Alternative Cannabis Based Products Gain Traction in a Crowded Marketplace
FinancialBuzz.com News Commentary
NEW YORK, June 27, 2019 /PRNewswire/ -- The medical cannabis marketplace has been around for quite some time in the North American region. Notably, California was among the first regions to legalize medical cannabis back in the 1990s. Following California, several more U.S. states such as Oregon, Alaska, Washington and Maine legalized medical cannabis as well. Now, more than half the U.S. has legalized cannabis for medical purposes and Canada had moved to legalize medical cannabis for specific medical purposes back in 2001. Health Canada split medical patients into two different categories based on their medical diagnosis: Category 1 patients are eligible for a medical cannabis prescription if they suffer from severe pain, muscle spasms, anorexia, weight loss, nausea from cancer, HIV/AIDS, and epilepsy. Meanwhile, Category 2 patients are those who have debilitating symptoms of medical conditions, other than the ones listed in Category 1. Typically, most patients are prescribed with cannabis in the form of flower, which is usually smoked via joints or other paraphernalia. However, as the industry continued to evolve, new products have emerged within the marketplace. Nowadays, traditional flower is quickly becoming outdated as more consumers are demanding alternative products. Predominantly, concentrates and extracts are quickly becoming favorites among consumers because of their high potency and immediate effectiveness. Yet, making potent concentrates or extracts still requires high-quality strains, meaning there is still an underlying demand for flower. Nevertheless, the Canadian government has imposed regulations and certain restrictions on cannabis-based products, despite having fully legalized adult-use cannabis in 2018. These emerging products are expected to deliver annual revenue of more than CAD 2.5 Billion and generate higher profits for retailers than cannabis products that are already legal, according to Deloitte's annual cannabis industry report, such as regular flower. Additionally, while concentrates and extracts are gaining popularity swiftly, Deloitte expects edibles to make up the majority of the market share for emerging products, as Canadian companies are hastily competing against one another to dominate in the next wave of legalization. Pasha Brands Ltd. (OTC: CRFTF) (CSE: CRFT), Cronos Group Inc. (NASDAQ: CRON) (TSX: CRON), Aphria Inc. (NYSE: APHA) (TSX: APHA), Organigram Holdings Inc. (NASDAQ: OGI) (TSX-V: OGI), Neptune Wellness Solutions Inc. (NASDAQ: NEPT) (TSX: NEPT)
Certain Canadian provinces, such as Ottawa, are already finalizing their regulations in anticipation of the legalization of alternative cannabis products. Health Canada did not release any further comments on the matter, however, the Canadian federal government noted that the legalization of edibles, extracts, and topicals will become legal "no later than October 17th, 2019." Deloitte also expects more first-time users to end into the industry and try cannabis for the time following the legalization as cultivators and producers are beginning to ramp up operations in efforts to create a large inventory for the future. For instance, large scale cultivators have the ability to grow tons of cannabis flower each harvest, allowing them to meet the escalating consumer demand. However, the major drawback to large-scale cultivation is the lack of quality in the buds. Generally, mass growing will only control environmental factors such as air quality, humidity, and irrigation. Moreover, growers may also spray harmful chemicals such as pesticides, insecticides, fungicides, rodenticides, and other repellents to prevent an infestation. And due to legal sales, retailers are mandated to list the specific chemicals the plant was treated with. Planet Natural Research Center uncovered that two of the more commonly used compounds include myclobutanil, a fungicide which is known to cause negative reproductive effects on test animals, and imidacloprid, a neurotoxin that has been linked to causing eye irritation, dizziness, and vomiting among farmers who apply it to crops. Furthermore, when myclobutanil is heated, it releases hydrogen cyanide, a severely toxic gas. Even though some pesticides are known to be harmful to consumers, no one has done anything regarding the matter because there's a lack of research within the field. As a result, small-scale cultivators have taken on the profession of creating "craft cannabis." Traditionally, craft cultivators avoid the use of harmful chemicals and other artificial byproducts to create a more natural plant. Since craft cultivators don't use pesticides or other repellants, they are required to tend to each and every single plant to ensure there are no issues or infestations. And while it may be a more tedious procedure, craft cultivators can ultimately produce a more natural. high-quality cannabis plant, allowing even the smallest cultivators to stand out among the competition. Additionally, craft cannabis can generally have a higher price point when compared to standard strains, but consumers are willing to pay more for a cleaner and premium product. "The federal government's Task Force on Cannabis Legalization and Regulation, released in late 2016, did a great job of consulting a variety of cannabis sector stakeholders, including small producers who have formed the backbone of Canada's successful medical cannabis program since 2001. Citing the advantages of encouraging market diversity, the report recommended production controls that would create space for craft cannabis production and prevent the development of monopolies or large conglomerates," according to Barinder Rasode, Grow Tech Labs for The GrowthOp.
Pasha Brands Ltd. (OTC: CRFTF) (CSE: CRFT) is also listed on the Canadian Securities Exchange under the ticker (CSE: CRFT). Yesterday, the Company announced the, "addition of three well-respected cannabis experts to the growing Pasha family: Scientific researcher Dr. Cris Felipe Alves, second-generation cultivator and consultant Travis Lane, and lifelong cultivator Kemal Morris.
As a solution provider to the craft cannabis industry, Pasha subsidiary BC Craft Supply Co. Ltd. ("BC Craft Supply") aims to provide cannabis farmers with the tools to transition to new regulations governing the micro-cultivation licence category. These experts will assist farmers in making that transition.
'I'm thrilled to have these experts join our team, and, with their support, I look forward to disrupting the market with craft products that will help solve Canada's ongoing supply chain issues,' said Patrick Brauckmann, Executive Chairman of Pasha Brands. 'With these additions to the Pasha family, I'm confident that enthusiasm for craft products will continue to grow.'
Dr. Cris Felipe-Alves has worked in academic and commercial settings in Australia, Asia, and North and South America, and holds a B.Sc in Biological Sciences from the University of Brasília, and a PhD in Molecular Biology and Biochemistry from Nagoya University. While working as a senior scientist at a global diagnostics company, he led a team of researchers from discovery to R&D and sales of molecular tools designed to detect cancers non-invasively. During this time, he became interested in the potential for cannabis as a curative agent against several types of cancer. Since then, he has worked as an extraction specialist and a Quality Assurance Manager. He will act as the Senior Quality Assurance Person at BC Craft Supply.
'Here at Pasha, I feel at home and am proud to be part of a brand house that has a focus on craft products,' said Dr. Felipe-Alves. 'I look forward to helping Pasha generate safe and efficient cannabis-based products that suit the needs of both recreational and medical consumers both in Canada and around the world.'
Renowned cultivator and consultant Travis Lane has been growing cannabis for more than 20 years. An organic, living-soil-based cultivator who has advocated for the facilitation of pesticide-free, sun-grown cannabis production, Lane has been involved in the founding of numerous small cannabis businesses over the last decade, including a successful chain of storefront dispensaries, a thriving online mail order service, and was a founding partner in one of the most successful hydrocarbon extraction brands in the country. Under legalization, Lane has divested from the illicit market to focus on multiple Cannabis Act license applications, as well as his work with Groundwork Consulting, focused on government relations and licensing for cultivation and retail, and Levity Solutions, a multi-purpose cannabis consultancy focused on assisting aspiring legal cultivators. He will act as a consultant for Pasha Brands and its subsidiaries.
'The level of talent and expertise that exists in the prohibition-era marketplace is beyond impressive,' said Lane. 'These long-time innovators will represent a huge market factor once licensed, and I am proud to help Pasha facilitate this next wave.'
Kemal Morris is a lifelong cultivator who has had his hands in the soil 'since before he could walk'. He watched his parents grow their own food –and cannabis– on Saltspring Island, British Columbia. Soon after Canada launched its first medical cannabis program in 2001, he spent 14 years learning the intricacies of breeding and extract production. In addition, Morris has spent the last four years launching a prominent Canadian Licensed Producer. He is passionate about patients and has connected hundreds of struggling patients with medicine. As the Master Grower for Pasha Brands' owned Vancouver Island Licensed Producer, MedCann, Morris will act as facility designer, cannabis expert, educator and facilitator.
"After completing a four-year term in the regulated industry, I am excited to work with Pasha," said Morris. "I finally have the opportunity to share all that I have learned with the cannabis enthusiasts I came up with, and I'm proud to be part of a company that is breaking the big business mold – affording a rightful place to the people who risked everything to create this thriving industry.'
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". For more information, please visit www.pashabrands.com"
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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 has entered into a multi-year supply agreement with MediPharm Labs Corp. (TSX-V: LABS) (OTCQX: MEDIF). 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, product quality and innovation. Recently, Aphria Inc. has completed its first transfer of plant cuttings from four of the Company's cannabis strains to Denmark-based Schroll Medical ("Schroll"), as part of the Company's previously announced Strategic Partnership (the "Partnership") with Schroll. The shipment was completed under permits issued by the relevant health authorities, including an export permit from Health Canada, an import permit from the Danish Medicines Agency and a phytosanitary certificate from the Canadian Food Inspection Agency. As previously announced, Aphria will handle the worldwide distribution of medical cannabis produced by the Partnership, which is anticipated to be made available to markets across Europe as medical cannabis markets develop. Aphria plans to complete a second shipment of additional strains to Schroll in the coming months. "We are pleased to introduce the first four Aphria strains to be produced in Europe, through our strategic alliance with Schroll," said Hendrik Knopp, Managing Director of Aphria Germany, who is overseeing the Partnership on behalf of Aphria and Schroll. "This marks another important milestone for Aphria as we extend our leadership position in the European market, and it gives me joy to be able to say today that we literally have a good thing growing in Europe."
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."
Neptune Wellness Solutions Inc. (NASDAQ: NEPT) (TSX: NEPT) specializes in the extraction, purification and formulation of health and wellness products. Neptune Wellness Solutions Inc. recently announced that it had received its license to process cannabis from Health Canada. The Health Canada license enables Neptune to handle dried cannabis, to manufacture and purify cannabis extracts and cannabis oil, and to sell its services to other license holders. With production activities anticipated to commence shortly at Neptune's 50,000 sq. ft. good manufacturing practice (GMP)-certified facility in Sherbrooke, Quebec, the Company expects to be able to generate revenues from existing supply agreements and conclude additional agreements shortly. "This is a thrilling moment for Neptune as our ambition to redeploy our core competencies to exciting consumer product categories by creating and delivering differentiated formulations for the burgeoning cannabis market becomes a reality. Neptune's long-standing scientific expertise in the formulation of natural health products supports our ability to deliver exceptional quality formulations for our business customers. The processing license granted by the agency puts us on a new growth trajectory, positioning Neptune as a provider of extracted cannabis products in this large, growing global market segment," said Jim Hamilton, President & Chief Executive Officer of Neptune.
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