Craft Cultivators Rely on Superior Methods to Carve out a Niche in the Cannabis Market
FinancialBuzz.com News Commentary
NEW YORK, July 29, 2019 /PRNewswire via COMTEX News Network/ -- In centuries past, prior to the current period of legalization, cannabis was predominantly used as an herbal medicinal remedy in countries such as China and India. However, during the 20th century, multiple nations decided to prohibit the plant because of the poorly perceived psychoactive effect derived from its THC compound, oftentimes imposing harsh restrictions on cannabis. However, by the late 20th century, the U.S. began to change the scene of the industry as several states legalized cannabis for medical use in the late 1990s. Following the trailblazers, a string of other states started to legalize medical cannabis as well. Now, more than half the U.S. has legalized the use of medical cannabis, while just over a fifth, including the District of Columbia, legalized recreational its use as well. While the U.S. is the primary growth driver for the global cannabis market, Canada has now become the center of attention after it completely legalized cannabis in October 2018, becoming the second country ever to fully legalize cannabis for adults. Yet, despite legalizing cannabis, the Canadian federal and provincial governments have imposed strict regulations as precautionary measures that have hurt many businesses, particularly smaller ones. Nonetheless, small businesses are now beginning to stand out among the competition, as they take an alternate approach to their processes. According to data compiled by ArcView Market Research and BDS Analytics, the legal cannabis spending reach USD 569 Million in 2018, during its first year of adult-use sales. By 2024, legal spending is projected to reach 5.2 Billion while exhibiting a CAGR of 44.4%. Pasha Brands Ltd. (OTC: CRFTF) (CSE: CRFT), Tilray, Inc. (NASDAQ: TLRY), Neptune Wellness Solutions Inc. (NASDAQ: NEPT) (TSX: NEPT), HEXO Corp. (NYSE: HEXO) (TSX: HEXO), The Supreme Cannabis Company, Inc. (OTC: SPRWF) (TSX: FIRE)
The Canadian federal government's restrictions on certain businesses caused numerous ventures to go out of business. For instance, regulators curtailed retailer hours, which resulted in some brick-and-mortar locations losing revenue and customers. Moreover, due to the small number of cultivation licenses distributed, the demand outweighed the supply for quite some time, causing countrywide shortages. And in most cases, large corporations were the only ones who were shining throughout the drought. However, some small businesses have created innovative products that large-scale companies simply cannot replicate. Specifically, "craft cannabis" cultivation has become a process many smaller cannabis businesses excel at. Craft cannabis is similar to other craft professions such as beer or coffee, where craft cultivators take immense passion in their work and strive to provide consumers with excellent, high quality products. Craft cultivators undergo tedious and meticulous procedures in order to create premium cannabis flowers. Notably, cultivators avoid the use of artificial products so that the plant is grown more naturally. Moreover, cultivators who use indoor or greenhouse facilities have complete control over the growing environment, allowing them to provide an optimal growing environment. For example, one strain may require stronger airflow because it is a short and dense plant, but another plant could be tall, which would require more airflow to its top. Additionally, taller plants can be a bit more difficult to manage because cultivators have to check the top to make sure molding doesn't occur. Similarly, cultivators tend to each and every individual plant to prevent any disturbances from damaging the buds. By doing so, cultivators can maintain the cannabinoids within the buds, creating a more potent strain. "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 today the company announced breaking cannabis news that, "North America's largest craft cannabis brand house, is pleased to announce that its wholly owned subsidiary, BC Craft Supply Co. Ltd ("BC Craft"), has signed a supply agreement with Canada's first licensed micro-cultivator applicant, Hearst Organic Cannabis ("Hearst").
Founded by Jol Lacelle in Hearst, Ontario, Hearst Organic Cannabis received its micro-cultivation licence from Health Canada on July 12, 2019. Under the new agreement, Hearst will supply BC Craft with its ongoing production to be sold as dried flower. BC Craft has agreed to process and package this flower before it is destined for licensed retailers.
"Jol and his team started with a shovel, and navigated the licensing process in just over nine months," said Jason Longden, CEO Pasha Brands. "They represent the first truly craft producer to be licensed as a micro-cultivator in Canada, the first of many BC Craft intends to bring to market, so this agreement is historic."
With Canada's current licensed cannabis producers only able to supply an estimated 15 per cent of what Canadians are consuming, Pasha is optimistic that this new supply agreement will help correct the cannabis supply imbalance. Each micro cultivator in Canada will be able to produce approximately 500 kg of cannabis per year. Canada has tens of thousands of craft producers operating in the illicit cannabis market and BC Craft is focused on helping as many small farmers transition into the regulated market as possible.
"Building Hearst and receiving my Health Canada licence has been a challenge, but I'm encouraged by the high demand for craft products," said Jol Lacelle, Founder of Hearst Organic Cannabis. "I'm proud to partner with the team at Pasha and BC Craft as they have clearly demonstrated their passion for supporting all craft cannabis producers in Canada."
Hearst Organic Cannabis will plant its first legal crop in August 2019 and harvest later in the fall.
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".
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Tilray, Inc. (NASDAQ: TLRY) is a global pioneer in the research, cultivation, production and distribution of cannabis and cannabinoids currently serving tens of thousands of patients and consumers in 12 countries spanning 5 continents. Tilray, Inc. recently announced that its wholly-owned subsidiary Tilray Portugal Unipessoal Lda. had received a standard manufacturing license and a Good Manufacturing Practices (GMP) certification, in accordance with the European Medicines Agency's (EMA) standards, for its Biocant Park manufacturing facility in Cantanhede, Portugal. This license and certification allow Tilray Portugal to manufacture and export GMP-certified dried cannabis as an active substance for medicinal products. Tilray's EU Campus in Portugal is a multi-faceted production facility that includes indoor, outdoor and greenhouse cultivation sites; research and quality control labs; as well as processing, packaging and distribution sites for medical cannabis and cannabinoid-containing medical products. To date, Tilray has invested approximately EUR 20 Million in the facility, which totals nearly 250,000 sq. ft. with additional room to expand. The site also serves as a hub supporting Tilray's clinical research and product development efforts across Europe. The Tilray EU Campus currently employs over 100 people, and that number is expected to double by the end of 2019, with production ramping up and multiple harvests anticipated in the coming months. An official ribbon-cutting ceremony celebrating the inauguration of Tilray's EU Campus was hosted in April 2019. "This licensing and certification marks a critical milestone for our growth in Portugal and Europe. We're proud to increase our international export capacity and are looking forward to exporting dried cannabis as active substances from our EU Campus to legal jurisdictions in the EU and other international markets," said Sascha Mielcarek, Managing Director, Europe. "The next phase of GMP certification will allow us to utilize the full capacity of our multi-faceted facility and continue to serve more patients in-need."
Neptune Wellness Solutions Inc. (NASDAQ: NEPT) (TSX: NEPT) specializes in the extraction, purification and formulation of health and wellness products. Neptune Wellness Solutions Inc. recently completed the acquisition of the assets of SugarLeaf Labs, LLC and Forest Remedies LLC. The acquisition was first announced on May 9th, 2019. "The acquisition of SugarLeaf, combined with Neptune allows us to create a leading North American extraction platform with significant capacity available to serve our customers on both sides of the border. Furthermore, considering the significant growth anticipated in hemp-based products, this acquisition provides Neptune with capabilities to satisfy a wide array of clients. Finally, we anticipate a significant contribution from this acquisition, as indicated by the large earnout structure providing adequate risk sharing," said Michael Cammarata, Neptune President and Chief Executive Officer.
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 the Company's cannabis products are now available to Alberta consumers for the first time after finalizing an agreement between HEXO and Alberta Gaming, Liquor and Cannabis (AGLC). The agreement provides AGLC with HEXO's nine dried flower products and award-winning Elixir oral sprays, making them available on the Alberta Cannabis online store and to all of the nearly 200 private retail stores in the province. "This agreement marks the latest achievement in the development of HEXO's presence in Western Canada and our goal to be top two in market-share in the country," said HEXO Corp. Chief Executive Officer and Co-Founder, Sebastien St-Louis. "Alberta represents one of the largest cannabis markets in Canada and we are thrilled to see our products are available to Albertans across the province."
The Supreme Cannabis Company, Inc. (OTCQX: SPRWF) (TSX: FIRE), is a global diversified portfolio of distinct cannabis companies, products and brands. The Supreme Cannabis Company, Inc. recently announced that it has entered into a definitive agreement under which Supreme Cannabis will acquire all of the issued and outstanding shares of privately-held Truverra Inc., to be effected by way of a three-cornered amalgamation between Truverra, Supreme Cannabis and a wholly-owned subsidiary of Supreme Cannabis. The Transaction is valued at 14.7 million common shares of Supreme Cannabis, giving the Transaction an approximate dollar value of USD 20,000,000 as of the Company's closing price on July 16th, 2019. "The recent introduction of Health Canada's amended cannabis regulations creates a distinct opportunity for Supreme Cannabis to establish a leading position in the cannabis extracts markets. With the acquisition of Truverra, we secure a Toronto-based facility equipped to extract our high-quality inputs for concentrates and vaping liquids in the near-term," said Navdeep Dhaliwal, Chief Executive Officer of Supreme Cannabis. "Truverra's operations also provide an additional entry point into Europe's CBD wellness market, where Truverra Europe has successfully launched multiple CBD products in various jurisdictions. Truverra's Canadian and European operations are managed by a senior leadership team with a wealth of experience manufacturing and launching products in highly-regulated industries such as life sciences and pharmaceuticals."