Market Overview

Will Creative Edge Nutrition Become The Jolly Green Giant Of Medical Marijuana?

Creative Edge Nutrition (OTC: FITX) trades on the OTC Markets for pieces of a penny, but that could all change relatively soon.

Michigan-based Creative Edge Nutrition is a supplement company with a mission that involves several types of “growth.” Creative Edge Nutrition president and CEO Bill Chaaban was featured on 420 Investor Alan Brochstein on Monday -- to discuss the company's steps into becoming the first publicly -traded United States company to distribute medicinal marijuana in Canada.

“Everybody said ‘This guy's nuts. He's crazy. Oh my god! You'll never do it.,'" Chaaban remembers. "The point is it wasn't to grow 1.3 million pounds in the first year, or even the first couple years. The thing is we're applying for a license and the government wants to know ‘How much would you like to buy and sell?.'"

Judging by their analysis of the Canadian and U.S. markets, they determined that, within a couple of years, they will be moving their limit in product while leaving room for healthy competition.

“Health Canada estimates that the price of marijuana per gram is going to settle anywhere between $7.60 to $8.60 per gram in the next few years with competition in the free market,” said Chaaban.

The black market value of marijuana in Canada is $10 to $12 per gram, he noted. And according to Chaaban, that means billions in tax revenue for Canada -- in addition to the savings the country will gain after April 1st -- when the process to access medical marijuana goes becomes simplified.

There are some strict regulations nonetheless for sellers -- including no cash transactions, quality testing by third parties and rigorous inspection across the board. With inside reports from Health Canada and market experts saying that Israel will likely be importing medical marijuana soon, it was important to Chaaban to look for other investors to up Creative Edge nutrition's momentum, in order to maximize force when they hit the market.

They teamed up with GrowLife (OTC: PHOT) after talking-and meeting with chairman and CEO Sterling Scott; offering up a stake in RXNB, a pharmaceutical company and the culmination of 20 personally owned companies and growing, that Chaaban had in partnership with someone within Creative Edge Nutrition's operation. It's worth over $110 million on its own.

“We have a significant bargaining position now, because we would be…the first U.S. publicly-traded that could potentially be growing and selling medical marijuana,” said Chaaban regarding the companies that have joined them.

Chaaban also emphasized extremely secure product shipping after the plant begins distributing some time after April 1. In total, they want to do 50 potent strains grown in a sterile environment, to maximize quality and safety.

Related: 7 Companies Capitalizing On Canadian Cannabis

Chaaban spared almost no detail when going over the process of entering the medical marijuana industry. He joked about getting into nutritional supplements after being inspired by Arnold Schwarzenegger's bulk in the 1980s. He wanted to be big, and supplements were a part of that for him. They still are.

“We started as a health and wellness company, and we continue, even with medical marijuana, to be a health and wellness company,” said Chaaban.

Chaaban notes some people have recommended they get out of health supplements, now that they're in medical marijuana. He even noted the supplement side of their business, Cenergy, is growing slower than expected, but they recently finalized a deal with GNC to carry their nutritional products and are shipping soon.

Chaaban believes it's an important distinction, despite the fact that the sales and margins don't have nearly the same potential as medical marijuana. They're incomparable, he included.

Their agricultural adventure began when he was approached by investors and those around the company to get into medical marijuana. A licensed attorney in both the U.S. and Canada, Chaaban didn't feel comfortable until recently, so they came up with and formulated their first marijuana product for “Cenergy Natural” — hemp additives for coffee and tea, as well as infused protein supplements.

A friend of the business purchased a piece of land in Ontario to use for a post-production movie studio space, but his land was zoned for agriculture when he acquired it. He couldn't get out of the deal, because of stricter zoning laws that favor land for agriculture. Then Lakeshore, a small town in Essex County, Ontario, called him and said it would be a great spot for growing medical marijuana. So he called Chaaban, and they signed the lease to begin their growing operation.

Related: Herb Greenberg Thinks Green Mountain Isn't Much Without Coke

“I said ‘Okay - Well, you know what? I need to put the team together.' And so I canvassed the medical marijuana market in Canada and said ‘Okay, we really need to shock and awe.' And the way I like to do things is: I don't like to do things small. I like to do ‘em big and I do them bold and I like to say, ‘I'm going to do something that no one's ever done before.' And I feed off of people saying that ‘You will never accomplish this and will never accomplish that',” said Chaaban.

And much like an action movie before a major operation, Chaaban assembled a top-notch team of professionals from both inside and outside the medical marijuana industry.

One team member is 33-year-veteran of Canada's police service -- who was heavily involved internationally in agencies like the DEA over the years; bringing down organized crime, specifically for the illegal trafficking of elicit drugs. A friend to Chaaban's, the former officer was shocked by the offer and needed time to think over the morally confusing decision. After a day's contemplation, he told Chaaban he was in to cover security.

“I sad ‘Well, I have to ask, what's your apprehension?' and he said, ‘Well, you know Bill, 33 years I've been arresting people for marijuana and now I'll be involved with one of the largest production facilities in probably Canada; in the world.' So it was a little-a little bit for him,” said Chaaban.

Others names came up in the list, from a master grower to ace designers. They're doing everything that they possibly can in-house, which leaves very little left to outsource, Chaaban said. Creative Edge Nutrition will even incinerate their own bad crops onsite.

 Jason Cunningham had no position with the mentioned entities while writing this article. Visit Jason on Twitter at @JasonCunningham and @Benzinga.

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