FinancialBuzz.com News Commentary
New York, NY (9/8/2020) – The legal cannabis industry continues to expand around the world with major contribution to the market coming from continuous legislative victories in North America and Europe. Specifically, legalization of medical cannabis and decriminalization in some countries has led to a decrease in black-market activity, as people are shifting to legally buying cannabis for medical as well as recreational use. According to a blog post by New Frontier Data, despite popular transformation of public attitudes toward cannabis over the past 20 years, as two-thirds of the country now support full national legalization, and 7 in 10 Americans viewing marijuana use as morally acceptable, advocates indicate that the transition from prohibition to legalization still has major obstacle to overcome. For example, the classification of cannabis as a Schedule 1 drug remains the most consequential impediment to ending the highly the U.S. prohibition laws on a federal level, which will give states more freedom to operate cannabis-based businesses. MediPharm Labs Corp. (OTC: MEDIF) (TSX: LABS), GrowGeneration Corp. (NASDAQ: GRWG), Cresco Labs Inc. (OTC: CRLBF) (CSE: CL), Aphria Inc. (NASDAQ: APHA) (TSX: APHA), Cronos Group Inc. (NASDAQ: CRON) (TSX: CRON)
CBD products have reaped the benefits of in terms of sales due to being known for their wide range of potential health benefits. However, it has only been approved to treat childhood epilepsy syndromes, such as Dravet syndrome and Lennox-Gastaut syndrome after the U.S. Food and Drug Administration approved Epidiolex, making it the first approved cannabis-based drug, last year. The FDA has made clear that additional research is required in order to advance with more approvals. “The 29 U.S. states reporting licensed hemp cultivation acreage total almost half a million acres in combined cultivation land area, which is a massive increase compared to 2018 figures of a total land area barely over 100,000 acres. While there continues to be uncertainty and a healthy amount of confusion around hemp cultivation for CBD production, it is clear that demand is nonetheless continuing to rise across the U.S.,” noted Giadha Aguirre de Carcer, New Frontier Data CEO and Founder. “As states issue more licenses, consumer demand increases, and mass-market retailers such as CVS and Walgreens continue to expand their own product offerings, we expect the FDA may be forced to provide further regulatory clarifications sooner rather than later.”
MediPharm Labs Corp. (OTCQX: MEDIF) (TSX: LABS) announced breaking news last week that, “its wholly owned subsidiary MediPharm Labs Inc. will supply premium, formulated cannabis oil to Cann Farm Peru S.A.C., a Lima-based producer and distributor serving Peruvian and other markets in Latin America.
This is MediPharm Labs first such agreement in Latin America and the most recent example of the Company’s international growth strategy in action. As part of this strategy, the Company has expanded its addressable medical, wellness and adult-use markets to parts of Asia Pacific, Europe and now Latin America.
MediPharm Labs is creating footholds in medical, wellness and adult-use markets around the world and in Latin American countries. With a combined population of approximately 580 million – and beginning with its fifth largest country Peru – Latin America factors highly in the Company’s business plan. As an early mover among Latin American countries, Peru has created a legal framework for producing, importing and selling cannabis for medical use. As a result, Peru’s market is advancing rapidly and offers the potential to register varied formats of cannabis based products. Using a range of pricing, consumption and patient datasets, the LATAM Cannabis Report
by Prohibition Partners(1) forecasts that the LATAM market is expected to exceed US$12 billion by 2028, offering “serious growth potential to global cannabis companies.”
‘Peru is one of the top medical cannabis markets in the world and Cann Farm is one of very few cannabis companies which hold both a Droguería licence and cannabis importation licence which makes this agreement of outstanding strategic value to MediPharm Labs,’ said Pat McCutcheon, CEO, MediPharm Labs. ‘As we pursue our global ambitions, it is vital for us to partner with companies of Cann Farm’s calibre who know their local markets intimately, have a real appreciation for the needs of patients, an ongoing commitment to scientific advancement and a sound plan for regional expansion. We expect great things from this collaboration.’
Under the one-year renewable agreement, MediPharm Labs Inc. will provide a variety of cannabis concentrate formats, with optionality for patient ready formulated products. The products will be distributed to patients through pharmacies in Peru. Cann Farm will in turn obtain all Peruvian registrations, authorizations and approvals required for importation. In the future, Cann Farm may look to MediPharm Labs for further support in commercialization activities. MediPharm Labs anticipates delivery to begin in Q4 2020, pending regulatory approval by applicable health authorities.
‘Cann Farm was created from our deep commitment to patients, who demand reliable, consistent high quality, and proven product integrity; therefore we choose our partners very carefully,” said Andres Vazquez Vargas, Executive President, Cann Farm Peru. “What impresses us most about MediPharm Labs is their focus on medical markets and their commitment to our production standards, as is seen with their GMP certification, which is the gold standard in pharma production. It’s rare to see GMP certification in the cannabis supply chain because it’s a complex and rigorous process to earn the qualification. This tells us all we need to know about their ability to meet our needs on not only a continuous, but consistent basis.’
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GrowGeneration Corp. (NASDAQ: GRWG) announced back in June that the Company has purchased the assets of H2O Hydroponics, LLC (“H2O”), the largest hydroponic garden center in Lansing, MI. Following the asset purchase, the Company will open a new location in Lansing, MI, which will serve as a retail/commercial operation, as well as a fulfillment center, supporting the Company’s online and direct-to-farm deliveries. Darren Lampert, CEO, commented, “H2O Hydroponics is the largest hydroponic store in Lansing, MI. with 2019 sales of approximately $4.0 million. We are consolidating our current West Lansing location, with H2O, and relocating into a newly built 15,000 square foot super hydroponic garden center, that we expect will generate over $7.0 million in sales. With this acquisition, we continue to increase our footprint and strengthened our supply chain in the Michigan market.” According to a March 2020 report, “The Market for and Economic Impact of the Adult-use Recreational Marijuana Industry in Michigan” by Michigan State University Product Center Food-Ag-Bio: “It is estimated that the level of cannabis retail sales once it becomes widely available is approximately $3 billion with a total economic impact in excess of $7.8 billion…”
Cresco Labs Inc. (OTCQX: CRLBF) (CSE: CL) announced earlier in July the opening of its eighth Illinois dispensary in the city of South Beloit. The adult-use dispensary is located near Highway 75 and visible from Interstate 90 by the Illinois-Wisconsin border. “We are thrilled to bring the Sunnyside retail experience to the hundreds of thousands of people living in South Beloit and surrounding communities in Winnebago County. This is our third store opening since the COVID-19 pandemic began, and I’m incredibly proud of our team’s dedication to providing responsible access to cannabis,” said Charlie Bachtell, Cresco Labs’ CEO and Co-founder. “At 7,208 square feet, this is one of the largest dispensaries in Illinois and across our entire portfolio. Illinois cannabis sales set a record in June reaching approximately $77 million, which translates to an almost billion-dollar annualized run rate. With our 6x increase in cultivation capacity and focus on going deep in the state, we continue to command an outsized share of this market.”
Aphria Inc. (NASDAQ: APHA) (TSX: APHA) announced last year that it had received a cultivation license from Health Canada for Aphria Diamond, the Company’s second Leamington, Ontario cannabis greenhouse facility, bringing an additional 1,300,000 sq. ft. of production space with an annual growing capacity of 140,000 kg. Combined with the Company’s Aphria One facility and its subsidiary Broken Coast Cannabis, the Company now has more than 2,400,000 sq. ft. of cultivation space capable of reaching a total annualized production capacity of 255,000kg. “We are extremely pleased to receive the licence for our long-awaited Aphria Diamond facility, which more than doubles our Canadian production capacity,” said Irwin D. Simon. “Reaching industry-leading production levels coinciding with the expansion into new categories and new opportunities for cannabis in Canada and around the world is a transformative moment for Aphria Inc.”
Cronos Group Inc. (NASDAQ: CRON) (TSX: CRON) announced last September that it had closed its previously announced acquisition of four Redwood Holding Group, LLC operating subsidiaries. The transaction provides Cronos Group with a leading U.S. hemp-based products platform, including hemp-derived cannabidiol infused skincare and other consumer products that are sold online and through retail and hospitality partner channels in the United States under the brand, Lord Jones. Mike Gorenstein, Cronos Group’s Chairman, President and Chief Executive Officer, said, “This acquisition is one of a number of new growth opportunities that is differentiating our company and our strategic direction. We are pleased to have completed this acquisition and look forward to working closely with Rob and Cindy to further build on their record of innovation and fully capitalize on the platform they have created.”
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