in Washington state characterized the demand/supply equation quite well, explaining to reporters earlier in July that it may take months or longer to see prices even start to come down from the $30/gram state residents are typically paying at any one of the 26 open retail marijuana stores, all of whom depend on the same handful of growers (around 2,600 applied but less than 334 of the approved growers are actually producing product). Growers essentially have carte blanche in Washington at the moment to set the price, according to this grower, due to staggering levels of demand and insufficient supply coming on-stream, conditions further exacerbated by strict state licensing regulations on dispensaries.

Policy director of Americans for Safe Access, a member-based organization that advocates for ensuring safe/legal access to cannabis for therapeutic and research purposes, has gone on record citing the fact that at prices of anywhere from $25 to $60 for an eighth of an ounce (3.54 grams) from most dispensaries, some patients are facing exorbitant outlays of as much as $1k/month or more to get enough medicine to treat their condition, a crippling sum for already health-compromised people to contend with. Novus is not wasting any time in getting out ahead of the curve, fully focused on creating a powerful network for patients who will have greater buying power in this seller’s market.

First Mover Advantage In A Burgeoning Industry

ProCon.org extrapolations on 2011 census data, while relatively conservative in terms of methodology, nevertheless project upwards of 2.4M medical marijuana patients in the U.S. alone if cannabis were legalized in all 50 states. Marijuana Policy Project pegs the low-end estimate for the number of legal patients in all states at currently just under 1.1M and the recent ArcView Market Research report on the MMJ sector indicates that beyond the 64% growth seen last year, the sector could top out at over $2.34B by the end of 2014.

There obviously exists a fast-growing, target-saturated market of MMJ patients that will not be served any time soon by major insurers due largely to persistent foot-dragging by federal regulators (which still have cannabis classified as a Schedule I Controlled Substance alongside heroin and cocaine). These are patients who grow increasingly frustrated that health insurance isn’t available to them for MMJ and who are likely used to being able to go to the pharmacy and pay a $5 co-pay for their other medications.

Due to the confusing regulatory quagmire created by federal laws that classify medical marijuana as a controlled substance and thus conflict with prevailing state legislation, the big insurance companies have been loathe to wade in at all, preferring to focus on the huge federal programs like Medicare/Medicaid. The result is that patients in dire need have been underserved by what is inherently a burgeoning industry, creating a growth opportunity for a company like Novus, especially since they are beating the big boys to the punch, and with a no-nonsense price point starting at $20 a month.

Novus handles the back-end for patients and physicians, clearing away obstacles and presenting them with a simplified solution that is already familiar to everyone involved, a patient network with a little card that provides access to improved cost and expedited service. Currently, patients who cannot afford to medicate sufficiently to treat their ailments are without an alternative to shelling out huge sums of money. By creating a patient network with a benefits package that asks very little of the end users and delivering real value for a nominal premium, Novus has their hands on a low-cost model that should find widespread appeal. This low-cost approach by Novus, more interested in providing real value to patients in need, nevertheless has tremendous upside.

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This article was published by CFN Enterprises Inc. (OTCQB: CNFN), owner and operator of CFN Media, the industry’s leading agency and digital financial media network dedicated to the burgeoning CBD and legal cannabis industries. Call +1 (833) 420-CNFN for more information.

About Ryan Allway

Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.

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