FinancialBuzz.com News Commentary
NEW YORK, May 29, 2019 /PRNewswire/ -- Before the surge of the recreational cannabis marketplace, cannabis was predominantly used for its medicinal applications. Before the early twentieth century, cannabis was used to treat conditions such as asthma, cough, migraine, insomnia, menstrual cramps, opiate withdrawal symptoms and even assist with birth labor pains. However, governments around the world deemed cannabis as unsafe due to its psychoactive properties and ultimately prohibited its use. Recently, however, U.S. states Colorado and Washington completely reshaped the industry as they became the first two states to fully legalize cannabis back in 2012. Following the two, Uruguay became the first nation to legalize cannabis entirely in 2013. Half a decade later, Canada joined Uruguay as the second nation and first G-7 nation to legalize cannabis for both recreational and medicinal use. Now, a string of countries have begun to explore opportunities within the industry as legalization efforts continue to ramp up. Predominantly, the cannabis sector is heavily comprised of the medical segment as medical cannabis is widely more accessible than its recreational counterpart, due to the favourable legislative stances many countries around the world have taken. However, the recreational segment primarily exists within the North American region. Nevertheless, consumers can enjoy recreational cannabis in countries where it is decriminalized, such as the Netherlands and Spain. Now, large investments from various public and private sectors are expected to fuel research and help develop and produce safer products for consumption, which, as a result, are expected to outpace sales of traditional flower. Overall, the collective growth factors are expected to shift the market share from largely medical to more recreational as the North American markets continues to propel forward. According to data compiled by Zion Market Research, the global legal marijuana market was valued at USD 16.71 Billion in 2017. By the end of 2024, the market is expected to generate revenue of around USD 62.96 Billion while growing at a CAGR of approximately 21% between 2018 and 2024. Canopy Rivers Inc. (OTC: CNPOF) (TSX-V: RIV), Cronos Group Inc. (NASDAQ: CRON) (TSX: CRON), Pyxus International Inc. (NYSE: PYX), Aphria Inc. (NYSE: APHA) (TSX: APHA), Curaleaf Holdings, Inc. (OTC: CURLF) (CSE: CURA)
Countries such as Australia, Argentina, Colombia, France, Germany, and the United Kingdom have all legalized cannabis for medicinal use. However, a select few of these countries strictly prohibit the cultivation of cannabis. Due to strict regulations, many are forced to receive imports from countries that allow cultivation as well as international distribution. Currently, the legality matter revolving around the cannabis industry heavily hinders the growth of the market. For instance, within the U.S., producers and distributors cannot transport cannabis across state lines because it is still considered a controlled substance. But, the transportation of cannabis is legal if the Company has obtained a special permit. On the other hand, if the Company hasn't obtained federal approval, it is forced to receive its supplies and grow only within state lines. Now, while certain regulations may impact companies' financials, a few actually benefit both the company and state as well. For example, taxes are essentially an investment for the cannabis industry and an economic booster for states as according to CannabisWire, Alaska generated over USD 11 Million in fiscal 2018 off tax revenue collected from 116 cultivators. Alaska's excise tax rate is USD 50 per ounce of flower or "bud" and USD 15 per ounce of any other part of the flower. Elsewhere, California implemented Prop 64 which directed where tax revenues would end up as California sales taxes, which accounted for 45% of the taxes in the first quarter of 2018, go directly into the state's general fund. Additionally, Prop 64 has set aside USD 10 Million annually for public university grants to research cannabis itself. Furthermore, the bill also provided USD 3 Million to California Highway Patrol to develop procedures to determine if a driver is under the influence; USD 2 Million to the University of California, San Diego for medical cannabis research; and USD 10 Million to develop a program to provide mental health and substance abuse treatments, job placement, medical care, and legal services affected by prior cannabis laws. "The legalization of cannabis in states like California and Colorado has led to state expectations in other states of a new source of revenue, especially financially strapped states," said Mark Friedlich, CPA, Senior Director at Wolters Kluwer. "However, it is not clear at this point how much of a revenue opportunity this will be for states. That will depend on many factors, such as the state's choice of taxable base, as well as competition from the black market, as well as neighboring states."
Canopy Rivers Inc. (OTC: CNPOF) (TSX-V: RIV) is also listed on the TSX Venture Exchange under the ticker (TSX-V: RIV). Earlier this week, Les Serres Vert Cannabis Inc., a subsidiary of Canopy Growth Corporation and a portfolio company of Canopy Rivers Inc. (TSXV: RIV; OTC: CNPOF) announced breaking news that it, "has received its final cultivation licence from Health Canada. All 700,000 sq. ft. of operating space at Vert Mirabel is now licensed for cannabis production. Vert Mirabel was established in December 2017 between Canopy Growth, Canopy Rivers, and Les Serres Stéphane Bertrand ("Bertrand").
'We are thrilled that the operational infrastructure at Vert Mirabel is now fully online with over 500,000 sq. ft. already in production,' said Olivier Dufourmantelle, Chief Operating Officer, Canopy Rivers. 'Vert Mirabel is a key asset for Canopy Rivers as it provides exposure to a commercially scaled source of locally grown, premium quality cannabis for distribution into Québec and across the country.'
The licence for Vert Mirabel increases the facility's growing space by 190,000 sq. ft. It brings Canopy Growth's total Canadian licensed production footprint to approximately 4.6 million sq. ft, another step towards its nearly 5.6 million sq. ft. national platform. The Vert Mirabel facility leverages Bertrand's multi-generational greenhouse operational expertise to produce high-quality cannabis.
'The final licence for Vert Mirabel strengthens our operations and will allow us to increase supply to meet the recreational market demand,' said Mark Zekulin, President and co-CEO, Canopy Growth. "From everyone at Canopy Growth, we congratulate the Bertrand's and their team for achieving a fully licensed, large-scale cannabis operation in under 18 months.'
Bertrand is a large-scale greenhouse operator and, prior to converting to cannabis, it was the largest producer of pink tomatoes in Canada. 'We are proud to announce that our venture with Canopy Growth and Canopy Rivers has reached this milestone,' said Stéphane Bertrand. 'Obtaining this licence will allow us to pursue our production goals in order to expand our footprint to meet the needs of the Québec market.'"
For our latest "Buzz on the Street" Show featuring Canopy Rivers Inc. recent corporate news, please head over to: https://www.youtube.com/watch?v=H9kciNx3qws
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 is expanding its global infrastructure network and innovation capabilities with the opening of a cannabinoid device R&D facility, based in Israel. The state-of-the-art facility supports Cronos Group's efforts to develop next-generation vaporizer products that are designed specifically for cannabinoid applications. Cronos Device Labs, which is equipped with an experienced team of product development talent, advanced vaporizer technology and analytical testing infrastructure, serves as the global center of R&D for the Company's vaporizer devices. The 23-member team at Cronos Device Labs, which brings to Cronos Group over 80 years of combined expertise in vaporizer development, is comprised of product designers, mechanical, electrical and software engineers, and analytical and formulation scientists. Cronos Device Labs significantly enhances Cronos Group's technology and development capabilities and is expected to enable the Company to deliver expanded product offerings to customers that are specially tailored to cannabinoid use. "The launch of Cronos Device Labs is an exciting next step on our journey to become a leader in cannabinoid innovation," said Cronos Group's Mike Gorenstein, Chairman, President and Chief Executive Officer. "Vapor is already one of the most popular forms of cannabis consumption, and we see a clear opportunity for Cronos Group to introduce the next-generation of vaporizer products designed specifically for cannabinoid formulations. With a deep bench of engineering, analytical, scientific and design talent already in place, we are confident that Cronos Device Labs will play an important role in positioning the Company for long-term success by enabling us to build innovative vaporizer products that resonate with our customers and generate shareholder value."
Pyxus International Inc. (NYSE: PYX) is a global agricultural company with 145 years' experience delivering value-added products and services to businesses and customers. Criticality, a North Carolina-based agricultural hemp company, recently announced the expansion of its consumer products under its brand name Korent with the launch of its line of cannabidiol (CBD) e-liquids. The announcement follows the brand's launch of CBD oils in December 2018. Criticality partners with Pyxus International, Inc., a provider of responsibly produced, independently verified, sustainable and traceable agricultural products, ingredients and services, to source, process and produce industrial hemp and hemp products under North Carolina's Industrial Hemp Pilot Program. The Korent e-liquids are featured in Mango Pineapple, Watermelon and Fresh Mint and come in two concentrations in each flavor – 600mg of CBD/60ml and 100mg of CBD/10ml. Additionally, a natural, unflavored booster is available for purchase in 100mg of CBD/10ml. These THC-free products feature flavors designed specifically to pair with, and enhance, Korent's CBD e-liquids, and are compatible with any open tank e-liquid module. "Korent's CBD products are expertly crafted and designed to help consumers effectively restore balance to their lives. Our new line of CBD e-liquids uses high-quality, verifiable ingredients," said Brian Moyer, Chief Executive Officer of Criticality. "Criticality provides unparalleled transparency into the production of our industrial hemp and hemp-derived products. The company's expertise in extraction and purification technologies enables us to produce superior hemp products that adhere to the highest quality standards."
Aphria Inc. (NYSE: APHA) (TSX: APHA) is a leading global cannabis company driven by an unrelenting commitment to our people, the planet, product quality and innovation. Aphria Inc. recently announced that its German subsidiary Aphria Deutschland GmbH had been awarded a fifth lot for the cultivation of medical cannabis in Germany as part of the Company's previously awarded license from the German Federal Institute for Drugs and Medical Devices ("BfArM"). The additional lot was provisionally awarded to Aphria Germany in April and was secured following a review by a German court, which affirmed the original decision by the BfArM. With this decision, Aphria Germany won the maximum output from the German tender process – a total of five lots – and stands as the only licensed producer in Germany with the permission to grow all three strains of medical cannabis approved by the BfArM. Aphria Germany is building its over 8,000 sq. m. indoor growing facility in Neumünster and is completing work on a state-of-the-art GMP-certified cannabis vault in Bad Bramstedt for the import of cannabis flowers and oil from Canada, Australia and Denmark. Aphria Germany also holds a 25.1% interest in Berlin-based Schöneberg Hospital, which provides access to both doctors and patients for education on the benefits of medical cannabinoids. The company also recently introduced CannRelief, a CBD-based nutraceutical and cosmetics product line for the German market, produced in the EU and distributed by CC Pharma, a subsidiary of Aphria with access to more than 13,000 pharmacies throughout Germany. "We are thrilled about our successful conclusion to the German tender process, which has awarded Aphria with the most comprehensive license in the country," said Hendrik Knopp, Managing Director of Aphria Germany. "This award affirms Aphria's leading position in the German medical cannabis market. Construction on our indoor cultivation facility continues to progress rapidly and we look forward to supplying Germany's first domestically-grown medical cannabis in early calendar 2020."
Curaleaf Holdings, Inc. (OTCQX: CURLF) (CSE: CURA) is the leading vertically integrated multi-state cannabis operator in the United States. Curaleaf Holdings, Inc. recently announced that it is sponsoring pioneering industrial hemp research being conducted by the University of Connecticut. The goal of the research is to help improve industrial hemp production levels and advance current cultivation processes. Findings have the potential to impact production in the medical cannabis industry. Through this partnership, Curaleaf has committed to providing funds to support researchers from the University of Connecticut's Department of Plant Science and Landscape Architecture. The multi-faceted project will focus on tissue culture work, tetraploid development and feminized seed for production, all of which serve as a foundation for seed breeding and improving current industrial hemp production processes. "We are thrilled to support research and education dedicated to advancing methods for hemp cultivation," said Greg Schaan, Curaleaf's Senior Vice President of Cultivation. "We are pleased to launch this partnership with the University of Connecticut and are eager to see the advancements that these studies will bring."
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