Competition Heats Up in the Cannabis Market as Regulations Ease

FinancialBuzz.com News Commentary

NEW YORK, Aug. 20, 2019 /PRNewswire/ -- Since Canada fully legalized cannabis, over 200 businesses have obtained licensing approvals to operate cannabis-related activities. And while the number of Canadian-based businesses is rather minuscule compared to the 28,000 businesses in the U.S., Canada's legal market is continuing to accelerate and could witness a sizeable emergence of cannabis-based companies. Canada legalized cannabis completely in late 2018, but prior to then, recreational use was decriminalized. Medical cannabis had also been prominent in Canada since the early 2000s, but at the time, health officials only allowed the use of medical cannabis for specific conditions. However, due to the passage of cannabis legislation, Canadian consumers can now use cannabis freely for both medical and recreational purposes. Additionally, in an effort to accelerate its market growth, some Canadian provinces have decided to issue out more licenses to companies to meet the demands of consumers. For instance, Ontario's provincial government decided to issue 50 more licenses to cannabis stores starting in October this year. Moreover, in May 2019, Alberta pledged to issue out over 115 new licenses over a 6-month period. Now, with the acceleration of licensing approvals, Canada's market is primed to become a major global market driver. Furthermore, the overall North American region has already established itself as a leader within the cannabis market, outpacing every other global market. And according to data compiled by Imarc Group, the North American legal cannabis market is expected to reach USD 35 Billion by 2023 from USD 8 Billion in 2017. Additionally, the market is expected to register a healthy CAGR of 28% throughout the forecast period. Pasha Brands Ltd. (OTC: CRFTF) (CSE: CRFT), Tilray, Inc. (NASDAQ: TLRY), Cronos Group Inc. (NASDAQ: CRON) (TSX: CRON), Aphria Inc. (NYSE: APHA) (TSX: APHA), Sundial Growers Inc. (NASDAQ: SNDL)

As more businesses continue to obtain licenses to operate, the competition within the cannabis marketspace is rapidly growing. Businesses are required to adapt to the changing environment in order to flourish among heavy competition. In particular, there are several large Canadian-based licensed producers who dominate the industry, making it difficult for smaller and newer businesses to thrive. As a result, many small-scale producers have decided to engage in cultivating "craft cannabis." Craft cannabis is the result of artisanal profession of meticulously cultivating premium cannabis. Small-scale cultivators excel in craft cannabis because their growhouses are typically much smaller, allowing them to tend to each individual plant to ensure a high quality product. On the other hand, large cultivators are geared towards mass producing cannabis, meaning that most of their operations are automated by machinery. The major drawback with the use of machinery is that strains can lose their cannabinoid content and are also more likely to infect strains or destroy them by factors such as molding or bugs. The art of craft cannabis is a tedious process, but it allows smaller producers to compete against larger competitors. "Craft growers embody the genesis of this industry," says David Robertson Director of the Craft Cannabis Association. "Craft growers are the fountain from which modern knowledge and cultivars have issued forth to reignite the world's love of cannabis and we would not have any of these world changes without them."

Pasha Brands Ltd. (OTC: CRFTF) (CSE: CRFT) is also listed on the Canadian Securities Exchange under the ticker (CSE: CRFT). Earlier last week, 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"

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=DiuXVssrpos

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 12 countries spanning 5 continents. Tilray, Inc. recently announced that its wholly-owned subsidiary Tilray Portugal Unipessoal Lda. has received a standard manufacturing license and a Good Manufacturing Practices (GMP) certification, in accordance with the European Medicines Agency's (EMA) standards, for its Biocant Park manufacturing facility in Cantanhede, Portugal. This license and certification allow Tilray Portugal to manufacture and export GMP-certified dried cannabis as an active substance for medicinal products. Tilray's EU Campus in Portugal is a multi-faceted production facility that includes indoor, outdoor and greenhouse cultivation sites; research and quality control labs; as well as processing, packaging and distribution sites for medical cannabis and cannabinoid-containing medical products. To date, Tilray has invested approximately EUR 20 Million in the facility, which totals nearly 250,000 sq. ft. with additional room to expand. The site also serves as a hub supporting Tilray's clinical research and product development efforts across Europe. The Tilray EU Campus currently employs over 100 people, and that number is expected to double by the end of 2019, with production ramping up and multiple harvests anticipated in the coming months. An official ribbon-cutting ceremony celebrating the inauguration of Tilray's EU Campus was hosted in April 2019. "This licensing and certification marks a critical milestone for our growth in Portugal and Europe. We're proud to increase our international export capacity and are looking forward to exporting dried cannabis as active substances from our EU Campus to legal jurisdictions in the EU and other international markets," said Sascha Mielcarek, Managing Director, Europe. "The next phase of GMP certification will allow us to utilize the full capacity of our multi-faceted facility and continue to serve more patients in-need."

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 an agreement to acquire an 84,000 sq. ft. GMP compliant fermentation and manufacturing facility in Winnipeg, Canadafrom Apotex Fermentation Inc. ("AFI"). The state-of-the-art facility, which will operate as "Cronos Fermentation", includes fully equipped laboratories covering microbiology, organic and analytical chemistry, quality control and method development as well as two large scale microbial fermentation production areas with a combined production capacity of 102,000L, three downstream processing plants, and bulk product and packaging capabilities. As previously announced, Cronos Group has entered into a partnership with Ginkgo Bioworks, Inc. to produce cultured cannabinoids. Research and development under this partnership is progressing, and as associated milestones are hit, this new facility is expected to provide Cronos Group with the ability to produce cultured cannabinoids at a commercial scale with high-quality and high-purity. "This acquisition will provide the fermentation and manufacturing capabilities we need to capitalize on the work underway with Ginkgo once the milestones under that partnership are achieved," said Mike Gorenstein, Chief Executive Officer of Cronos Group. "Together with Ginkgo, we are bringing innovation and the power of biological manufacturing to the cannabis industry, aiming to allow for cannabinoid production at large scale and with greater efficiency than is currently possible with traditional cultivation and extraction. We continue to be very excited about the opportunities ahead." 

Aphria Inc. (NYSE: APHA) (TSX: APHA) is a leading global cannabis company driven by an unrelenting commitment to our people, product quality and innovation. Aphria Inc., through its subsidiary Aphria Deutschland GmbH, recently launched the Company's first CBD-based nutraceutical, the first product in its CBD-based cosmetics line for the German market. Featuring CBD derived from hemp, the CannRelief brand of products are being produced in the European Union and distributed by the Company's subsidiary, CC Pharma, which has access to more than 13,000 pharmacies throughout Germany. "We are excited to introduce our first brand of CBD products for the German nutraceutical and cosmetics market," said Jakob Ripshtein, President of Aphria. "Supported by our extensive distribution network through CC Pharma, CannRelief provides a natural extension to Aphria's growing business opportunities in the German medical cannabis market. We look forward to providing a full range of CannRelief CBD products this year."

Sundial Growers Inc. (NASDAQ: SNDL) proudly crafts pioneering cannabis brands to Heal, Help and PlayTM. Sundial Growers Inc. recently announced that it has received amendments to its Standard Cultivation and Standard Processing licences from Health Canada for an additional 115,000 sq. ft. of cannabis cultivation at its flagship facility in Olds, Alberta. The newly licensed space includes 34 additional purpose-built modular rooms for the cultivation of premium cannabis, almost doubling the total number of flowering rooms to 74 in Olds. "Our master growers and expert staff have successfully completed more than 150 harvests. We are very excited about the premium quality and industry leading yields our state-of-the-art facility in Olds is producing," said Torsten Kuenzlen, Chief Executive Officer of Sundial. "The additional flowering rooms will further accelerate our production capacity, allowing us to expand into more provinces and provide our high-quality cannabis to a wider consumer base."

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