Canada's Provinces Lining up to Sell Pot

LOS ANGELES, October 19, 2017 /PRNewswire/ --

USA News Group - Following its announcement that the Province of Ontario is planning to add 150 new governments, the Province of New Brunswick has announced a multi-million dollar deal with cannabis producers.

Companies affected by the positive news include Canopy Growth Inc. (TSX: WEED) (OTC: TWMJF) Aurora Cannabis (TSX: ACB) (OTC: ACBFF), Organigram Holdings Inc. (TSX: OGI) (OTC: OGRMF), and Abattis Bioceuticals Corp. (CSE: ATT) (OTC: ATTBF).

The easterly Province of New Brunswick has announced that it has developed a new Crown corporation for the supervision of cannabis sales for the government's anticipated legalization of recreational cannabis July 2018.

As with the announcement from Ontario's government earlier, producers and all cannabis companies see this move as further demand for requirements to produce, test and deliver cannabis products both medicinal and recreational.

Positive reaction by investors helped companies whose positions will be impacted by additional, new distribution and support services.

Top Licensed Producers (LPs) of cannabis who are feeling the love include Aurora Cannabis (TSX: ACB.TO) (OTCQX: ACBFF), with year-over-year growth at 387% in 2017, and Organigram Holdings Inc. (TSX-V: OGI.V) (OTCQB: OGRMF), the only Licensed Producer in New Brunswick. Both of these will see significant increased demand as early as 2018 thanks to the raft of government announcements.

Canada's granddaddy of cannabis production, Canopy Growth Inc. (TSX: WEED.TO) (OTC: TWMJF) continues to soar with its year-over-year growth pegged at 127% and the industry's largest quarterly sales volume. Canopy is expected to add $40 million to its revenue in its first two years of the New Brunswick deal.

All the added production and volume is adding to the prospects of Abattis Bioceuticals Corp. (CSE: ATT.CN) (OTCQB: ATTBF) who already operates licensed testing, research facilities with added formulation and extraction capabilities. ATT flies under the radar of the big LPs, but trades many times below their big cap share prices because of its new status.

Growing by the Week 

The cannabis market is ratcheting up weekly. New Brunswick's announcement is just one more sign of the tempo of demand.

Analysts are having a hard time keeping up with the figures, but the value being generated as a result is heading for CAGR projected as high as 25% through 2025 or more.

Deloitte estimates the Canadian market has a base retail value between $4.9 billion-$8.7 billion, based on the latest data. That would easily be as big as or bigger than the Canadian alcohol market valued at $5 billion annually.

Arcview Market Research, which tracks the advances carefully, reports that North American marijuana sales grew by an unprecedented 30% in 2016 to $6.7 billion as the legal market expands in the U.S. and Canada.

The report shows North American sales are projected to exceed $20.2 billion by 2021 using that compound annual growth rate of 25%.

Not coincidentally, ArcView's report includes Canada for the first time based on its moves towards implementing legal adult use marijuana in 2018.

Testing a Concern 

One area that is particularly feeling the surge of demand is testing and research.

The global cannabis testing market is expected to grow at a CAGR of 11.5%, culminating towards a $1.42 billion market by 2021.

Organigram Holdings Inc. ran up against this in a big way earlier in the year when it believed it had some pesticide contaminant in its crops.

Organigram overcame the issue with some effort, but it moved the government to announce that all licensed producers must conduct mandatory testing for the presence of unauthorized pesticides in addition to the required testing for microbial and chemical contaminants such as mold, heavy metals, and bacterial and fungal contamination.

Producers also need an accurate reading of drug potency, including the levels of the key medicinal components of cannabis, THC and CBD.

So all this new cannabis will to need to be certified resulting in a huge jump in the need for testing capacity. This will include government licensed, specialized third party operations to test product before it goes to market.

Here's where third party tester Abattis comes into play.

The company has a full spectrum lab staffed ready to validate quality standards required by producers and developers.

Research will also become a critically important part of this industry as it seeks new formulations and products to suit specific needs. Abattis is well suited on that front too.

ATT in a Prime Space 

The government entry into the marijuana space adds to the need for more regulation and scrutiny. Essentially, the cannabis business is growing up and maturing.

This new level of direct government contracts and the associated regulation puts research and testing companies like ATT on the top of the requirements.

Abattis has multiple assets which it plans to use to become Canada's gold standard facility for cannabis testing, R&D, formulation and extraction capabilities.

Most of the companies in the cannabis space are there as producers in cultivation or some aspect of production and distribution. Virtually every one of them needs to apply bioscience to the industry for safety, efficacy and the delivery of formulations and products that consumers want.

This has created potentially very profitable opening for companies applying bioscience and technology with immediate rapid turnaround and qualified results.

Abattis Bioceuticals and its majority-owned subsidiary Northern Vine Labs have merged efforts to create a state-of-the-art testing and research company. It is positioned to be one of the most sophisticated, Health Canada licensed operations in the country with the potential to handle virtually all forms of Cannabis testing, R&D and extraction development.

As a smaller company dwarfed by the big producers, ATT may not be top of the crop charts. However, if the cannabis industry in Canada and globally is going to grow at the rate indicated by legislative bodies and consumer demand, Abattis Bioceuticals could become the golden child of the support and services industry.

POTENTIAL COMPARABLES 

Aurora Cannabis (TSX: ACB.TO) (OTCQX: ACBFF)

Through its wholly-owned subsidiary, Aurora Cannabis Enterprises Inc., Aurora Cannabis is a major LP, operating a 55,200 square foot, state-of-the-art production facility in Mountain View County, Alberta. Aurora made waves when it announced the construction of its 800,000 square foot "Aurora Sky" facility second 800,000 square foot production facility at the Edmonton International Airport. Aurora's also involved in Quebec, with its third 40,000 square foot production facility set to be completed in Pointe-Claire, Quebec, on Montreal's West Island. Aurora also holds a minority stake in leading extraction technology company Radient Technologies Inc., based in Edmonton, and a minority stake in Australian company Cann Group Limited, which was the first in Australia to conduct research on and cultivate medical cannabis. Aurora also owns German wholesale importer, exporter, and EU medical cannabis distributor Pedanios. 

Organigram Holdings Inc. (TSX-V: OGI.V) (OTCQB: OGRMF)

Organigram Holdings Inc. is a TSX Venture Exchange listed company who's wholly owned subsidiary, Organigram Inc., is a licensed producer of medical marijuana in Canada. Organigram is focused on producing the highest quality, condition specific medical marijuana for patients in Canada. Organigram's facility is located in Moncton, New Brunswick and the Company is regulated by the Marihuana for Medical Purposes Regulations. In September of 2017, Organigram becomes one of the first licensed producers to sign an MOU with provincial authority responsible for the distribution of cannabis to the adult recreational market.

Canopy Growth Inc. (TSX: WEED.TO) (OTC: TWMJF)

The granddaddy of the corporate cannabis sector, Canopy Growth is the world's largest diversified cannabis company. Canopy boasts a wide offering of distinct brands and curated cannabis varieties in dried, oil and capsule forms. Most widely recognized is Canopy's subsidiary Tweed which is the world's most recognized marijuana production brand, as well as an industry educator. Accompanying Tweed in Canopy's portfolio is medical-grade cannabis producers Bedrocan Canada. In total, Canopy Growth's numerous state-of-the-art production facilities total over half a million square feet of GMP-certified indoor and greenhouse production capacity.

For a more in-depth look into ATT you can view the in-depth report at USA News Group: http://usanewsgroup.com/2017/10/16/the-upside-to-biotech-and-cannabis-3/

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