Safe Supply Firm Announces Another Promising Acquisition

Safe Supply Streaming Co. Ltd (SPLY:CSE; SSPLF:OTCQB; QM4:FSE) has announced the closing of its previously announced 7% stake acquisition of Safety Strips Tech Corp. The company paid CA$50,000 cash and 3,000,000 common shares at CA$0.10 in Safe Supply for a total value of CA$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 the 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 capitalize 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 in 2023.

The Sector is Changing

As for the market, the tone around drug use has been changing over the past few years. 

Recently, an ecstasy-for-medicine advocate raised US$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 the 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 toward 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 have 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 Sciences NV (ATAI:NASDAQ), which uses a similar approach to Safe Supply and is incubating numerous companies in the psychedelic sectors, achieved a peak valuation of US$3.3 billion.

RIV Capital (RIV:CSE) (former Canopy Rivers) invested in and incubated companies in the cannabis industry and achieved a peak valuation of US$1.1 billion.

Ownership and Share Structure

According to Reuters, Safe Supply Streaming has 73.92 million (73.92M) shares outstanding and 71.23M free float traded shares.

The company reported that over 50% of Safe Supply is with strategic investors and held by family offices and large shareholders. One of these offices includes Jonathan Goldman, who was an early backer of Canopy Growth and the cannabis Wave.

The rest is in retail.

Safe Supply has a market cap of CA$9.92M, Reuters reports.

Its 52-week trading range is CA$0.07–0.37 per share.

Important Disclosures:

1. Safe Supply Streaming Co. Ltd. has a consulting relationship with an affiliate of Streetwise Reports, and pays a monthly consulting fee between US$8,000 and US$20,000.
2. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Safe Supply Streaming Co. Ltd.
3. Lauren Rickard wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
4.  This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company. 
5. This article does not constitute medical advice. Officers, employees and contributors to Streetwise Reports are not licensed medical professionals. Readers should always contact their healthcare professionals for medical advice.

For additional disclosures, please click here.