New Zealand missed the boat on medical cannabis and is too late to the game to gain a serious foothold in the commodity space, according to Nubu Pharmaceuticals. The medical cannabis company is in the midst of a $2.5 million series A funding round for 12.5% of the company at a pre-money valuation of $20m. It sees itself as the Invivo or 42 Below of medical cannabis, focusing on developing IP that it then contracts to manufacturers. The bulk of New Zealand’s visible medical cannabis companies have adopted a seed-to-sale approach, which sees the company grow, process,market, and sell its products. Many of these companies also secure importation deals for white label cannabis products to secure revenue while developing their proprietary medicines. Nubu co-founder and chief executive Mark Dye said he was surprised other companies hadn’t adopted the same strategy as his own. “Most of the players in this market seem to be following the cannabis strategy that made sense in 2016; they haven't updated the model.” “Cannabis is a commodity, like so many things that New Zealand produces, are we going to be able to compete in that commodity? We don't think we're going to be able to and so we're looking for partners that can supply us that commodity in a number of realms and looking to basically create value-added products out of that commodity for us to send overseas.” Dye said half of the money being sought in the capital raise was already in the bank and during the process, he had been approached by a number of parties looking to buy the business. He said the offers were turned down because the business was in a prime position and was very close to hitting milestones it had set for itself. “It seemed like a silly time to bounce out”. The information memorandum for the capital raise forecasts a $340,276 loss in the 2021 financial year, $269,232 loss in the 2022 year, reaching a peak loss of $2.9m in 2023 before hitting profitability, with a $7.5m profit expected in 2025. Nubu is split into two divisions, Nubu Import and Nubu Innovation. The import pharmaceutical distribution company, which Dye said is “pretty much” cashflow positive, has partnerships with five cannabis companies and one that supplies medical cannabis hardware, namely vaporisers. Dye said Nubu Innovation’s purpose was to combine well-known NZ Inc products with cannabis for export markets. Infrastructure As far as the decision to opt for a light touch import approach over the seed-to-sale approach, Dye said, “I'm a lot happier I'm running this company than any one of those infrastructure companies. She's a tough road ahead for them to be completely honest.” He said Nubu’s distribution partner ANTG had the highest-selling cannabis strain in the massive German market, captured 50% of the dried cannabis market in Australia, and would be one of the first, if not the first, to enter the dried flower cannabis market here in New Zealand. “Those guys have been doing this for four or five years now, there has been all sorts of pain for them along the way to get to this point and all of the local guys that are building up this infrastructure have still got all of that to go through.” Nubu marketing material leans heavily on New Zealand imagery Dye doesn’t think much market share will be left once the vertically integrated companies arrive. "The reason why we avoided all of this is because we were too late to the party, New Zealand missed the boat." “If you're either an investor in a company that's building out this expensive infrastructure or involved in a company that's building out this expensive infrastructure, you've got some concerns, because what are you building this out for? The New Zealand market is sizable, if you look at the Ministry of Health numbers, but it's not infinite.” He said the “the horse has kind of bolted” for the international market as well. “I don't think there's going to be anything left. So, again, why are they building all this infrastructure? Why are they spending all this money?” Dye, who started the company in 2016 following an on-air discussion he had while working as a radio host, said Nubu’s ultimate goal was to have every type and format of medicinal cannabis products available to New Zealand patient, as well as establish itself as the main New Zealand cannabis company. The company is currently 31.8% held by Dye, with fellow co-founder Will Douglas holding 28.9%. Non-executive chair Scott Bradley holds 25.4%, with 13 smaller shareholders, including Australian business partner ANTG.