Spending on Cannabis Continues to Grow in Legalized Regions

FinancialBuzz.com News Commentary

NEW YORK, Nov. 14, 2019 /PRNewswire/ -- Due to various recent regulatory changes, the cannabis industry is slowly evolving out of the black market and morphing into a global economic powerhouse. While cannabis still remains heavily regulated in most regions around the world, a handful of countries have moved to legalize cannabis for either medical or recreational use. Notably, only Canada and Uruguay have completely legalized cannabis yet it is the U.S. that accounts for the majority of the global market share. In fact, the U.S. is the largest individual market primarily because of its massive addressable market as well as its early adoption. To note, the U.S. has not federally legalized cannabis, but instead gave states the jurisdiction to decide for themselves. Consequently, 11 states and the District of Columbia moved to legalize recreational cannabis, while more than half the country approved medical cannabis use. In particular, California was the first state to adopt medical cannabis back in 1996. And shortly after, Oregon, Alaska, and Washington joined California and legalized medicinal cannabis in 1998. However, Colorado and Washington completely reshaped the entire industry after the two states moved to legalize recreational adult-use in 2014. By 2015, Colorado reported total cannabis sales of USD 995.59 Million, while Washington reported total sales of USD 486 Million. Meanwhile, Canada reportedly sold approximately USD 1.1 Billion worth of cannabis in the past 12 months, according to Cannabis Benchmark. Moreover, Canada recently launched its "Cannabis 2.0" program, which legalized additional cannabis products such as edibles and beverages. Now, the rapidly growing North American market is anticipated to push the global cannabis industry into mainstream markets. And according to data compiled by Ahead Intel, the global cannabis market was estimated at USD 14.5 Billion in 2018. By 2025, the market is expected to reach USD 107.67 Billion, exhibiting a CAGR of 33.17%. Pasha Brands Ltd. (OTC: CRFTF) (CSE: CRFT), HEXO Corp. (NYSE: HEXO) (TSX: HEXO), OrganiGram Holdings Inc. (NASDAQ: OGI) (TSX: OGI), The Green Organic Dutchman Holdings Ltd. (OTC: TGODF) (TSX: TGOD), Emerald Health Therapeutics Inc. (OTC: EMHTF) (TSX-V: EMH).

The North American region has remained the largest and fastest growing global market segment. Additionally, throughout a seven-year forecast period, the region is expected to continue its dominance and register a CAGR of 26.92%. Meanwhile, the European region is expected to be the second leading market due to increasing government support, expected recreational and medical legalization, and a supportive regulatory environment. Specifically, the global cannabis market is primarily being accelerated by the medical sector. Now, more and more countries are beginning to evaluate the potential use of cannabis for medical applications to treat a variety of conditions such as cancer, Alzheimer's, Parkinson's, epilepsy, and multiple sclerosis. However, industry experts are also forecasting the recreational sector to overtake the medical sector in terms of market share. To note, the recreational sector is expected to be predominantly driven by the North American sector despite the number of global regions that have decriminalized cannabis. Subsequently, the developing recreational market is expected to create a substantial economic opportunity and suppress the illicit black market. Additionally, the legalization of recreational cannabis is also projected to increase the number of jobs and restructure law enforcement tasks and expenses. Nevertheless, the recreational sector is threatened by the massive global black market as it still maintains its dominance in legal regions because it is much more accessible and cheaper than legally purchased products from dispensaries. The downside is that consumers typically do not know where their product comes from, or who has had a hand in its production. On the other hand, the legal cannabis industry has strict regulations that compel licensed cultivators to disclose the growing process as well as products used during the farming process. Notably, "craft cultivators" have become increasingly popular for their organically grown cannabis. The craft cannabis moniker encapsulates various premium-grade strains that are wholly organic. Specifically, craft cultivators avoid using artificial practices such as pesticides or genetic modifications. As a result, strains are much more natural and retain more cannabinoids, thus creating a highly potent end product. "Consumers already look at marijuana as a more 'natural' product so don't pay as much attention to growing methods as they might at the grocery store," says Anthony Franciosi, head grower at Colorado's Honest Marijuana Company. "That thinking is dangerous, because it's more important to make sure the things you smoke are organic than the things you eat."

Pasha Brands Ltd. (OTC: CRFTF) (CSE: CRFT) is also listed on the Canadian Securities Exchange under the ticker (CSE: CRFT). Earlier this week, the Company announced breaking news that it, "expects nation's first micro-cultivator harvest next month.

While the large-scale licensed producers continuing to experience pressure in the market, Pasha's approach looks to solve both industry and consumer issues by bringing small-scale growers into the legal marketplace. Pasha has signed supply agreements with over 100 micro-cultivator applicants, including the first five micro-cultivators licensed by Health Canada. North 40 in Saskatchewan, Hearst in Ontario, and Canandia in BC are all expected to harvest before the end of December.

"Craft" is a word often thrown around in this new industry, but it is one that Pasha embodies through meaningful relationships with some of the country's most recognized brands. But what makes cannabis "craft" has less to do with reputation and more to do with the care and attention to detail with which these plants are cultivated.

'To me, craft cannabis is about quality over quantity, and a more individualistic approach to cultivation,' said Jamie Shaw, Chief Communications and Culture Officer at a Pasha Brands. 'It's the whole reason our model exists, allowing the grower to stay autonomous and avoiding large plant-to-grower ratios. This allows them to function independently and ensures a move away from big-box, cookie-cutter production,' she added.

The Founder of North 40 Cannabis, Gord Nichol, explains the mindset this way, "having Pasha's support has allowed me to focus on the plant and give it the attention required to bring out the very best in it. The market is ready for hand-crafted cannabis products and Pasha's experience is a vital resource in helping us deliver the goods"

Pasha remains committed to bringing small farmers to market and expects the first legal micro-cultivated dried cannabis to hit store shelves by early 2020.

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 its subsidiary, 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."

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HEXO Corp. (NYSE: HEXO) (TSX: HEXO) is an award-winning consumer packaged goods cannabis company that creates and distributes innovative products to serve the global cannabis market. HEXO Corp. recently announced that it had received licenses from Health Canada for its cannabis Centre of Excellence in Belleville, Ontario, for research, and for the sale of cannabis topicals, extracts, edibles and beverages from its flagship Gatineau campus. While a Processing Licence provides for testing on live plants, fresh and dried plant material, seeds, and oil, a Research and Development Licence significantly expands the scope of work that can be conducted on cannabis and its derivatives. The Company plans to conduct research and development at its Vaughan and Montreal Innovation, Development and Engineering hubs, as well as at its Centre of Excellence in Belleville and in other facilities. "The research licence will allow us to take our innovation work to the next level, with testing on derivative products, including taste testing. Consumers have high expectations for their packaged goods experiences, and cannabis will be no different," said Sebastien St-Louis, Chief Executive Officer and Co-Founder of HEXO Corp. "We are committed to not only ensuring a quality consistent experience but to also guaranteeing that experiences powered by HEXO meet these expectations."

OrganiGram Holdings Inc. (NASDAQ: OGI) (TSX: OGI) is a NASDAQ Global Select and TSX listed company whose wholly owned subsidiary, Organigram Inc., is a licensed producer of cannabis and cannabis-derived products in Canada. Organigram Holdings Inc. recently announced that effective September 6th, 2019, it had received Health Canada's approval for the licensing of 17 additional cultivation rooms under the Cannabis Regulations. The new cultivation rooms represent approximately 15,000 kg/yr of increased target production capacity. These are the first 17 rooms licensed within the Company's Phase 4B expansion and now brings the Company's Moncton facility to annualized licensed capacity to a target of 76,000 kg. The licenses are valid until March 27th, 2020, and subject to terms and conditions. "Once again, we are pleased to receive licensing approval consistent with our expectations and the streamlined process we have experienced to date. Our Phase 4 facility expansion remains on schedule to meet growing demand and further contribute to efficiencies of scale," explains Greg Engel, Chief Executive Officer, Organigram.

The Green Organic Dutchman Holdings Ltd. (OTCQX: TGODF) (TSX: TGOD) is a publicly traded, premium global organic cannabis company, with operations focused on medical cannabis markets in Canada, Europe, the Caribbean and Latin America, as well as the Canadian adult-use market. The Green Organic Dutchman Holdings Ltd. recently announced that following its launch in Ontario at the end of August, which marked the Company's entrance into Canada's recreational market, initial demand has exceeded expectations. TGOD's high-THC signature strain, Unite Organic, is performing well online and at dispensaries, triggering a second order from the OCS earlier than initially anticipated. "We are thrilled to witness such strong sales and positive feedback from retailers and consumers across Ontario, Canada's most populous province at 14.32 million people. We can see from the initial response that demand for high-quality flower is strong," commented Brian Athaide, Chief Executive Officer of TGOD. "Our team is working hard to ramp up production of our premium organic products as we get ready to expand distribution with additional strains and product forms as well as to other provinces in the months ahead. With our Hamilton hybrid greenhouse completed, and a second one nearing completion in Valleyfield, we are on track to distribute nationally early next year."

Emerald Health Therapeutics Inc. (OTCQX: EMHTF) (TSX-V: EMH) is a Canadian licensed producer of cannabis products focused on differentiated, value-added product development for medical and adult-use customers supported by novel intellectual property, large-scale cultivation, extraction, and softgel encapsulation, as well as unique marketing and distribution channels. Emerald Health Therapeutics, Inc. recently received organic certification for cannabis production at its Metro Vancouver operation in British Columbia, which encompasses 156,000 sq. ft. in two greenhouses as well as 12 acres (~500,000 sq. ft.) of licensed outdoor cultivation area. Certification was provided by Pro-Cert, which is accredited by the Canadian Food Inspection Agency to provide third party certification to the Canada Organic Regime (COR) and its equivalency arrangements. COR certification is required to produce, process, package or label a product with an organic claim and place it for sale in Canada. "Our Metro Vancouver operation is designed to serve medicinal customers and adult-use consumers looking particularly for health and wellness benefits, and we believe that producing our products according to organic standards will be a favourable distinction in the marketplace," said Riaz Bandali, President and Chief Executive Officer of Emerald. "With both indoor and outdoor cultivation, we expect this certified site to play an integral role in facilitating the expansion of Emerald's product line and positioning."

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