FinancialBuzz.com News Commentary
NEW YORK, Aug. 7, 2019 /PRNewswire/ -- Last year, Canada legalized cannabis for adult use and the market has rapidly evolved since. In October 2018, Canada made international headlines after it became the second country ever to fully legalize cannabis, after Uruguay. Despite its complete legalization, the Canadian federal government still strictly regulates the industry and restricts many aspects of the marketplace. For example, regulators have provided limited licenses for businesses, which has resulted in fierce competition among companies vying for the legal document. Moreover, the handful of companies that have obtained licenses are only permitted to cultivate certain amounts or operate in specific jurisdictions. In turn, the regulations have caused widespread market disruptions as the limitations led to supply not keeping pace with demand. For instance, Alberta alone accounted for nearly a third of total Canadian cannabis sales, despite provinces such as Quebec, Ontario, and British Columbia having a much larger population. The aforementioned province accounted for nearly 28% of the overall national cannabis sales, however, it also accounts for just 11% of Canada's total population. Now, Canada is nearing the conclusion of its first year of legalization and as a result, government officials are beginning to tone down regulations. Notably, earlier in July, the Canadian province of Ontario announced that it will provide 50 more recreational cannabis licenses by fall of this year. Moreover, later this year, regulators have hinted that a "second" wave of legalization is impending. The second legalization refers to the introduction of other cannabis-based products such as oils, tinctures, edibles, and concentrates into the Canadian markets. Now, as more solid data continues to come to light, Canada is positioned to witness immense growth in consumer spending. Furthermore, with the incorporation of the second legalization, consumer spending is expected to increase dramatically. According to data compiled by Arcview Market Research and BDS Analytics, the legal cannabis spending in Canada is projected to grow at a CAGR of 44.4% from USD 569 Million in 20187 to nearly USD 5.2 Billion by 2024. Pasha Brands Ltd. (OTC: CRFTF) (CSE: CRFT), Sundial Growers Inc. (NASDAQ: SNDL), KushCo Holdings, Inc. (OTC: KSHB), Valens GroWorks Corp. (OTC: VGWCF) (CSE: VGW), The Supreme Cannabis Company, Inc. (OTC: SPRWF) (TSX: FIRE)
The evolving cannabis marketspace has introduced a plethora of new products to consumers. Nowadays, buyers can select from a variety of products aside from the traditional flower. However, demand for dried flower is still high despite the diversity in the marketplace. In the fourth quarter of 2018, GMP Securities analyst Martin Landry told Marijuana Business Daily that Canada's medical and recreational markets were dominated by dried flower products. Landry notes that the flower sales dominated the marketplace because of the abundance as opposed to the proliferation of other products such as extracts. However, Landry highlights that extracts can potentially eclipse dried flower sales, shifting the overall consumer demand. Despite the shift, many extracts such as oils require dried flower to be created. And while extracts are already significantly more potent than traditional flower, dried cannabis is still required in order to create a premium extract. In most cases, small cultivators grow better quality cannabis compared to large licensed producers as many engage in the cultivation of "craft cannabis." It is seen as an artisanal profession of monitoring each individual plant to ensure top-shelf quality. Aside from individually inspecting each plant, cultivators also manage and maintain optimal growing conditions within the grow house to create cannabinoid-rich buds. Moreover, craft cultivators strive to grow natural and organic cannabis by avoiding the use of artificial byproducts such as pesticides. In the end, the laborious practice of cultivating craft cannabis results in a premium and high-quality strain that stands out from the rest of the competition. "A lot of the licensed producers right now, their goal as publicly traded companies is producing the cheapest cannabis possible for the commercial market," said Lisa Campbell, Chief Executive Officer of Lifford Cannabis Solutions. "A lot of people say hand-trimmed buds is craft, so the trim is really important. If it's dense and not fluffy, it's great, and obviously, smell and flavour are factors … It's like getting a bottle of wine for thousands of dollars - there will be certain products that will fetch a premium."
Pasha Brands Ltd. (OTC: CRFTF) (CSE: CRFT) is also listed on the Canadian Securities Exchange under the ticker (CSE: CRFT). Earlier last month, the Company announced, "the acquisition of a national brand known as Earth Dragon Organics - a leading pre-legalization manufacturer and purveyor of small batch cannabis-infused topicals, based in British Columbia.
Since its inception in 2012, Earth Dragon Organics has typified the variety of smaller, female-led and patient-focused businesses that flourished during cannabis prohibition. Earth Dragon Organics supplied THC- and CBD-infused topical products to those seeking relief from muscle pain, arthritis, nerve pain, migraines, and multiple sclerosis, among other conditions, combining cannabis with local, organic ingredients including arnica and essential oils to harness the qualities of THC and CBD.
"Becoming part of the Pasha Brands family is a huge milestone for Earth Dragon Organics in that it will allow us to scale up and make these handmade, craft products more available to the entire country," said Tessa Serra, founder of Earth Dragon Organics and Pasha's newly hired product manager. "This partnership is a great match and I'm looking forward to the evolution that is about to take place."
The line of handmade products including balms, creams, body butters, sunscreen, bath salts and more are not currently available as all sales have ceased to prepare their entrance to the regulated framework with product manufacturing located at Pasha's licenced processing facility on Vancouver Island. Pasha has acquired all of the brand's trademarks, names and intellectual property and will re-launch the brand in the Canadian regulated market after the appropriate regulations is passed on October 17, 2019. According to the federal Canadian Cannabis Survey 2018, in the last year alone, the number of Canadians using topicals for pain relief has doubled (from seven to 14 percent).
"This is exactly the kind of business legalization has been leaving behind, and Pasha is honoured to help bring Tessa's passion for creating sustainably made, handcrafted cannabis-infused topicals into the legal market," said Patrick Brauckmann, Executive Chairman of Pasha Brands. "We're lucky to have her skillset as a product developer and manufacturer on the Pasha team, and glad we will be able to make her cherished products available again soon."
Following the passing of regulations that will enable licensed producers to make and sell edibles, extracts, and topicals, Pasha will seek provincial and territorial distribution for the brand. The company has already submitted an Earth Dragon Organics product line in an application to the Ontario Cannabis Store.
About Earth Dragon Organics: Inspired by the cannabis conscious community of Salt Spring Island BC, Earth Dragon Organics is a craft cannabis topical brand embodying the natural beauty of the West Coast. Highlighting the profound benefits of cannabis and the alchemy of traditional herbal remedies, Earth Dragon Organics' innovative skincare line offers nourishing treatments for all skin types and conditions.
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 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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Sundial Growers Inc. (NASDAQ: SNDL) proudly crafts pioneering cannabis brands to Heal, Help and PlayTM. In response to the growing global demand for health and wellness products, Sundial Growers Inc. recently announced a new venture to give consumers more choices to meet their needs. Sundial has acquired UK-based Bridge Farm Group with plans to produce and sell high-quality CBD products globally. Bridge Farm is a market-leading producer of ornamental plants, flowers and herbs in the United Kingdom. It currently operates three growing facilities with 1.5 million sq. ft. and plans to expand to 3.5 million sq. ft. by the end of 2021. Using a phased approach, and subject to necessary regulatory approvals, Sundial intends to use parts of these facilities to cultivate hemp and cannabis. The Bridge Farm acquisition will establish Sundial's presence in Europe and represents an important milestone for its international expansion. "This is a significant acquisition for Sundial, taking us one step closer to our goal of being one of the leading cannabis companies in the world," said Torsten Kuenzlen, Chief Executive Officer of Sundial. "We recognize that expedient global expansion requires a combination of organic growth and strategic acquisitions. Bridge Farm's experienced management team, strong market position and operational excellence made it an ideal acquisition."
KushCo Holdings, Inc. (OTCQX: KSHB) is the premier producer of ancillary products and services to the cannabis and hemp industries. KushCo Holdings, Inc. recently announced the creation of its new Retail Services division. The new business unit will focus on providing comprehensive retail solutions, through strategic partnerships with best-in-class sales agencies, to leading CBD brands. KushCos retail services division will focus on industry education and compliance, as well as building distribution networks of CBD brands across conventional retail channels. With Retail Services experienced leadership optimizing growth opportunities, this division will expand the Company's platform and fuse two industries that have historically operated independent of each other. In his position as Vice President of Retail Services, Ryan Savage will oversee sales agency partnerships, including C.A. Fortune, a leading full-service national consumer products sales and marketing agency focused on lifestyle brand partnerships. In addition, he will manage the expansion of CBD into the retail space across all channels, driving sales through management of brands, brokers and customers to increase distribution and revenue growth. Ryan Savage has spent the past 15 years gaining knowledge of multiple aspects of the consumer packaged goods (CPG) industry. He has worked with many diverse, major retailers including Sprouts, Trader Joes, Target, Amazon, and Kroger, in both a branded and private label capacity.
Valens GroWorks Corp. (OTCQB: VGWCF) (CSE: VGW) is a research-driven, vertically integrated Canadian cannabis company focused on downstream secondary extraction methodology, distillation and cannabinoid isolation and purification, as well as associated quality testing with three wholly-owned subsidiaries located in and around Kelowna, BC. Valens GroWorks Corp. recently announced that it has entered into a multi-year extraction services agreement to provide cannabis and hemp extraction services to The Green Organic Dutchman Holdings Ltd., a 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. Under the terms of the initial 2-year agreement, TGOD will supply Valens with an annual minimum of 30,000kg in the first year, increasing to 50,000kg in year two, of cannabis and hemp biomass which Valens will process into premium quality resins and distillates using certified organic extraction processing methods. TGOD intends to use the concentrated cannabinoid resins and distillates to produce oils, sprays and capsules as well as oils for vaporization and future edible, beverage and topical products. Valens expects the first shipment to arrive and begin processing early Q2. "We are excited to work with TGOD, Canada's premier certified organic producer," said Tyler Robson, Chief Executive Officer of Valens GroWorks. "Organic resonates with consumers, and Valens looks forward to helping accelerate TGOD's time to market with the launch of its hemp-derived CBD product line in the coming months."
The Supreme Cannabis Company, Inc. (OTCQX: SPRWF) (TSX: FIRE) is a globally diversified portfolio of distinct cannabis companies, products and brands. The Supreme Cannabis Company, Inc. recently announced the launch of Supreme Heights, an investment platform based in London, UK focused on opportunities in the UK and Europe's CBD health and wellness space. Supreme Heights intends to make strategic investments in and provide support services to differentiated high-growth health and wellness businesses with focused brands and premium CBD offerings. Supreme Cannabis has launched Supreme Heights as a separate entity that will solely address opportunities in the UK and Europe's CBD health and wellness market. Supreme Heights will benefit from Supreme Cannabis' regulatory, product commercialization, supply chain, marketing and capital markets expertise and corporate support services. Supreme Cannabis' management team has immense experience supporting health and wellness companies operating in Canada and international markets. Supreme Heights will draw on the Company's experience launching premium brands. "The rapidly evolving CBD markets in the UK and Europe present compelling investment opportunities given the promising environments for new health and wellness companies to establish differentiated brands and capture meaningful market share. Supreme Heights is positioned to quickly act on attractive opportunities and establish an early mover advantage in the space," said Navdeep Dhaliwal, Chief Executive Officer of Supreme Cannabis. "Supreme Heights will benefit from our experience launching some of the most premium cannabis brands in Canada and from the strong leadership and the deep industry connections of our UK partners. We look forward to driving value for Supreme Cannabis shareholders through this investment platform."
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