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The Cannabis Industry's Spread Worldwide Continues to Reshape Stereotypes
FinancialBuzz.com News Commentary
NEW YORK, July 2, 2019 /PRNewswire/ -- Cannabis has become one of the most trending topics worldwide because of its widespread legalization movements. While the plant has been heavily involved in the news cycle, cannabis has been around for centuries and was primarily used for medicinal applications. However, cannabis became listed as a controlled substance under international regulations due to the psychoactive nature of its marijuana derivative. In particular, the U.S. prohibited the sale and use of cannabis in the early 20th century, but by the 1990s, a select few states began to legalize it for the use of medical purposes. Now, as the months go by, more consumers and politicians view cannabis as a medicinal treatment option rather than a drug to simply get "high," which completely reshaped the stereotypes revolving around the plant. Notably, California became the first state in North America to legalize the medical use of cannabis. And following its decision, a series of other states began to legalize cannabis medical as well. Now, more than half of the U.S. has legalized the use of medical cannabis. Additionally, throughout the past twenty years, the cannabis industry has rapidly changed and evolved. For instance, Colorado was one of the first states to legalize the recreational use of cannabis in 2014 and during Colorado's first year of legal adult-use, the state delivered USD 683 Million in marijuana sales. By the end of 2018, Colorado reported record sales of USD 1.54 Billion. And as of April 2019, Colorado's marijuana sales were on track to deliver yet another record year. Primarily, U.S. states such as Colorado, California, Washington, and Nevada are the main growth drivers for the global cannabis industry. However, as other nations, such as Australia, Canada, Germany, France, and Spain begin to accelerate their programs, the global cannabis industry is positioned for exponential growth. According to data compiled by Ameri Research, the global legal marijuana market was valued at USD 14.3 Billion in 2016. By 2024, legal marijuana global sales are projected to reach USD 63.5 Billion while exhibiting a CAGR of 21.1% from 2017 to 2024. MediPharm Labs Corp. (OTC: MEDIF) (TSX-V: LABS), Cronos Group Inc. (NASDAQ: CRON) (TSX: CRON), Aphria Inc. (NYSE: APHA) (TSX: APHA), Organigram Holdings Inc. (NASDAQ: OGI) (TSX-V: OGI), Curaleaf Holdings, Inc. (OTC: CURLF) (CSE: CURA)
Over the past several years, cannabis flower has become an outdated delivery method and more consumers are switching to alternatives such as extracts. Cannabis extracts, also known as hash oils or dabs, have become increasingly popular because of their potency and effectiveness. With the advancements in extraction technologies and techniques, the cannabis industry has introduced more extracts such as budders and shatters. Extractors can select the desired parts of the plant, allowing them to produce a completely customized end result. For instance, an extractor can create a product that is rich in either CBD or THC, or they can create a balanced ratio. If extractors want to obtain a concentrate that is rich in CBD, they would most likely choose a hemp or cannabis strain that is CBD dominant. Several common forms of extraction methods include alcohol extraction, CO2 extraction, and butane extraction. On the other hand, extractors can also create concentrates without the use of solvents by using natural processes which utilize water, heat, and pressure. And, depending on the method, the final product has a purer, cleaner, and more enhanced effect on the consumer if it is produced in such a way. Currently, however, the industry is still in its infancy stage, meaning there is still much more room for it to grow. And as the industry continues to progress and develop, industry leaders believe that the extract market can evolve further from the current THC and CBD-based products and transition into a multifaceted industry. "There are so many bright, innovative minds in the cannabis industry, constantly pondering ways to create safer, more effective medicine for the various needs of patients … Currently THC, CBD, and terpenes are the main focus of the concentrate industry, but through continued research, the benefits and potential uses of other cannabinoids and compounds like CBNand THCV [may come into play]," according to Robert Ferguson, Director of Operations at Jetty Extracts.
MediPharm Labs Corp. (OTCQX: MEDIF) (TSX-V: LABS) is also listed on the TSX Venture Exchange under the ticker (TSX-V: LABS). Earlier last week, the Company announced that, "its wholly owned subsidiary, MediPharm Labs Inc., has entered into purchase agreements to secure a substantial 9,000 KG of dried cannabis supply from multiple cultivators in the last three weeks in June. In addition to MediPharm Labs' ongoing procurement of cannabis biomass for existing contracts, this bulk purchase is expected to contribute to increased production for future sales and position the Company to meet the mandatory minimum monthly volume requirements to win new large white-label contracts.
At the half year mark in 2019, and only seven months since receiving its sales license, MediPharm Labs has expanded its cultivation relationships to secure and scale up its own supply of dried cannabis that has also increased the total market supply of cannabis concentrates for white label, value-add products including bottled oil, gel caps and upcoming vape pen devices to be legalized later this year.
'With the increasing availability of bulk supply and our ongoing dried cannabis supply purchases, we are well positioned to significantly increase quarterly production over and above our existing contracts, which we expect to translate into additional sales from new white-label contracts that require substantial volumes monthly,' said Patrick McCutcheon, Chief Executive Officer of MediPharm Labs. 'As the industry continues to mature, with additional cultivation supply sources coming online, we continue to focus on building on our specialized extraction skill set to provide a stable source of high quality, cannabis concentrates for the growing demand of value-add concentrate based products for medical and recreational consumers.'
'We look forward to further diversifying relationships with new cultivation partners, including outdoor grows, who continue to focus on producing high quality active cannabinoid flower at lower costs over the long term.'
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Cronos Group Inc. (NASDAQ: CRON) (TSX: CRON) is an innovative global cannabinoid company with international production and distribution across five continents. Cronos Group Inc. recently announced that it had entered into a multi-year supply agreement with MediPharm Labs Corp. MediPharm Labs will supply Cronos Group with approximately USD 30 Million of high-quality private label cannabis concentrate over 18-months, and, subject to certain renewal and purchase options, potentially up to USD 60 Million over 24-months. In addition, Cronos Group and MediPharm Labs have entered into a multi-year tolling agreement, where Cronos Group will supply bulk cannabis to MediPharm Labs' state of the art extraction facility in Barrie, Ontario, to fulfill certain additional processing needs of the Company. "As the industry develops and matures, we see opportunity to work with companies like MediPharm Labs that provide specialized, high-quality services and inputs for our products," said Mike Gorenstein, Chief Executive Officer of Cronos Group. "Along with our internal capabilities, we are pleased to be working with MediPharm Labs to bring great products to consumers in anticipation of the derivative market launching in Canada this fall."
Aphria Inc. (NYSE: APHA) (TSX: APHA) is a leading global cannabis company driven by an unrelenting commitment to our people, the planet, product quality and innovation. Aphria Inc. recently announced that its German subsidiary Aphria Deutschland GmbH had been awarded a fifth lot for the cultivation of medical cannabis in Germany as part of the Company's previously awarded license from the German Federal Institute for Drugs and Medical Devices ("BfArM"). The additional lot was provisionally awarded to Aphria Germany in April and was secured following a review by a German court, which affirmed the original decision by the BfArM. With this decision, Aphria Germany won the maximum output from the German tender process – a total of five lots – and stands as the only licensed producer in Germany with the permission to grow all three strains of medical cannabis approved by the BfArM. Aphria Germany is building its over 8,000 sq. m. indoor growing facility in Neumünster and is completing work on a state-of-the-art GMP-certified cannabis vault in Bad Bramstedt for the import of cannabis flowers and oil from Canada, Australia and Denmark. Aphria Germany also holds a 25.1% interest in Berlin-based Schöneberg Hospital, which provides access to both doctors and patients for education on the benefits of medical cannabinoids. The company also recently introduced CannRelief, a CBD-based nutraceutical and cosmetics product line for the German market, produced in the EU and distributed by CC Pharma, a subsidiary of Aphria with access to more than 13,000 pharmacies throughout Germany. "We are thrilled about our successful conclusion to the German tender process, which has awarded Aphria with the most comprehensive license in the country," said Hendrik Knopp, Managing Director of Aphria Germany. "This award affirms Aphria's leading position in the German medical cannabis market. Construction on our indoor cultivation facility continues to progress rapidly and we look forward to supplying Germany's first domestically-grown medical cannabis in early calendar 2020."
Organigram Holdings Inc. (NASDAQ: OGI) (TSX-V: OGI) is a NASDAQ Global Select and TSX Venture Exchange listed company whose wholly owned subsidiary, Organigram Inc., is a licensed producer of cannabis and cannabis-derived products in Canada. Organigram Holdings Inc. recently announced that it had received approval from Health Canada for the licensing of 17 additional cultivation rooms within the Phase 4A/4B perimeter of the building. Thirteen of 31 Phase 4A cultivation rooms originally contemplated have previously been licensed. The 31st room initially contemplated for Phase 4A is being moved from the Company's 4A plans to its 4B licensing plans thereby adjusting Phase 4A from 31 to 30 rooms and Phase 4B from 32 rooms to 33 rooms. As a result of this approval, cannabis plants will be moved into these new cultivation rooms on a rolling basis commencing immediately. The Company anticipates being able to begin to harvest product from these newly on boarded rooms by the end of September, based on its historical cultivation timelines with the ability to ship dried flower as early as mid-fall of 2019. "Sustainable growth, exceptional quality and constant innovation are the pillars of our overall strategic approach," explains Greg Engel, Chief Executive Officer, Organigram. "We are proud to continue to increase our physical capacity to meet the needs of cannabis consumers across the country while also bringing new thinking and technology to our production."
Curaleaf Holdings, Inc. (OTCQX: CURLF) (CSE: CURA) is the leading vertically integrated multi-state cannabis operator in the United States. Curaleaf Holdings, Inc. recently announced that it has made two separate acquisitions in Arizona for combined consideration of USD 25.5 Million. Curaleaf entered into an agreement to acquire Glendale Greenhouse, a vertically integrated cannabis business operating a cultivation and processing facility, as well as a prime retail location, with plans to rebrand as Curaleaf after the transaction closes. The Glendale Greenhouse production facility is a 20,000 sq. ft., multi-level cultivation center which is capable of producing 3,600 pounds of flower annually. Its 1,500 sq. ft. dispensary, located directly off the Agua Fria Freeway with 90,000 cars passing daily, can be expanded to nearly 5,000 sq. ft. Glendale Greenhouse holds the master lease on the 15,000 sq. ft. multi-tenant building where the dispensary is located. The facility also operates a state-of-the-art CO2 extraction lab and a kitchen, which is already producing various edible lines such as mints, gummies, brownies and ice cream, with additional products expected to launch later this year. "The acquisition of both Glendale Greenhouse and the opening of our 83rd Avenue location demonstrates our commitment to the Arizona market and to providing consumers with reliable and high-quality cannabis experience," said Joseph Lusardi, Chief Executive Officer. "This transaction not only strengthens our position with the seventh and eighth Curaleaf branded dispensaries in the fast-growth Phoenix metro market, but greatly enhances our processing capabilities and accelerates our plans to produce and distribute wholesale products in the state."
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