For Early Success in Cannabis Look Outside the Box
11 Oct, 2017, 14:00 BST
LOS ANGELES, October 11, 2017 /PRNewswire/ --
- USA News Group News Commentary
USA News Group -To capture big gains prior to wide adoption and legalization in the marijuana space may require thinking a little outside the box or perhaps outside your geographical comfort zone.
But it could certainly pay off. Many top pot stocks are on the rise and up hundreds of percent as the cannabis market is booming.
Companies generating wide interest in this category include Canopy Growth Inc. (TSX: WEED) (OTC: TWMJF) MedReleaf (OTC: MEDFF), GW Pharmaceuticals (NASDAQ: GWPH) and Abattis Bioceuticals Corp. (CSE: ATT) (OTC: ATTBF)
The first obvious move is to focus on Canadian companies. While they operate mostly outside the U.S., many trade on U.S. exchanges.
Canada has already declared it is committed to legalize recreational sales of marijuana by July 2018 and its medical application has been legal there since 2010.
Canada's enormous projected demand for quality cannabis also signals a massive need for specialized testing, control quality and research.
Here Abattis Bioceuticals Corp. (CSE: ATT.CN) (OTCQB: ATTBF) is a standout that operates testing and research facilities licensed expressly for this purpose. ATT is setting up to become one of the country's pre-eminent cannabis testing, R&D and extraction technology companies.
The Largest Licensed Producer in Canada is Canopy Growth Inc. (TSX: WEED.TO) (OTC: TWMJF) with a CDN $1 Billion Market Cap., followed by, MedReleaf (OTC: MEDFF), the second largest supplier. MedReleaf's value is up 40% over the last four months alone.
Both companies are well positioned to service the Canadian market and are entering global markets for cannabis.
Another tact that could produce major returns in this sector is Pharmaceutical companies who are employing marijuana and its derivatives like GW Pharmaceuticals (NASDAQ: GWPH). This large UK-based pharma is looking to use cannabinoids from the cannabis plant to effect positive biologic changes.
ALL MARKETS GROWING
If there remained any doubt as to whether the marijuana markets are flourishing, just last week, Canada's most heavily populated province of Ontario's announced it plans to roll out 150 legal government run stores in the post-legalization climate.
This news gave rise to predictions of even greater demand and sent a new wave of enthusiasm.
The value being generated in the cannabis industry is very sizeable - heading for CAGR projected as high as 25% through 2025.
A just issued report by Arcview Market Research indicates North American sales are projected to top $20.2 billion by 2021, assuming the compound annual growth rate of 25%. The report includes Canada for the first time as it moves towards implementing legal adult use marijuana.
Accounting firm Deloitte estimates the Canadian market has a base retail value between $4.9 billion to as much as $8.7 billion. That rivals the size of the Canadian alcohol market, which is currently estimated at $5 billion annually.
North American marijuana sales grew by an unprecedented 30% in 2016 to $6.7 billion as the legal market expands in the U.S. and Canada.
Taken in perspective, all components of the cannabis market - from growth to testing, research, and medicinal application - are showing phenomenal expansion.
MORE DEMAND EQUALS GREATER INFRASTRUCTURE
Ontario's news reinforces the fact that the whole marijuana industry is going to need vastly increased production capacity, improved infrastructure and lot of independent firms doing testing, and research for improved extraction methods, and formulations.
Pot will to need to be certified and producers will need an accurate reading of the drug's potency, including the levels of the key medicinal components of cannabis, THC and CBD. This will require skilled and specialized third parties to test their product before it goes to market.
In all, the global market for cannabis testing market is expected to grow at a CAGR of 11.5%, culminating towards a $1.42 billion market by 2021.
ABATTIS IS WELL POSITIONED
New levels of regulation and demand for greater scrutiny puts research and testing companies like ATT at the forefront.
ATT is establishing multiple assets in its bid to become Canada's cannabis testing, formulation and extraction facility of choice.
The company has a full spectrum lab staffed with industry experts to ensure the quality standard required by producers and developers. Its subsidiary, Northern Vine Labs, is not going to be limited to testing. Instead, it will be focused on extraction and formulation.
Research will also become a critically important part of this industry as it expands.
Most of the companies in the cannabis space have entered through the producer's end of the business either in cultivation or some aspect of production and distribution. Canopy Growth and MedReleaf are perfect examples.
But research, formulations and delivering better quality products are quickly becoming paramount. The need to apply bioscience to the industry for the delivery of formulations and products that consumers want has created a large and potentially very profitable opening for those companies on the leading edge of the cannabis business.
Abattis Bioceuticals and its majority-owned subsidiary Northern Vine Labs could easily fill the bill. Its combined operations will be one of the most sophisticated, Health Canada licensed operations in the country with the potential to handle virtually all forms of Cannabis testing, R&D and extraction development.
Abattis, Canopy Growth, MedReleaf, and GW Pharmaceuticals all offer unique pathways to jump in on the still early cannabis trend. Pundits caution that there is a possibility of a "fall fall" as well. Reality is that great opportunities for rewards of often come joined with great risks.
POTENTIAL COMPARABLES
Canopy Growth Inc. (TSX: WEED.TO) (OTC: TWMJF)
The granddaddy of the corporate cannabis sector, Canopy Growth is the world's largest diversified cannabis company. Canopy boasts a wide offering of distinct brands and curated cannabis varieties in dried, oil and capsule forms. Most widely recognized is Canopy's subsidiary Tweed which is the world's most recognized marijuana production brand, as well as an industry educator. Accompanying Tweed in Canopy's portfolio is medical-grade cannabis producers Bedrocan Canada. In total, Canopy Growth's numerous state-of-the-art production facilities total over half a million square feet of GMP-certified indoor and greenhouse production capacity.
MedReleaf Corp. (OTC: MEDFF)
MedReleaf sets The Medical Grade Standard for cannabis in Canada and around the world. The first and only ISO 9001 certified cannabis producer in North America, MedReleaf is a R&D-driven company dedicated to patient care, scientific innovation, research and advancing the understanding of the therapeutic benefits of cannabis. Sourced from around the world and perfected in one of two state of the art facilities in Ontario, MedReleaf delivers a variety of premium products to patients seeking safe, consistent and effective medical cannabis.
GW Pharmaceuiticals (NASDAQ: GWPH)
GW Pharmaceuticals plc, a biopharmaceutical company, engages in discovering, developing, and commercializing cannabinoid prescription medicines using botanical extracts derived from the Cannabis plant. It operates through three segments: Commercial, Sativex Research and Development, and Pipeline Research and Development. The company markets Sativex, an oromucosal spray for the treatment of spasticity due to multiple sclerosis. It is also developing Sativex in Phase II trials in neuropathic pain. In addition, the company's product pipeline includes Epidiolex, which is in Phase III clinical development for the treatment of dravet syndrome, lennox-gastaut syndrome, tuberous sclerosis complex, and infantile spasms, as well as other product candidates in Phase I and II clinical development for the treatment of glioma, adult epilepsy, and schizophrenia. It primarily operates Europe, the United States, Canada, and Asia.
For a more in-depth look into ATT you can view the in-depth report at USA News Group: http://usanewsgroup.com/2017/10/09/the-upside-to-biotech-and-cannabis-2/
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USA News Group
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