- Insurance Broker Participation,
Provider Engagement
- Drive Growth For 10th Consecutive Quarters
MIAMI, FL / ACCESSWIRE / March 25, 2019 / Novus Acquisition and Development, Corp. (OTC PINK: NDEV), through its wholly owned subsidiary WCIG Insurance Services, Inc., is a diversified insurance entity in health, liability, annuity and accident, and, the nation's first carrier/aggregator offering a cannabis health plan, today reported financial and operational results for its fourth quarter and year ended December 31, 2018.
Fourth Quarter 2018 and Year End 2018 Highlights:
10th Consecutive Quarters of Sequential Increase in Revenue:
Management Discussion and Analysis
Novus' Chief Executive Officer, Frank Labrozzi, commented, ''We continued our positive momentum in the fourth quarter with growth in all of our key performance indicators which resulted in growth in revenue to a quarterly record for Novus Cannabis MedPlan. With more and more medical cannabis cultivators, manufacturers and dispensaries opening in legalized medical states and the proliferation of CBD across the country, we continue to see growth in our Provider Network. These cannabis cultivators, manufacturers and dispensaries are experiencing increased competition, struggling to turn profits and seek differentiating factors to draw customers through their doors. As Novus continues to build bridges for those dispensaries that once turned down to participate in our Provider Network, these same entities are now seeing Novus' value by driving a customer base to their storefronts with higher than average monthly med purchases and gratuitous local advertising effort.''
Novus and Cannabis Industry Outlook
Marijuana legalization had a very good mid-term elections in November 2018. The big news came from Michigan, which became the first state in the Midwest to legalize cannabis for recreational purposes. And it appears to have won by a fairly big margin: With 87 percent of precincts reporting, the ''yes'' vote got 56% of the vote - topping the ''no'' vote by 12 percentage points.
There were also a couple of medical marijuana victories in Missouri and Utah. Both states went Republican in state races (particularly the Senate), yet they still showed solid support for legalizing medical pot. The winning measure in Missouri got 66% of the vote, and the initiative in Utah is so far, with 95 percent of precincts reporting, at 53%.
The one bit of bad news for legal marijuana came from North Dakota, where voters rejected an initiative that would have legalized cannabis for recreational purposes. That measure got less than 41% support.
But the North Dakota loss was widely expected. North Dakota is very conservative; it was always very unlikely to fully legalize pot before, say, liberal New York and New Jersey. The measure's chances were likely lowered further because it was very unusual: It would have legalized selling pot without any regulations, leaving it to the state's lawmakers to quickly enact rules instead. Typically, marijuana legalization measures at least set up a regulatory framework for sales.
In short, marijuana legalization got three major wins and an expected loss.
Beyond the midterm elections, 2018 has been a big year for marijuana legalization. California opened the world's biggest legal marijuana market, Vermont legalized marijuana possession (becoming the first state to do so through its legislature), and Canada became the world's first wealthy nation to fully legalize pot.
At the end of 2018, 10 states have legalized marijuana for recreational and medical uses, and 22 others have legalized only for medical purposes.
After a lengthy process through Congress, the President signed into law The Agriculture Improvement Act of 2018 (the 2018 Farm Bill) on Dec. 20, 2018. The bill replaces the Agriculture Improvement Act of 2014, which expired Sept. 30, 2018. Distributing more than $850 billion, the 2018 Farm Bill is an enormous piece of legislation that funds programs such as crop insurance, school lunches and the Supplemental Nutrition Assistance Program (SNAP), aka food stamps.
Integrated into the Farm Bill is the bipartisan-supported Hemp Farming Act of 2018. The act's inclusion is significant: industrial hemp and its derived products now are legal on a federal level, and states may choose how to move forward in this exciting new industry.
Spearheaded by Sen. Mitch McConnell (R-KY), The Hemp Farming Act federally legalizes the production of industrial hemp (defined as Cannabis sativa L. plants containing less than three-tenths of a percent of tetrahydrocannabinol (THC)). The low concentration of THC makes hemp unsuitable for marijuana production, which remains federally illegal.
The 2018 Farm Bill abolishes this inconsistent treatment by removing industrial hemp from the definition of ''marihuana'' in the CSA. In addition, THC contained in industrial hemp will be removed from the purview of the CSA, making clear that industrial hemp plants can be grown domestically as well as imported. This amendment to the CSA decriminalizes the production and use of hemp and its derived products that match the definition of industrial hemp, such as seed oil, CBD oil, fibers and paper.
Industrial hemp will not be entirely unregulated, however. The 2018 Farm Bill moves regulatory authority from the CSA and DEA to the Agricultural Marketing Act of 1946 (AMA) and the Department of Agriculture. The AMA authorizes and directs the Secretary of Agriculture to carry out programs to assist the production, transportation and marketing of crops. Now that the Hemp Farming Act of 2018 is law, hemp will be treated the same as any other legal crop by the Department of Agriculture, with a few caveats based on its previous status as a controlled substance and the potential for unscrupulous growers to cultivate strains with high THC levels.
As part of the amendment, State and Tribal governments can create their own regulatory framework for industrial hemp production. Those plans must include:
The plan may include anything that does not conflict with federal regulations.
Growth In 2018
The Company showed continued growth in fourth quarter of 2018 due to Facebook (FB) rejecting ads that contain the word ''cannabis'', this came on the heels of FB Federal Government inquiry on privacy of its users. This has subsided and now we can generate digital ads on FB along with our marketing mix to support the business model, is not solely reliant on FB and we have stepped up other avenues of marketing that have been responsive.
Agreement with Alloy Insurance Services, a new group provider to bundle Novus Cannabis MedPlan, expands footprint. Novus executed a bundling agreement with Alloy Insurance Services LLC, an entity that provides employee benefits and administration services for over 50,000 employees nationwide.
Plans to file as a Health Maintenance Organization (HMO) in the State of California.
Novus Cannabis MedPlan had a positive initial teleconference with the California Department of Managed Health Care (CDMH) regarding filing its Cannabis MedPlan as a Health Maintenance Organization (HMO). Additional follow up reviews and evaluations by CDMH beginning as early as January 2019.
Novus as an HMO will expand its breadth as health insurance carrier through its developed network of provider(s) such as:
· Physicians (for example,
family doctors that write cannabis recommendations),
· Specialists (for example, oncologists and
ophthalmologists that recommend cannabis) and,
· Med facilities (for example, clinics and
cannabis dispensaries/cultivators)
Novus Cannabis MedPlan, once approved, will initiate as an HMO or at least specialty insurance carrier where it will agree to pay cannabis providers specific levels of compensation for a range of services they provide to its patient/members commencing in the State of California. In return for a monthly fee, or premium, patient/members are granted access to providers inside Novus' cannabis network at no additional cost.
The value add of this premium structure is three-fold:
· Patients: Reduce healthcare
costs with likely reimbursement of cannabis meds and services for
patient/members.
· Providers: As an HMO cannabis network provider
benefits by supplying them with more patients.
· Employers: Growing interest in Novus Cannabis
MedPlan by many Professional Employment Organizations that want to
integrate THC and CBD Plans for their client base in an health
insurance format.
Notable Accomplishments from 2018
The achievements are expected to be catalysts for accelerated growth in 2019.
a) Professional Employment Organization
(PEO):
PEO's are companies that sell business insurance, employee benefits
and administration services on the behalf of employers. During the
third quarter of 2018, the emergence of interest from PEO's saw the
value proposition of where they can generate revenue by bundling
our cannabis health plans. Our current contract with Alloy
Insurance Services targets 50,000 employees looking for alternative
benefit plans. We expect to enter into similar contracts with
additional PEO's making our future growth effort productive.
b) FinTech Alignment:
We contracted with Revolution Insurance Technologies (RIT), a
Silicon Valley FinTech that owns a proprietary digital platform
that integrates benefit packages from the world's top insurance
carriers. This partnership assists insurance broker/agent to create
customized packages from diverse carriers and bundle those products
that meet the needs and price of the customer. To-date we have
recruited 450 agencies/brokers/affiliates to educate and sell our
cannabis health plans to the consumer and now with RIT, we send
them to one platform that will assist them in efficiently adding
our product in one bundled quote.
c) Increase CBD Enrollments Due The
Popularity Of This Non Psychoactive Med:
In 2018, Novus experienced an increase by 20% of CBD enrollments.
This was contributed to our contract with U.S. Hemp Wholesale, the
country's leading CBD provider with channels of distribution from
the country's top 20 CBD manufacturers that drop-ship to Novus'
patient /member network.
The growth potential of CBD could be worth $20 billion by 2022. The future of CBD and its effectiveness is promising with the Federal Farm Bill that was signed into law before Christmas, permitting all states to cultivate hemp. On a regulatory level this is a complex issue since the new law eliminates hemp-derived products from its Schedule I status under the Controlled Substances Act but does not legalize CBD federally. The only exemption is GW Pharmaceutical's Epidiolex, a pharmaceutical grade of CBD. This action now plays a key part to controlling the barrier of entry for many new CBD products with the cost of research and development contributing to a stronger new market.
d) Challenges from State And Federal
Regulators:
2018 reflected many challenges to Novus and the cannabis industry,
particularly in the following areas:
However, all three detriments proved to be short-term and resulted in more positive outcomes by the end of 2018. Sessions left office without making any impact on the Department of Justice to enforce marijuana prohibition.
In Michigan, we lost 40% of our in-network dispensaries due to new regulations imposed by the state shutting down many retail locations. However, the state has since issued an additional 50 new licenses for the opening of dispensaries in and around the Detroit area, and they are rapidly becoming in-network providers.