Cannabis Regulations Continue to Thaw Throughout the World
FinancialBuzz.com News Commentary
NEW YORK, July 24, 2019 /PRNewswire/ -- In recent years, the cannabis industry has witnessed immense support from countries across the world. Numerous national governments have their own unique perspective regarding the plant, however, most still have not moved to legalize cannabis because of the stigma surrounding its psychoactive nature. Nonetheless, cannabis has already tapped into several of the largest global markets. For instance, Canada became the first and only G-7 nation to legalize cannabis entirely in late 2018. Meanwhile, among the other G-7 nations, France, Germany, Italy, the United Kingdom and the U.S. have all adopted partial or full medical cannabis legislation. The only G-7 nation to not have adopted any form of cannabis legislation is currently Japan. Overall, many Asian countries enforce stricter regulations, which result in severe consequences if violated. As such, cannabis companies have not had much luck tapping into the Asian markets. However, South Korea and Thailand are two Asian nations that decided to take steps forward and dive into the cannabis industry. South Korea's medical cannabis program launched in early March and paved the way for select THC and CBD-based medication imports. In particular, Canopy Growth Corporation is among the several Canadian multinational firms looking to enter the South Korean market. Similarly, Thailand has moved to legalize medical cannabis, with many expecting the legislation to be implemented next year after Thailand's military-appointed National Legislative Assembly voted 166 to 0 in favor of legalizing medical cannabis. The profound movement stirring throughout Asia further highlights the impact that cannabis is making on a global scale. Moreover, ongoing international legalization efforts are expected to accelerate and further bolster the market in the near future. According to data compiled by MarketsandMarkets research, the cannabis market was valued at USD 10.3 Billion in 2018. By 2023, the market is expected to reach USD 39.4 Billion while registering a CAGR of 30.7% during the forecast period. Pasha Brands Ltd. (OTC: CRFTF) (CSE: CRFT), Canopy Growth Corporation (NYSE: CGC) (TSX: WEED), Cronos Group Inc. (NASDAQ: CRON) (TSX: CRON), Aphria Inc. (NYSE: APHA) (APHA.TO), HEXO Corp. (NYSE-A: HEXO) (TSX: HEXO)
ArcView Market Research and BDS Analytics highlight that the entry of big tobacco and large beverage producers into the sector is attributable to the potential growth in consumer spending. Moreover, the firms also note that the passage of the U.S. Farm Bill is a key factor in the global market's growth. Predominantly, the majority of the global cannabis revenue derives from the U.S. because of its early adoption. However, most of the large cannabis corporations are headquartered within Canada. At the end of 2018, the top five licensed producers in Canada reached a combined market capitalization of nearly USD 20 Billion. Notably, the five producers have all established international operations, supplying the various regions across the world with medicinal cannabis. Furthermore, as investments continue to pour in from other public or private sectors, licensed producers are expected to benefit greatly. Producers can use investment funds towards obtaining more licenses or expanding their facilities. In return, producers can obtain higher yields during each harvest. However, sometimes higher yields can interfere with the quality of the bud. As a result, more producers are using funds in order to tend to each individual plant to grow more potent and high quality strains as consumer demand continues to increase. In conclusion, Canadian consumers can expect cannabis supply to stabilize if licensed producers can overcome legal barriers. "If you look at the data from 2017, and you compare it to pace of production right now, you can see how licensed producers were stockpiling cannabis at a hectic rate," Armstrong said. "Something's definitely going on with getting supply to consumers, that's one of the possibilities, but I'm pretty sure this will all eventually get resolved."
Pasha Brands Ltd. (OTC: CRFTF) (CSE: CRFT) is also listed on the Canadian Securities Exchange under the ticker (CSE: CRFT). Earlier today, the company announced breaking news that, "it has signed an agreement with Great North Distributors, Inc. ("Great North"), Canada's first national sales broker for legalized adult-use cannabis, to distribute Pasha's craft cannabis products throughout Canada.
Through the newly formed partnership, Great North will give Pasha Brands access to its nationwide sales and distribution network, which includes experienced sales and marketing teams, established relationships with all government cannabis distribution boards, as well as coverage with Canada's numerous private retailers.
"Our agreement with Great North is very significant for a variety of reasons," said Jason Longden, CEO of Pasha Brands. "Through BC Craft Supply Co., small craft producers throughout Canada will now have nationwide sales representation for their world-famous craft products – without ever having to make a sales call. The Great North leadership team's experience in the wine and spirits sector translates well into the newly established Canadian cannabis industry and is of great value as we look to build our business throughout Canada."
Established by the owners of Southern Glazer's Wine & Spirits, the world's preeminent distributor for beverage alcohol, Great North has reach across every province in Canada, including established relationships and expertise in working with provincially-owned and operated retailers and private retailers. Great North applies industry-leading data analytics capabilities from the wine and spirits industry to the new cannabis industry, providing suppliers with a powerful data-driven approach to cannabis sales.
Doug Wieland, Executive Vice President and General Manager of Southern Glazer's Wine & Spirits of Canada and Great North Distributors, provided insight into the decision to partner with Pasha Brands, saying, "Having spent the past year meeting the Pasha team and craft producers in BC Craft Supply Co.'s supply chain, we believe that the next big move in Canada's cannabis sector will be craft products. We look forward to bringing these products to market in a timely and accessible fashion and can't wait to see how Canadians react to this highly coveted class of cannabis products."
With a proven track record of performance and driving sales from coast-to-coast, Great North will ensure that Pasha Brands, its subsidiaries and their products will be well-represented at cannabis retailers across the country. Great North's established cannabis sales team has been operational pre-legalization and will be responsible for selling Pasha's growing portfolio of brands and products to Canadian cannabis retailers.
Under the agreement, BC Craft Supply Co. will purchase cannabis products from licensed micro-cultivators for processing and sell the finished products through provincial and territorial government distribution systems in Canada.
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 license 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"
For our latest "Buzz on the Street" Show featuring Pasha Brands Ltd. recent corporate news, please head over to: https://www.youtube.com/watch?v=bhaATntJ52Y
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 new license from Health Canada permitting it to grow cannabis at an outdoor site in northern Saskatchewan. Hours after receiving the licence, the first cannabis cuttings were planted at a 7 million sq. ft. (160 acres) secure cultivation field in the province. The new license expands Canopy Growth's diversified Canadian footprint and complements its existing indoor and greenhouse facilities to provide a leading balance of facilities to produce low-cost input materials for value-add products while ensuring more sophisticated growing operations for in-demand flower products. "Our team has outdoor, at-scale cannabis expertise gained from over a decade of hemp farming experience, including Canopy's 4,000-acre hemp operation executed last year, the extract of which is bolstering our CBD supply for the medical and recreational markets," said Mark Zekulin, President and Co-Chief Executive Officer, Canopy Growth. "At this stage in the summer planting season we view this as a pilot and ramp up project for outdoor cannabis cultivation, though the team will do everything it can to deliver low cost yields this year."
Cronos Group Inc. (NASDAQ: CRON) (TSX: CRON) is a globally diversified and vertically integrated cannabis company with a presence across five continents. Cronos Group Inc. recently announced that the CAD 2.4 Billion equity investment in the Company by Altria Group, Inc. (NYSE: MO) has closed. As previously announced, Altria's investment represents an approximate 45% ownership interest in Cronos Group. Altria also has a warrant to acquire additional ownership in Cronos Group, which is exercisable over the next four years. If exercised in full today, the warrant would increase Altria's ownership in Cronos Group to approximately 55% and provide Cronos Group with additional proceeds of approximately CAD 1.4 Billion. "We are delighted to close this transaction and kick-off a relationship that we expect to lead to significant growth and value creation," said Mike Gorenstein, Cronos Group's Chairman, President and Chief Executive Officer. "Altria's investment and the services they will provide to Cronos Group will enhance our financial resources, and allow us to expand our product development and commercialization capabilities, and regulatory expertise to better position Cronos Group to compete, scale and lead the rapidly growing global cannabis industry. We look forward to the many opportunities we expect this relationship to create."
Aphria Inc. (NYSE: APHA) (APHA.TO) is a leading global cannabis company driven by an unrelenting commitment to our people, product quality and innovation. Aphria Inc. recently announced that it had expanded the scope of its previously announced agreement expanding the territory where Aphria has been granted exclusive preferred rights to license, manufacture, distribute and sell RDT's QuickStrip™ innovative, proprietary delivery technology for the cannabis market to Germany. RDT's proprietary QuickStrip™ technology is a Quick, Convenient, Precise, Discreet™ oral fast-dissolving drug delivery system that offers a smoke-free choice to consumers. Aphria expects to produce and distribute CBD-only Quickstrips™ in Germany by Spring 2019. "Germany is one of the most sought-after cannabis markets today, and Aphria continues to take a comprehensive approach to ensure a leading presence in the country as the opportunity evolves," said Jakob Ripshtein, President of Aphria. "Aphria is committed to bringing advanced products and innovations to cannabis markets around the world, and this agreement with RDT will enable us to bring QuickStrip™ technology to the German market and offer a unique nutraceutical product that delivers a consistent dosage."
HEXO Corp. (NYSE-A: HEXO) (TSX: HEXO) is an award-winning consumer packaged goods cannabis company that creates and distributes prize-winning products to serve the global cannabis market. HEXO Corp and Newstrike Brands Ltd. ("Newstrike") (TSX-V: HIP) recently announced that they have entered into a definitive arrangement agreement (the "Arrangement Agreement") under which HEXO will acquire, by way of a plan of arrangement under the Business Corporations Act (Ontario), all of Newstrike's issued and outstanding common shares in an all-share transaction valued at approximately USD 263 Million (the "Transaction"). The Transaction gives HEXO the capacity to produce approximately 150,000 kg of high-quality cannabis annually. The Transaction also provides HEXO access to four cutting-edge production campuses totalling close to 1.8 million sq. ft. of near-term cultivation space and diversified growing and production techniques. This is in addition to HEXO's 579,000 sq. ft. facility for a manufacturing and product development centre of excellence in Belleville, Ontario. Combined, HEXO and Newstrike have established distribution agreements in 8 provinces including Ontario, Quebec, British Columbia, Alberta, Saskatchewan, Manitoba, Nova Scotia, and Prince Edward Island, allowing broad consumer access to HEXO's products across Canada. Newstrike's licensed indoor facility provide HEXO with access to diversified growing techniques and positions HEXO for flexibility for international exports as global cannabis markets continue to open. "We're thrilled to welcome the Newstrike team into the HEXO family. Jay Wilgar (Chief Executive Officer of Newstrike) and his team have built incredible relationships, including teaming up with The Tragically Hip, and they share HEXO's vision of bringing exceptional branded cannabis experiences to adults everywhere," said Sebastien St-Louis, Chief Executive Officer and Co-Founder of HEXO Corp "With Newstrike, we're adding talented employees and infrastructure to take HEXO to the next level on our journey to become one of the largest cannabis companies in the world. We're extremely proud of our record of execution, and today are committing to achieving over USD 400 Million in net revenue in 2020."
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