Star Power and Craft Cultivation Add New Dimensions to the Cannabis Market

NEW YORK, June 10, 2019 /PRNewswire/ -- The cannabis industry has moved into the spotlight throughout the recent years due to the widespread legalization efforts seen around the world. The public support has risen substantially over the past two decades as clinical trials debunked common stereotypes. Now, according to Pew Research Center, over 62% of Americans support the legalization of marijuana, which has nearly doubled since 2000. The public's opinion heavily factors into government decisions across the world, but notably, the advocacy from celebrities has played a major role in the industry. Prominent public figures such as Seth Rogan, Snoop Dogg, Wiz Khalifa, Melissa Etheridge, and Willie Nelson have all voiced their positive stance on cannabis. For instance, Melissa Etheridge has long endorsed cannabis for its medical therapeutic effects after she was diagnosed with breast cancer back in 2004. Following her successful recovery, Etheridge believes that cannabis will completely reshape the healthcare and medical industry in the near future. Moreover, Willie Nelson and Wiz Khalifa have also launched their own lines of cannabis-branded products primarily for recreational purposes. For instance, Wiz Khalifa has his own personal strain called Khalifa Kush, however, it is supposedly unavailable to the public. According to Wikileaf, Khalifa Kush is an indica-dominant hybrid strain with THC levels between 26% to 29% and the strain is predominantly known for its stimulating effects. Breeders designed the strain for uplifting cerebral effects along with relaxing body effects and high-quality strains such as Khalifa Kush are quickly becoming increasingly sought after, regardless of the price per gram. However, every individual consumer has different tastes and tolerance levels, meaning that cultivators would need to produce strains to appeal to each specific demographic. In order to obtain these specialized strains, cultivators can alter the biological makeup of the strain throughout the growing process. Strains can either be highly potent or offer a simple relaxation effect. And as a result, the cannabis marketspace is becoming more attractive to both novice users and even the more experienced or frequent users. According to data compiled by Ameri Research, the global legal marijuana market was valued at USD 14.3 Billion in 2016. By 2024, legal marijuana global sales are projected to reach USD 63.5 Billion while exhibiting a CAGR of 21.1% from 2017 to 2024. Pasha Brands Ltd. (CSE: CRFT), Molson Coors Brewing Company (NYSE: TAP) (TSX: TPX), Innovative Industrial Properties, Inc. (NYSE: IIPR), Aphria Inc. (NYSE: APHA) (TSX: APHA), Zynerba Pharmaceuticals, Inc. (NASDAQ: ZYNE)

Generally, it is much easier to produce a plant that is higher in THC as opposed to growing one that is high in CBD content. Growers cannot make a plant produce more CBD due to its genetic limitations. However, growers can choose a strain that is higher in CBD content compared to others. Typically, a strain with 2% or more CBD is considered to be high level, but nowadays, many breeders tend to infuse CBD and THC, which complements the CBD effect. For example, a 1:1 ratio of THC and CBD would largely cancel the effects of the THC, while allowing some of the THC effect to linger around. Furthermore, there are various other ways to increase THC levels in strain such as providing adequate lighting, longer harvesting times, and administering a proper curing process. The combination of these procedures can lead to more trichomes on the plant, resulting in higher THC concentrate. Trichomes are crystalized glands that produce the resin on a marijuana plant that carry the majority of the cannabinoids. Cultivators are continuously seeking ways to produce higher quality cannabis while maintaining its natural aspects. Henceforth, more cultivators are now moving towards growing natural cannabis, which means avoiding pesticides and other artificial chemical byproducts. Conversely, some argue that growing cannabis naturally or with chemicals doesn't make a difference, but more cultivators and consumers are beginning to turn towards a more natural plant, more commonly known as "craft cannabis." Similar to craft beer or craft coffee, craft cannabis is the art of paying close attention to each individual plant throughout the growing process in order to ensure a high quality product. "The art of cannabis has come a long way from the days of the dime bag, when you had no idea where your cannabis came from, what kind of pesticides or growing methods produced it, or even what strain it was. These days, in the legal cannabis marketplace, you have your choice of the best of the best of "craft cannabis," said Lisa Rough, former Associate Editor at Leafly.

Pasha Brands Ltd. (CSE: CRFT) earlier last week announced breaking news that, "it has acquired Medcann Health Products Ltd. ("Medcann"), a fully licensed, Health Canada approved facility to process, cultivate and sell medical cannabis under the Cannabis Act regulations. Prior to its acquisition by Broome Capital Inc., the privately held Pasha Brands Ltd. had previously entered into a letter of intent to acquire Medcann, dated effective April 30, 2019.

This acquisition will allow subsidiary company, BC Craft Supply Co. Ltd. ("BC Craft") to accelerate its pace of growth in Canada's new craft cannabis sector. BC Craft acts as a service provider to small farmers under the newly created Health Canada licence category known as Micro Cultivator. In exchange for a cannabis supply agreement with a micro cultivator, BC Craft assists the applicant in receiving its licence with Health Canada and provides a whole host of services ranging from quality assurance to the marketing of its cannabis products in Canada's provincial and territorial markets.

With approximately 10,000 square feet of space, on an acre of land on Vancouver Island, Medcann was granted its processing, cultivation and sales licence by Health Canada in March 2019. Medcann provides Pasha with an immediate pathway to bring craft cannabis products to market under Health Canada's new micro-cultivation licence category. The Medcann facility will test, process and package high quality craft flower, and package this flower for distribution throughout Canada. In addition to flower sales, it is expected that Medcann will process cannabis for Canada's emerging oil market through an extraction lab to be developed at the facility. Pasha currently owns nine prohibition-era cannabis brands which Canadians were purchasing in the pre-legalization era. As regulations permit, Pasha will distribute product under these leading brands throughout Canada.

There is a growing supply gap for cannabis in Canada as licensed producers are unable to meet consumer demand. Through BC Craft, Pasha will focus on bringing micro-cultivators into the market. The micro-cultivation licensing program allows for the processing of approximately 500 kilograms of dried flower per year, per micro cultivator. More than just a viable solution for closing the supply gap, this provides consumers with high-quality craft cannabis products that are differentiated from others in the space. Under the micro-cultivation program, the BC Craft network will look to add and assist hundreds of producers. For every 100 micro-cultivators BC Craft secures, up to 50,000 kilograms of world-class craft cannabis could be available to the market via Canada's regulated supply chain.

In consideration for the acquisition of all of the outstanding share capital of Medcann, Pasha has completed a cash payment of $3,000,000, and has issued 14,444,445 common shares (the "Consideration Shares") at a deemed price of $0.90 per share, to the existing shareholders of Medcann.

The Consideration Shares are subject to a pooling arrangement which restricts the ability of the holders to transfer or trade the shares. The Consideration Shares will be released from the pooling arrangement over a period of eighteen months, with 25% of the shares released immediately upon completion of the acquisition, and the balance released in six equal tranches every three months thereafter. In the event the volume weighted average closing price of the Pasha common shares is less than $0.72 in the twenty trading days prior to the expiry of the pooling arrangement, the shareholders of Medcann will be entitled to receive additional Consideration Shares to guarantee the value of the consideration they receive.

Following completion of the acquisition, Medcann will also hold the right to acquire the property on which its facility is located in consideration for a further cash payment of $1,200,000. The property is currently subject to a lease arrangement which permits the operation of the facility.

In connection with completion of the acquisition, Pasha intends to issue 1,066,667 common shares as a finders' fee to certain arms'-length parties who assisted Pasha in facilitating the transaction. All shares issued as a finders' fee will be subject to a four-month-and-one-day statutory hold period in accordance with applicable securities laws.

About Pasha Brands: Based in Vancouver, British Columbia, Pasha is a vertically integrated prohibition-era brand house that is 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's subsidiary, BC Craft, is 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". For more information, please visit www.pashabrands.com."

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Molson Coors Brewing Company (NYSE: TAP) (TSX: TPX) has defined brewing greatness for more than two centuries. Molson Coors Canada (MCC), the Canadian business unit of Molson Coors Brewing Company, and HEXO Corp. recently announced that they have closed the transaction announced on August 1, 2018, to form a joint venture to pursue opportunities to develop non-alcoholic, cannabis-infused beverages for the Canadian market following legalization. The joint venture, Truss, will be led by former Molson Coors executive, Brett Vye, in the role of Chief Executive Officer. Vye will report to the Truss board of directors consisting of three members appointed by MCC and two members appointed by HEXO. "With the backing of two partners with deep Canadian roots, proven success, and market-leading experience in the respective beverage and cannabis industries in Canada, Truss will hit the ground running," said Brett Vye, Chief Executive Officer at Truss. "When consumable cannabis is legalized in Canada, Truss will be ready to make its mark as a responsible leader in providing high-quality beverages for the Canadian consumer. Why "Truss"? We are joining together the extensive experience and excellent practices of each partner to build a powerful foundation for the future."

Innovative Industrial Properties, Inc. (NYSE: IIPR) is a self-advised Maryland corporation focused on the acquisition, ownership and management of specialized industrial properties leased to experienced, state-licensed operators for their regulated medical-use cannabis facilities. Innovative Industrial Properties, Inc. recently announced that it closed on the acquisition of a property in Saxton, Pennsylvania, which comprises two buildings totaling approximately 266,000 square feet of industrial space. The purchase price for the Pennsylvania property was USD 13.0 Million. Concurrent with the closing of the purchase, IIP entered into a long-term, triple-net lease agreement with a subsidiary of Green Leaf Medical, LLC, which intends to operate the property as a licensed medical-use cannabis cultivation and processing facility. Green Leaf Medical has redeveloped approximately 103,000 sq. ft. of the industrial space for medical-use cannabis cultivation and processing, with the remaining approximately 163,000 sq. ft. of industrial space available for future redevelopment. As the pioneering real estate investment trust (REIT) for the medical-use cannabis industry, IIP partners with experienced medical-use cannabis operators and serves as a source of capital by acquiring and leasing back their real estate assets, in addition to offering other creative real estate-based capital solutions. "We are pleased to add multi-state operator Green Leaf Medical to our premier tenant roster," said Paul Smithers, President and Chief Executive Officer of IIP. "Green Leaf Medical has achieved tremendous success in Maryland in a short period of time, and is focused on replicating that model across a number of states, including Pennsylvania. We are thrilled to serve as one of their capital sources to allow them to continue those expansion initiatives and reach an ever-growing number of patients across the Northeast."

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 entered into an exclusive agreement with Toronto-based UNOapp Inc. to collaborate on the development of technology and analytics solutions for Canada's adult-use cannabis industry.  Founded in 2010, UNOapp has developed proven technology, marketing and analytical solutions that has enabled more than 4,500 customers across the globe to engage with their customers and drive revenue. As part of the Agreement, UNOapp has granted Aphria a first option to commercialize any platform or solution developed from this collaboration in any international market outside Canada. "With our innovation-focused approach, Aphria is setting the pace for the evolution of the adult-use cannabis industry in Canada," said Jakob Ripshtein, President of Aphria. "Our industry's long-term future will be driven by consumer-centric, innovation-led product, brand and technology solutions. We are excited for this collaboration with a fantastic technology partner in UNOapp and look forward to developing industry-leading solutions that shape the adult-use cannabis market for years to come."

Zynerba Pharmaceuticals, Inc. (NASDAQ: ZYNE) is the leader in pharmaceutically-produced transdermal cannabinoid therapies for rare and near-rare neuropsychiatric disorders. Zynerba Pharmaceuticals, Inc. recently announced that the U.S. Food and Drug Administration (FDA) had granted Fast Track Designation for the Company's lead development candidate Zygel™ (ZYN002 CBD gel) for treatment of behavioral symptoms associated with Fragile X Syndrome (FXS). FDA's Fast Track program is designed to facilitate the development of drugs intended to treat serious conditions and fill unmet medical needs and can lead to expedited review by FDA in order to get new important drugs to the patient earlier. Zygel (CBD gel) is the first and only pharmaceutically-manufactured CBD formulated as a patent-protected permeation-enhanced clear gel, designed to provide controlled drug delivery into the bloodstream transdermally (i.e. through the skin). Recent studies suggest that FXS and other neuropsychiatric conditions may be associated with a disruption in the endocannabinoid (EC) system. "The FDA's decision to grant Fast Track Designation for Zygel underscores the significance and severity of the unmet medical need that exists for patients living with Fragile X Syndrome and their caregivers," said Armando Anido, Chairman and Chief Executive Officer of Zynerba. "We believe that Zygel has the potential to be the first treatment indicated to directly address the core behavioral symptoms of this syndrome, and we look forward to working closely with the FDA to obtain approval to market Zygel as soon as possible."

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