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NEW YORK, Aug. 14, 2019 /PRNewswire/ -- In February, the World Health Organization recommended that the United Nations remove pot and its key components from a list of highly-controlled substances under international drug treaties. Since then, there has been rapid development towards regulation and capitalization of pot-related industries, especially in Europe. Amidst reports that the CBD industry on the continent is exploding—with the Brightfield group projecting that in Europe the market will grow more 400% through 2023—there is remarkable room for growth in the CBD space. CBD cultivators and product manufacturers will have to move quickly to navigate existing regulation and produce nothing but the highest quality goods. By doing this, companies like StillCanna Inc. (CSE:STIL) (OTC:SCNNF), GW Pharmaceuticals (NASDAQ:GWPH), The Green Organic Dutchman Holdings Ltd. (TSX:TGOD) (OTCQX:TGODF), OrganiGram Holdings (TSX-V:OGI) (NASDAQ:OGI), and Tilray Inc. (NASDAQ:TLRY) will establish in Europe a lucrative and trustworthy market for CBD products.
"CBD is just starting to take hold in Europe, with both product availability and consumer awareness still quite limited, Brightfield Managing Director, Bethany Gomez, recently highlighted. "This is a great opportunity for developed brands to enter and expand through Europe with far less competition than we're seeing in the U.S."
Industry-Leading Cultivation and Extraction
StillCanna Inc. (CSE:STIL) (OTCPK:SCNNF) has taken this opportunity to heart by combining its proprietary strengths with a number of key acquisitions and initiatives. In May, the company acquired legacy Polish hemp company Olimax, a vertically integrated licensed cultivator, extractor, and formulator of CBD. This purchase makes StillCanna by far the largest hemp cultivators in Poland and, when combined with its Romanian facilities, one of the largest in all of Europe.
Because hemp has been legal to grow in Poland for years, the company quickly got to work seeding more than 3,700 acres (1,500 hectares) of Polish farmland with its EU-certified, high-CBD-content hemp.
Of note, StillCanna is one of only three companies on the continent that has its own proprietary and registered hemp seed. Furthermore, its varietal strain has a gestation period of just 45 days, meaning that the company can plant two crops a year on a number of its properties to increase cultivation capacity starting in 2020.
But this cultivation capacity is only half the story. On August 7, StillCanna (CSE:STIL) (OTC:SCNNF) begun harvesting its crops through its patented method, which during the harvesting process maintains optimum CBD levels. This leads into a two-stage extraction plan for the hemp once it has been harvested.
The first step involves the company's newest extraction facility in Poland called Nexus. Nexus has been optimized to produce over 1,230 kgs. of CBD isolate every month. StillCanna expects Nexus to be fully operational by Q4, allowing the company to begin fulfilling its delivery contracts.
The second step involves another CBD extraction facility, budgeted at an initial C$8.5 million to construct and equip with GMP certification which should be operational in 10 to 14 months. Named Horizon, this facility will be the technical culmination of knowledge gathered from the company's earlier facilities. Upon completion, it will be one of the most advanced, green, high-capacity facilities in the world, capable of producing more than 80 million grams of CBD per year.
By the end of this year, StillCanna will be able to produce up to 16 million grams of CBD, while next year it plans to double that number. By 2021 the company expects to be cultivating 12,500 acres and produce up to 60 million grams, with still plenty of room to grow beyond that.
Other Early Movers in the European CBD Market
Another company that is well-positioned to be a major provider of CBD products for Europe is GW Pharmaceuticals (NASDAQ:GWPH). The British-based company manufactures a CBD drug called Epidiolex which has already been prescribed to more than 12,000 patients. This has led GW Pharma to post net sales of $68.4 million during the last quarter and $101.9 million over the first half of 2019. The company has also seen positive results for its phase-three trial of the drug, which evaluated the effects of Epidiolex in patients with a rare and severe type of childhood epilepsy.
Meanwhile, The Green Organic Dutchman Holdings Ltd. (TSX:TGOD) (OTCQX:TGODF), which recently filed an application to join the NASDAQ, has been extending its already impressive reach into new corners of the European CBD markets. At the start of the year, its JV partner, Knud Jepsen, received cannabis business authorization from the Danish Medicines Agency. Then, in May, TGOD entered the German CBD market through its subsidiary, HemPoland. The Dutchman's premium CBD brand will soon be lining the shelves of German pharmacies.
Already ahead of the curve, OrganiGram Holdings (TSXV:OGI) (NASDAQ:OGI) burst into the European market last year when it invested in Serbian-based hemp and CBD producer Eviana Health Corporation (CSE:EHC). Due to the fact that Eviana is licensed by the EU, it has easy access to Europe, and because it is a vertically integrated company, it can ensure its CBD maintains a high quality along with every phase of production.
Most recently, Tilray Inc. (NASDAQ:TLRY) added nearly 50 acres of outdoor cultivation space to its holdings in Portugal, making for a total of just 60 indoor and outdoor acres in the country. Tilray will grow, harvest, and dry pot material for medicinal purposes at the site before transporting them to its manufacturing, processing and research space elsewhere in the country. The company plans to harvest its crop in the fall.
Europe-Focused Sales Offer Unique Prospects
In order to ensure that StillCanna (CSE:STIL) (OTC:SCNNF) capitalizes on its already prominent position in the CBD supply market, the company's founder Marc Crimeni relocated to Europe at the end of July to concentrate on bulk sales of CBD.
Noting that the European market for bulk CBD has been forecast to be "the largest in the world," Crimeni said that he is confident in his team members to handle management, agriculture, harvesting and extraction duties so that he can dedicate himself fully to sales.
This bodes well for StillCanna (CSE:STIL) (OTC:SCNNF), as the company's London-based anchor-customer, Dragonfly BioSciences, already increased its minimum monthly order from 50 kgs. of CBD per month to over 170 kilos per month starting in July. This deal is expected to generate $46 million in revenue for the company over the next three years.
GW Pharmaceuticals (NASDAQ:GWPH) is also already generating revenue from the new and exciting market, as it posted more than $100 million in net sales of its CBD drug Epidiolex in the first half of 2019. Likewise, The Green Organic Dutchman Holdings Ltd. (TSX:TGOD) (OTCQX:TGODF) can expect increased revenue from Europe as its CBD products enter the Danish and German markets.
Canadian pot companies OrganiGram Holdings (TSXV:OGI) (NASDAQ:OGI) and Tilray Inc. (NASDAQ:TLRY) are both poised to profit off the growing demand for CBD in Europe, though from opposite ends of the continent. The former invested in a hemp and CBD producer in Serbia, and the latter acquired almost 50 acres of medicinal pot cultivation space in Portugal.
As demand for CBD products in Europe continues to grow year over year, these are the companies expected to supply the continent. As they do, they will establish the industry standard for cost-effective production yielding high-quality goods.
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