Smokers Turn to CBD as a Tobacco Alternative

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Sep 30, 2020, 09:00 ET

NEW YORK, Sept. 30, 2020 /PRNewswire/ -- The development of the cannabis industry has made new products accessible in the marketplace, causing sales and demand to grow. Notably, CBD is having a major impact on global markets because it offers a number of therapeutic benefits without the psychoactive effects of THC. There has also been a substantial growth in demand for cannabidiol (CBD) products around the globe in recent years, mainly in developed countries such as the U.S., France, Canada and the Netherlands. Part of the spike in interest can be attributed to the passage of the 2018 Farm Bill, which legalized production of industrial hemp, transforming it into a mainstream agricultural product. Shortly after, numerous categories of CBD products started to appear. Perhaps not surprisingly, hemp and CBD products are potentially stealing market share from other markets, such as tobacco for example. According to data provided by the Brightfield Group and published by Hemp Industry Daily, a survey of more than 5,000 CBD users in the U.S. reveals that 24% have used it to help quit smoking and quitters are often replacing cigarettes with either smokable hemp or vaping. Additionally, 41% of quitters have entirely replaced their tobacco with hemp CBD. Kaival Brands Innovations Group, Inc. (OTC: KAVL), Taat Lifestyle & Wellness Ltd. (OTC: TOBAF), 22nd Century Group, Inc. (NYSE: XXII), Green Thumb Industries Inc. (OTC: GTBIF), Aurora Cannabis Inc. (NYSE: ACB)

According to the World Health Organization (WHO), the leading global risks for mortality in the world are high blood pressure (responsible for 13% of deaths globally), tobacco use (9%), high blood glucose (6%), physical inactivity (6%), and overweight and obesity (5%). Nevertheless, the tobacco industry is a major market, and in some aspects, it is evolving to adapt to a new demographic. Next generation products, such as new forms of e-cigarettes and heated tobacco products, are coming in the market. These products are exhibiting technological innovation and change, which the tobacco industry has not experienced in many decades. Nevertheless, the attempts of governments to reduce tobacco consumption have seen mixed results. According to the WHO's report from last year, for the first time, the organization projects that the number of males using tobacco is on the decline, indicating a powerful shift in the global tobacco epidemic. Despite the optimistic numbers, progress in meeting the global target set by governments to cut tobacco use by 30% by 2025 remains off track.

Kaival Brands Innovations Group, Inc. (OTCQB: KAVL) announced earlier this week, "the formation of a new wholly-owned subsidiary, Kaival Labs, Inc., a Delaware corporation ("Kaival Labs"), that will own and develop the patent.

The U.S. patent and international patent applications protect the utilization and creation of controlled preparations of synthetic nicotine that are greater than 99.5% pure with specific ratios of (R, S, and R-S)-isomers for cessation purposes. As such, the product will meet the purity requirements described for nicotine in the United States of America's USP monograph.

Niraj Patel, CEO of Kaival Brands, sees incredible potential with the nicotine cessation patents and stated, 'The science behind these patents has discovered that within the nicotine molecule the S-isomers control the addictive properties, whereas the R-isomers control the beneficial qualities of the nicotine that a user enjoys. The exclusivity is that the patents allow us to control the specific ratios of each isomer in the final synthetic nicotine molecule we produce for cessation products. We can now create completely unique products for smoking cessation and nicotine addiction therapy that remain effective and satisfying for the user, but are free from nicotine's addictive traits.'

'Pursuant to the Agreement, Kaival Labs will own the patented science to create a pure, yet non-addictive synthetic nicotine for the development and production of smoking cessation and nicotine replacement therapy products. Tobacco-Free Nicotine (TFN) is a certified clean, pure, non-tobacco-derived synthetic nicotine, and a key ingredient in numerous products like nicotine patches, lozenges, gums, e-cigarettes, e-liquids and more,' Patel added.

Kaival Brands will acquire the patent and international patent applications for a total purchase price of $3 million from Next Generation Labs, LLC, ("NGL") the only specialized manufacturer of the patented TFN brand synthetic nicotine in the United States. NGL is to be paid upon two events: (i) a portion of the purchase price will be paid upon the completion of the Company's future public offering of its common stock; and (ii) the remaining portion of the purchase price will be paid upon the successful creation of any commercialized product utilizing the patents.

'Billions of smokers and tobacco users worldwide are looking for an answer and real solution to their nicotine addiction problems. Imagine patent-protected products, either approved pharmaceutically or made available over-the-counter, that offer a way to truly ease a user off their addictive cravings for nicotine without losing any of their accustomed benefits along the way. We are excited to develop these innovative patents and bring effective, enjoyable smoking cessation products to an expanding market, helping all nicotine users lead healthier and higher-quality lives,' expressed Patel.

According to a Global Smoking Cessation Market Analysis 2019, the smoking cessation market is projected to reach $63.99 billion by 2026, growing at a CAGR of 16.9% during 2018 to 2026. The study defines smoking cessation as the process of discontinuing tobacco smoking and includes products such as chewing gum, inhalers, lozenges, patches, sprays, and sublingual tablets and therapies such as nicotine replacement therapy (NRT), non-NRT therapy and e-cigarettes."

Taat Lifestyle & Wellness Ltd. (OTC: TOBAF) announced on September 22nd that its processing facility in Las Vegas, NV has received a large shipment of base material for Beyond Tobacco™, which is to undergo the Company's proprietary fourteen-step process after being trimmed and prepared for refinement, which is set to yield a net quantity of 3.2 tons of usable material. Subsequently, the finished Beyond Tobacco™ base material is to be transported to the Company's manufacturing partner for production of the first "distribution-ready" batch of Beyond Tobacco™. Under the terms of its agreement with the Company providing favourable pricing terms for producing Beyond Tobacco™, the Manufacturer's name cannot be publicized. The Company estimates a lead time of approximately six weeks for this batch of base material to be refined in-house and transported to the Manufacturer, with the Beyond Tobacco™ product packaged in the industry-standard "pack and carton" format and stored shipment-ready on pallets in the Manufacturer's warehouse.

22nd Century Group, Inc. (NYSE: XXII) announced on April 30th that the Company and North Carolina State University ("NCSU"), have completed successful research field trials that have validated new non-GMO (genetically modified organism) methodologies for reducing nicotine in tobacco plants. The research was partially funded by 22nd Century and was conducted by NCSU's Department of Crop and Soil Science with project oversight provided by 22nd Century's R&D team. "We are very pleased with the outcome of the research field trials completed in collaboration with NCSU, which demonstrate that non-GMO methodologies can be applied reliably to reduce nicotine levels in tobacco plants by up to 99%. To further validate our research, 22nd Century and NCSU will conduct larger scale and more extensive field trials in additional geographies," said Juan Sanchez Tamburrino, Vice President of Research and Development for 22nd Century.

Green Thumb Industries Inc. (OTCQX: GTBIF) announced on May 26th, the expansion of its retail footprint in Illinois with the opening of Rise Niles, the company's eighth store in Illinois and 45th in the nation, on May 28th. This is the third adult-use only store Green Thumb has opened in Illinois this year. The company has opened a total of six stores across the country year-to-date. "We are thrilled to open our eighth store in our home state of Illinois and look forward to being active community partners and good neighbors in Niles," said Green Thumb Founder and Chief Executive Officer Ben Kovler. "Our team remains nimble, diligent, and committed to fulfilling our responsibility for a safe and successful adult-use program in Illinois. We have continued to move forward through the ongoing COVID-19 crisis to provide jobs and much needed access to well-being through the power of cannabis during these difficult times, as demonstrated by the opening of Rise Niles, our fourth opening since the crisis began. Our retail team has pivoted quickly and efficiently as regulations evolve and we are profoundly grateful for their dedication and service to our customers."

Aurora Cannabis Inc. (NYSE: ACB) announced on May 28^th that it had completed the previously announced acquisition of Reliva, LLC a leader in the sale of hemp-derived CBD products in the United States for approximately USD 40 Million of Aurora common shares. The transaction also includes a potential earn-out of up to a maximum of USD 45 Million payable at Aurora's option in shares or cash contingent upon Reliva achieving certain financial targets over the next two years. Reliva is a leader in delivering high quality hemp-derived CBD products to consumers. Reliva has grown to become one of the largest retail CBD brands in the U.S. Supported through long-term partnerships with leading national wholesalers and retailers Reliva's products can be found in over 20,000 retail stores.

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