Craft Cannabis Products Remains Popular as Large-scale Cultivators Lack in Quality
FinancialBuzz.com News Commentary
NEW YORK, Sept. 3, 2019 /PRNewswire/ -- The cannabis industry has been facing tremendous upward momentum as more and more countries continue to evaluate possibilities of legalization. Notably, Canada made worldwide headlines after it became the second nation ever to completely legalize cannabis in late 2018. To note, Uruguay was the first country to legalize cannabis when former President Jose Mujica signed a legislation to legalize recreational cannabis in 2013. Since then, more countries have moved to legalize cannabis for either medical or recreational use. For instance, major countries such as France, Germany, Australia, and South Korea adopted medical cannabis for specific conditions. Moreover, 11 U.S. states and the District of Columbia have legalized recreational use. The growing adoption is further accelerating the overall cannabis industry's growth. And as more countries continue to research the efficacy of cannabis, others are expected to be influenced and adopt a cannabis legislation. Recently, the Netherlands is possibly exploring legalizing cannabis production. The Netherlands is well known for its lenient laws regarding soft drug consumption, yet under federal regulatory laws, cannabis is still illegal. Nonetheless, adult consumers can purchase recreational cannabis in coffee shops, but products can still be confiscated by authorities. The Netherlands represents just one out of many countries looking into cannabis legalization. The collective effort from international governments to legalize cannabis will mold the broad industry into a thriving global powerhouse. According to data compiled by Verified Market Research, the global marijuana market was valued at USD 42.20 Billion in 2016. By 2025, the market is expected to reach USD 466.81 Billion while registering a CAGR of 35.3% from 2018 to 2025. Pasha Brands Ltd. (OTC: CRFTF) (CSE: CRFT), Canopy Growth Corporation (NYSE: CGC) (TSX: WEED), Cronos Group Inc. (NASDAQ: CRON) (TSX: CRON), Tilray, Inc. (NASDAQ: TLRY), Aurora Cannabis Inc. (NYSE: ACB) (TSX: ACB)
Generally, most countries receive imports from other countries that have legalized cannabis cultivation. For instance, Australia and the U.K. receive cannabis oil imports from Canadian licensed producers. However, more countries are pushing to legalizing cannabis production so they can grow their own supply without having to pay import duties. Most of the top global cannabis producers are based in Canada and have the power to grow tons of cannabis each harvest. However, the major drawback for large-scale cultivation is that the quality tends to lack. Large licensed producers are more focused on meeting the overall consumer demands rather than producing premium products. The lack of high quality products in the marketplace prompted smaller cultivators to grow 'craft cannabis'. Craft cannabis is the meticulous process of growing premium cannabis. Specifically, craft cultivators carefully inspect each individual plant to ensure its cannabinoid content is properly growing. Moreover, craft cultivators also avoid the use of artificial products that may damage the plant. The process of growing craft cannabis is an all natural procedure that uses the most painstaking techniques to grow top-shelf cannabis strains. The craft cannabis market has allowed smaller cultivators to thrive among competition against large-scale producers, creating a symbiotic relationship in the marketplace. Large-scale producers meet the demands of the overall consumers, while smaller producers target savvy and frequent consumers looking for a high quality product. "We are seeing more and more mainstream retail and branding strategies come into the space as the industry continues to evolve and mature. With the shift toward mainstream cannabis, a number of high-end marketing and brand firms are starting to enter the space to cater to the new consumer. Naturally, this has led, and will continue to lead, to the prevalence of more high-end products throughout the market," said Erik Knutson, Chief Executive Officer and Chairman of CanCore Concepts.
Pasha Brands Ltd. (OTC: CRFTF) (CSE: CRFT) is also listed on the Canadian Securities Exchange under the ticker (CSE: CRFT). Earlier last month, the Company announced that "its wholly owned subsidiary, BC Craft Supply Co. Ltd ("BC Craft"), has signed a supply agreement with Canada's first licensed micro processor, North 40 Cannabis ("North 40").
Founded by Gord Nichol in Nipawin, Saskatchewan, North 40 Cannabis received its micro-cultivation and micro-processing licences from Health Canada on July 26, 2019. Under the agreement with Pasha, North 40 will supply BC Craft with North 40's annual production, to be sold as dried flower and other cannabis products in Canada.
'I'm absolutely thrilled to have signed an agreement with a company like Pasha,' said Gord Nichol, founder of North 40 Cannabis. 'They have shown micro cultivators like me that they are dedicated to ensuring craft producers in Canada will flourish under legalization. I'm excited to move ahead and looking forward to our first harvest this year.' North 40 Cannabis will plant its first legal crop in August 2019 and harvest later in the fall.
With Canada's current licensed cannabis producers only able to supply an estimated 15 per cent of what Canadians are consuming, Pasha is optimistic that, in addition to its previously established supply agreement with Hearst Organic, this new supply agreement with a licensed micro cultivator and micro processor will help correct the cannabis supply imbalance and bring exciting new products to market. Each micro cultivator in Canada will be able to produce approximately 500 kilograms of cannabis per year, while each micro processor can process up to 600 kilograms of cannabis per year. Canada has tens of thousands of craft producers operating in the illicit cannabis market and Pasha's wholly-owned subsidiary BC Craft Supply Co. is focused on helping as many small farmers transition into the regulated market as possible.
'Signing this agreement with Canada's first micro processor is very significant as it affirms BC Craft's business model with not only the micro-cultivation market but also now with processors,' said Jason Longden, CEO of Pasha Brands in reaction to the news. 'North 40 has established a state-of-the-art cultivation and processing facility and we are proud to work with such an innovative team. This is simply the next step in fulfilling our goal of becoming the biggest producer of craft cannabis products in Canada and I'm confident North 40 will help us bring Canadians more of the cannabis that they're looking for.'
About Pasha Brands: Based in Vancouver, British Columbia, Pasha is a vertically integrated, prohibition-era brand house firmly rooted in BC's craft cannabis industry, which boasts an international reputation. With proven capabilities in cannabis cultivation, genetic research and development, product processing, and retail, Pasha is uniquely positioned in the new legal cannabis market through its network of hundreds of craft cannabis suppliers under the Pasha umbrella.
Pasha subsidiary, Medcann Health Products Ltd., is a Health Canada licensed cultivator and processor with a licence to sell medical cannabis products in Canada.
Pasha and BC Craft are also developing a craft cannabis campus, which is dedicated to bringing craft quality into the newly legal cannabis market in Canada. BC Craft is driven to assist craft growers in obtaining security clearance and licensing to grow as micro-cultivators, specializing in education and compliance to bring growers into the regulated cannabis supply market. Pasha's common shares trade on the CSE under the symbol "CRFT" and on the FSE under the symbol "ZZD". For more information, please visit www.pashabrands.com"
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Canopy Growth Corporation (NYSE: CGC) (TSX: WEED) is a world-leading diversified cannabis, hemp and cannabis device company, offering distinct brands and curated cannabis varieties in dried, oil and Softgel capsule forms, as well as medical devices through Canopy Growth's subsidiary, Storz & Bickel GMbH & Co. KG. Canopy Growth Corporation recently announced that it has received a licence from Health Canada for its KeyLeaf Life Sciences ("KeyLeaf") facility in Saskatoon, Saskatchewan. Including the Smiths Falls site and the recently licensed BC Tweed extraction site, Canopy Growth now operates three significant extraction assets to support the throughput required for large scale value-add product development. "With this milestone, we are executing against the vision of making strategic investments today in order to deliver results over the long term," said Mark Zekulin, Chief Executive Officer, Canopy Growth. "This licence will ensure we have the supply of extraction inputs for the medical, CBD, and recreational markets, especially the next generation of value-add, high margin cannabis products here in Canada."
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 has entered into a definitive agreement to acquire four of Redwood Holding Group, LLC's operating subsidiaries (collectively, "Redwood"). Redwood manufactures, markets and distributes hemp-derived cannabidiol (CBD) infused skincare and other consumer products online and through retail and hospitality partner channels in the United States under the brand, Lord Jones™. Redwood's products use pure hemp oil that contains natural phytocannabinoids and terpenes found in the plant. Redwood was co-founded in 2017 by Robert Rosenheck and Cindy Capobianco. Following the close of the transaction, Mr. Rosenheck and Ms. Capobianco will join Cronos Group and continue to lead the development of the Redwood platform with the support of the current team, brand names and operating locations remaining in place. "Rob and Cindy have built a differentiated, best-in-class platform with hemp-based CBD formulations that stand for quality and consistency. Our goal is to preserve the integrity of all Rob and Cindy have created, while also learning from them and leveraging Cronos Group's resources to capitalize on the significant demand for skincare and other consumer products derived from hemp. Leading the industry forward responsibly and being a part of the conversation with industry stakeholders remains a top priority for Cronos Group in this evolving area," said Mike Gorenstein, Cronos Group's Chairman, President and Chief Executive Officer.
Tilray, Inc. (NASDAQ: TLRY) is a global pioneer in the research, cultivation, production and distribution of cannabis and cannabinoids currently serving tens of thousands of patients and consumers in 13 countries spanning five continents. Tilray, Inc. recently announced it has entered into a definitive agreement ("the Agreement") pursuant to which Tilray, through a wholly-owned subsidiary of High Park Holdings Ltd. ("High Park"), will acquire all of the issued and outstanding securities of 420 Investments Ltd. ("FOUR20"), an adult-use cannabis retail operator headquartered in Calgary, Alberta. FOUR20 provides adult-use cannabis consumers with a premium retail experience focused on high quality product selection, education and community. FOUR20 currently operates six licensed retail locations and has 16 additional high-traffic locations secured in desirable locations in Alberta, including Canmore, Calgaryand Edmonton. Tilray and High Park will leverage FOUR20's retail expertise and brand and market knowledge to expand into other Canadian provincial markets where Licensed Producer retail ownership will be permitted in the future. "FOUR20 offers a premium retail experience for the mainstream cannabis consumer and builds on our broader retail strategy, which includes several minority investments in other leading cannabis retailers," says Tilray Chief Corporate Development Officer Andrew Pucher. "With FOUR20, we will elevate the retail experience for consumers by offering the best quality-tested products while preparing for the next wave of legalized product launches taking place by year's end."
Aurora Cannabis Inc. (NYSE: ACB) (TSX: ACB), headquartered in Edmonton, Alberta, Canada with funded capacity in excess of 625,000 kg per annum and sales and operations in 25 countries across five continents, is one of the world's largest and leading cannabis companies. Aurora Cannabis Inc. recently announced the completion of the previously announced plan of arrangement (the "Arrangement") with Hempco Food and Fiber Inc. ("Hempco") (TSX-V: HEMP) pursuant to which Aurora has acquired all of the issued and outstanding common shares of Hempco ("Hempco Shares") not already owned by Aurora, reflecting a valuation of approximately CAD 63.4 Million on a fully diluted basis. Hempco is now a wholly-owned subsidiary of Aurora. The Hempco Shares will be delisted from the TSX Venture Exchange, and Aurora will apply to the relevant securities commissions for Hempco to cease to be a reporting issuer under Canadian securities laws. "Aurora is defining the future of cannabis and hemp, globally," said Terry Booth, Chief Executive Officer of Aurora. "Through the addition of Hempco, we have assembled a world-class portfolio of high-quality hemp assets that together form the basis of a strong new operating division that will develop CBD-from-hemp around the world. Aurora Hemp brings together the cultivars, strategic partners, brands, and distribution networks to service medical, consumer, and wellness markets and further advances Aurora's entry into the US hemp food and hemp-derived CBD markets."
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