Expect material growth in sales coming up from cannabis company Avicanna (Avicanna Stock Quote, Chart, News, Analysts TSX:AVCN), says Raymond James analyst Rahul Sarugaser. The analyst delivered a company brief to clients last Wednesday in which he reiterated his “Outperform 2” rating, saying that over recent months Avicanna’s products have been top-sellers in Shoppers Drug Mart’s medical channel platform. Toronto-based Avicanna is an internationally oriented cannabinoid platform company with a partnership with global organic agriculture company El Grupo Daabon and with production facilities in northern Colombia cultivating high-quality, low-cost hemp and cannabis. Avicanna mines the biomass for active pharmaceutical ingredients for its lines of pharmaceutical-grade products under its business-to-business Aureus brand, its Pura Earth brand for CBD products and its RHO Phyto brand for THC products. The company also has a pipeline of clinical assets in development. Avicanna announced on December 23 that it will begin selling RHO Phyto through retail channels starting in early 2021, marking the company’s first foray into the adult-use market. Avicanna said RHO Phyto’s medical formulary has so far been “incredibly successful” in its launch over the past four months, tallying 300 prescribers and 20 clinics to date. The company, which aims to make RHO Phyto the “doctor recommended brand within the cannabis industry,” appealed in its press release to a stat saying a purported 44 per cent of consumers seeking cannabis for medical purposes in fact do not go through medical channels to obtain the drug and, according to a 2020 survey, 76 per cent of Canadian medical cannabis users do not have a medical document such as a prescription from a health professional. “The existing stigma around medical cannabis and the barriers to obtain a medical document make it particularly challenging for some patients to access medical cannabis through the appropriate channels with the support of a health care practitioner,” said Avicanna CEO Aras Azadian, in a press release. “We believe that by expanding the RHO Phyto portfolio into retail sales channels we will provide consumers with easier and low barrier access to standardized medical products they seek. For a biopharmaceutical company like Avicanna, this expansion of our medical products into retail channels is in many ways similar to accessing over-the-counter medical products,” Azadian said. Remarking on the announcement, Sarugaser said Avicanna’s revenue should grow materially from Q1 2021 onward. “Given AVCN's strong uptake among physicians, and, interestingly, older medical cannabis patients (47 per cent of buyers in the 51-75 age-range and 55 per cent women), the medical cannabis market's size relative to adult-use, compounded by the adult-use market's much larger (and rapidly expanding), we anticipate potential revenue derived from adult-use sales to be 5-10x greater than those derived from AVCN's medical cannabis sales through Shoppers,” Sarugaser wrote. “AVCN's entry into the $3.2-billion run-rate Canadian adult-use cannabis market comes after the successful launch of its RHO Phyto products through Shoppers, where the company saw >100-per-cent month-over-month sales growth in all product categories,” he said. “According to our channel checks, AVCN's brands made up Shoppers' top-selling products during the last several months. AVCN remains committed to its medical cannabis patients and will maintain its exclusive, preferred supply relationship with Shoppers Drug Mart, which is slowly but surely building out a powerful nationwide medical cannabis platform,” Sarugaser said. The analyst is calling for Avicanna to generate 2020 revenue and EBITDA of $3 million and negative $11 million, respectively, and 2021 revenue and EBITDA of $14 million and negative $2 million, respectively. Avicanna closed on a capital raise earlier this month, completing its first prospectus offering of about 6 million units at the price of $0.85 per unit, comprised of one common share and one-half of one common share purchase warrant exercisable at a price of $1.20 per share over the following 36 months. Gross proceeds of about $5.1 million are being earmarked for product development, working capital and general corporate purposes. “The completion of our first prospectus offering and substantial capital raise since our IPO is a confirmation of the on-going support from our existing and new shareholders during a difficult time in the market,” said Azadian in a December 8 press release. “This also coincides with further cost reductions and with the launch of our medical products and several other commercial initiatives across several markets where we intend to use the use the proceeds of this raise to pave the way to sustainability and profitability.” Avicanna’s share price has had a considerable slide since its debut in mid-2019, going from $7.00 per share to sub-$1.00 territory. For 2020, AVCN is currently down 83 per cent. Avicanna has a market capitalization of $30 million and current net debt of $2 million, with 28.4 million shares outstanding.