NEW YORK, May 9, 2019 /PRNewswire/ -- In the early twentieth century, President Franklin D. Roosevelt signed the Marijuana Tax Act of 1937 which prohibited cannabis entirely. Prior to then, cannabis was primarily used as an herbal medicine to treat ailments. However, due to the biological nature of the THC or tetrahydrocannabinol compound, cannabis was deemed as a drug by prior administrations. By the early 1990s, a handful of states began to legalize cannabis for strictly medicinal purposes as California became the first state to do so back in 1996 with the approval of Proposition 215. After California's ruling, numerous states began to follow suit and also legalized medical cannabis. Then in 2012, the cannabis industry was completely reshaped after Colorado and Washington both legalized recreational cannabis. Now, there are 33 states that have legalized medical cannabis while 10 states and the District of Columbia have legalized recreational use as well. Following in its steps, a string of countries also began to legalize cannabis for medicinal purposes. Countries such as Argentina, Australia, Chile, Colombia, France, Germany, Spain, and South Korea have all implemented some form of cannabis legislation. Notably, Canada became the second country ever to legalize cannabis entirely in late 2018 after Uruguay was the first country to legalize cannabis back in 2013. Despite Uruguay's early adoption, the North American region still represents the largest global cannabis market. Specifically, U.S. states such as California, Colorado, and Washington are the primary market drivers because they collectively deliver billions of dollars in cannabis revenue every year. While cannabis is still federally illegal in the U.S., its growing advocacy and usage is causing the market to continue growing. According to Grand View Research, the global marijuana market is expected to reach USD 146.4 Billion by the end of 2025 while exhibiting a CAGR of 34.6% during the forecast period. Canopy Rivers Inc. (OTC: CNPOF) (TSX-V: RIV), Canopy Growth Corporation (NYSE: CGC) (TSX: WEED), Cronos Group Inc. (NASDAQ: CRON) (TSX: CRON), Aurora Cannabis Inc. (NYSE: ACB) (TSX: ACB), Aphria Inc. (NYSE: APHA) (TSX: APHA)
Currently, the medical cannabis sector accounts for the majority of the global market share. However, as the North American recreational market continues to prosper, the recreational sector is expected to overshadow its medical counterpart. Nevertheless, the medical sector is still thriving and is much more readily available around the world as most countries are not moving towards legalizing recreational cannabis because of its psychoactive properties. However, based on the economic growth on display in North America, some countries are beginning to explore opportunities for the plant. Furthermore, as clinical trials and research continue to advance, more countries will begin to consider adopting medical cannabis legislation. As of now, researchers have suggested that cannabis can effectively treat symptoms associated with medical conditions such as cancer, Alzheimer's Parkinson's, chronic pain, and epilepsy. Moreover, the positive data from clinical trials had resulted in the U.S. Food and Drug Administration approving its first cannabis-based drug, Epidiolex, to treat childhood epilepsy. Specifically, Epidiolex is a CBD-based drug, meaning it does not provide the consumer with psychoactive effects like its THC complement does. The FDA's approval of Epidiolex marks a historic milestone within the industry since it is the first time a government agency has recognized cannabis as a medicine. Additionally, the growth of the CBD marketplace is expected to complement that of the THC marketplace, causing a symbiotic industry. "On one hand, yes, it's really surprising to see this young industry be at such huge numbers so quickly—and still kind of pulling itself together—and on the other side, I don't think it's a surprise at all, because it's about time," said Lex Pelger, Science Director at Bluebird Botanicals, in an interview with Cannabis Dispensary. "With such a long human history of cannabis being an important plant, it makes sense that this is just exploding back onto the public consciousness like it does every couple (of) decades."
Canopy Rivers Inc. (OTC: CNPOF) (TSX-V: RIV) is also listed on the TSX Venture Exchange
under the ticker (TSX-V: RIV). Earlier today, the Company announced breaking news that, "its portfolio company PharmHouse Inc. ("PharmHouse") has entered into a second offtake agreement (the "Agreement") with Canopy Growth Corporation ("Canopy Growth") (TSX: WEED, NYSE: CGC) for the purchase of cannabis from its 1.3 million square foot greenhouse facility upon licensing. The Agreement commits an additional 20% of PharmHouse's flowering space to Canopy Growth for the next three years, in addition to the 10% that was originally committed in May 2018. The Agreement provides for the delivery to Canopy Growth of a minimum of 25,000 kg of cannabis per year and a maximum of 45,000 kg of cannabis per year.
'PharmHouse continues to show tremendous progress at the facility, and the joint venture is quickly developing as a key pillar for value creation and synergy within the Canopy Rivers portfolio ecosystem,' said Olivier Dufourmantelle, Chief Operating Officer of Canopy Rivers. 'Thanks to the collaborative contributions of our joint venture partners, the ongoing support and guidance of Canopy Rivers, and the strategic insight of Canopy Growth throughout the licensing process, we are excited to announce an incremental supply partnership that mutually benefits all three parties.'
This new supply arrangement provides PharmHouse with additional revenue visibility and financial de-risking for a significant portion of the expected production from the flagship facility. Canopy Rivers holds a 49% equity interest in the PharmHouse joint venture and has played an active role in sourcing and negotiating production and supply agreements, which now cover approximately 50% of expected annual output. The incremental 50% of output remains unencumbered for the development of PharmHouse's own suite of brands and products.
'This offtake agreement represents a significant step forward for PharmHouse. By effectively committing and selling 50% of our near-term cannabis production, we favorably position PharmHouse for the development of a proprietary suite of products and brands and/or the pursuit of incremental contract manufacturing agreements,' said Tony Abbas, General Manager of PharmHouse. 'The fact that we are executing yet another agreement with an industry titan like Canopy Growth sends a strong signal about the quality of our operations and the confidence in our team's ability to deliver.'
The 1.3 million square foot facility in Leamington represents the first stage of a planned global strategic relationship between Canopy Rivers and its PharmHouse joint venture partner, a company formed by the leading principals and operators of a North American agriculture conglomerate. The parties seek to leverage their relationship networks and respective strengths in cannabis, global commercial agriculture, marketing, and distribution to pursue regulated cannabis opportunities together on a global scale.
About PharmHouse: Formed by Canopy Rivers and a company formed by the leading principals and operators of a North American agriculture conglomerate, the PharmHouse joint venture operates out of an ultramodern 1.3 million greenhouse facility in Leamington, Ontario, constructed in 2017 using the latest in commercial agriculture technology and featuring state-of-the-art automation systems. Canopy Rivers, along with its PharmHouse joint venture partners, are actively upgrading and supplementing the facility in preparation for licensing. In January 2019, PharmHouse entered into a syndicated credit facility providing up to C$80 million of secured debt financing. PharmHouse has secured multiple offtake agreements for an aggregate 50% of the production capacity upon licensing.
About Canopy Rivers: Canopy Rivers is a unique investment and operating platform structured to pursue investment opportunities in the emerging global cannabis sector. Canopy Rivers works collaboratively with Canopy Growth Corporation (TSX: WEED, NYSE: CGC) to identify strategic counterparties seeking financial and/or operating support. Canopy Rivers has developed an investment ecosystem of complementary cannabis operating companies that represent various segments of the value chain across the emerging cannabis sector. As the portfolio continues to develop, constituents will be provided with opportunities to work with Canopy Growth and collaborate among themselves, which Canopy Rivers believes will maximize value for its shareholders and foster an environment of innovation, synergy and value creation for the entire ecosystem."
For our latest "Behind the Buzz" Show featuring Canopy Rivers Inc. corporate overview, please head over to: https://www.youtube.com/watch?v=tERoI09sarY
Canopy Growth Corporation (NYSE: CGC) (TSX: WEED) is a world-leading diversified cannabis and hemp company, offering distinct brands and curated cannabis varieties in dried, oil and Softgel capsule forms. In addition to Canopy Growth's news regarding its offtake agreement Canopy Rivers (OTC: CNPOF) (TSX-V: RIV) portfolio company PharmHouse, Canopy Growth Corporation and Acreage Holdings, Inc. (CSE: ACGR.U) (OTC: ACRGF) also recently announced news. Canopy Growth and Acreage have entered into a definitive arrangement agreement that grants Canopy Growth the right to acquire 100% of the shares of Acreage, with a requirement to do so at such time as cannabis production and sale becomes federally legal in the United States, subject to obtaining the requisite prior approval of the shareholders of each of Acreage and Canopy Growth, respectively, as well as the approval of the Supreme Court of British Columbia. The Companies will also execute a licensing agreement granting Acreage access to Canopy Growth's award-winning line-up of brands such as Tweed and Tokyo Smoke, along with other intellectual property. Once the Right is exercised, Acreage will become part of a leading global cannabis company with access to markets beyond the U.S. Until then, the two companies will continue to operate independently. "Today we announce a complex transaction with a simple objective. Our right to acquire Acreage secures our entrance strategy into the United States as soon as a federally-permissible pathway exists," said Bruce Linton, Chairman and Co-Chief Executive Officer, Canopy Growth. "By combining Acreage's management team, licenses and assets with Canopy Growth's intellectual property and brands, there will be tremendous value creation for both companies' shareholders."
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) had 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. "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."
Aurora Cannabis Inc. (NYSE: ACB) (TSX: ACB), headquartered in Edmonton, Alberta, Canada with funded capacity in excess of 625,000 kg per annum and sales and operations in 24 countries across five continents, is one of the world's largest and leading cannabis companies. Aurora Cannabis Inc. and EnWave Corporation recently announced that the companies had entered into a royalty-bearing commercial license agreement, providing Aurora with the exclusive rights to EnWave's patented Radiant Energy Vacuum (REV™) drying technology for the production of cannabis materials in the European Union, excluding Portugal. Aurora has also secured exclusive license options for both Australia and South America, excluding Peru, exercisable pursuant to minimum REV™ machine purchase order requirements. Additionally, Aurora has signed a non-exclusive sub-license to use REV™ technology in Canada. The companies furthermore announce that Aurora has placed a purchase order for two of EnWave's 120kW REV™ dehydration systems for its Aurora Sky and Aurora Sun facilities in Canada, as well as the intention to purchase a third 120kW REV™ dehydration system for its Aurora Nordic facility in Denmark within sixty days. The REV™ dehydration systems will be used to increase throughput of material for extraction and use in derivative cannabis products. Aurora has also acquired a 10kW pilot-scale REV™ machine for product development, protocol development and R&D.
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. recently announced that its German subsidiary Aphria Deutschland GmbH has been selected by the German Federal Institute for Drugs and Medical Devices ("BfArM") to receive a license for the domestic cultivation of medical cannabis. The provisional decision announced by BfArM is subject to a mandatory 10-day standstill period for public contracts, which permits unsuccessful bidders to challenge the decision before the final contract is signed. BfArM's decision would grant Aphria 5 of the 13 available lots, each with a minimum annual capacity of 200 kg. Since Germany's Cannabis as Medicines Act was enacted in March 2017, the country's growing medical cannabis needs, currently estimated at up to 40,000 patients, has been exclusively supplied by imports. Pending the successful completion of the Standstill, Aphria looks forward to supplying German patients with domestically-grown, high-quality medical cannabis. "Aphria is proud to have been selected as a successful applicant in the German tender process, a testament to our high production quality standards," said Hendrik Knopp, Managing Director of Aphria Germany. "The decision from BfArM is a validation of our strategic approach to supporting the German medical cannabis market, including with high-quality, domestic production to secure vital supply for patients. We are very pleased with our continued business momentum in Germany."
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