The weed boom continues.

Emerald Plants Health Source Inc., a Canadian company hoping to gain an approval to grow cannabis north of the border, will go public via a reverse merger, according to new Securities and Exchange Commission (SEC) filings.

The surviving company, EPHS Holdings Inc., will need to raise capital quickly, according to its filings with the SEC. There was no financing included in the reverse merger filing with EPHS Holdings, formerly known as Sertnant Inc.

The capitalization may prove challenging as the seasoning rules tied to reverse mergers require companies using the method to go public must trade on a non-senior exchange for two years unless they raise $40 million or more in an underwritten offering.

This would mean that EPHS will see its shares likely trading on OTC Markets, and while listing there certainly doesn't preclude the newly public company from raising capital, it will mean that task will require more effort. Companies trading on OTC have less exposure to equity coverage, and trading can be illiquid at times, despite OTC's efforts to both elevate the quality of companies trading there and to get those companies to take steps to improve their profiles.

Emerald has submitted its Access for Medical Purposes Regulation application to Health Canada for review. The company expects to submit its Evidence Package and Request for Information to Health Canada on March 9. If that package is judged satisfactory, Emerald will receive a license.

That will not be the end of the regulatory hoops that Emerald will need to jump through, however. After securing its license it will need to apply for a sales license, it will also have to submit its first marijuana crop for inspection to detect levels of contaminants and any environmental concerns. Should Emerald pass muster, it will be allowed to sell cannabis via licensed distributors.

The Canadian government decided to make medical cannabis legal and to become involved in the approval process via Health Canada. Later this year, recreational cannabis will also become legal and growers can send their product that way as well.

As a result the Canadian cannabis sector is viewed as a legitimate destination for investor capital while the U.S. market struggles because of the overhang from federal drug laws which makes cultivation, possession and use of marijuana illegal. Moreover, cannabis is on the Schedule 1 drug classification by the Drug Enforcement Agency, and the Justice Department under Attorney General Jeff Sessions has given no indication that classification or pot laws in general are likely to change.

Under the Obama administration, the DOJ and DEA had a hands-off approach as 30 states and the District of Columbia have made cannabis legal for medical use or recreationally.

The newly public company is being run by Gianfranco Bentivoglio, whose background is in hospitality having owned and operated hotels and restaurants for 30 years. He also served as a director and CEO of Event Cardio Group, an inventor of a cardiac monitoring device. Bentivoglio is the sole officer and director of EPHS.

As with most reverse merged companies, EPHS has a colorful history. It was incorporated as Quantum Bit Induction Technology Inc. in 2009. The company was focused on using technology to mine for gold, platinum and rate earth medals in Nevada.

The business didn't make it and was placed into receivership in February 2017. It emerged from receivership last December when Quantum issued 75 million shares to EPHS for $110,000. On Feb. 27, 2018 EPHS acquired all of the common stock of Emerald in exchange for 20 million EPHS shares.

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