(Image via Cannary Packaging Inc.)
Where is the cannabis industry going in 2020? According to an article by Grand View Research, the global legal 
cannabis market is projected to reach USD $66.3 Billion by the end of 2025, expanding at a compound annual growth rate (CAGR) of 23.9% during the forecast period. The green rush growth trajectory is driven by multiple factors including the expansion of both the recreational and medicinal cannabis markets. Cannabis advocates are cautiously optimistic that 2020 will be a pivotal year for the legal market as the industry gains widespread acceptance and well-positioned companies will achieve revenue expectations.
The legalization of cannabis has resulted in a decrease in the illicit market, as consumers are increasingly accessing the legal cannabis market. This growth is being led by Canada’s legalization of recreational cannabis consumption at the Federal level in 2018, and the increasing adoption of legalization in the U.S.: 11 states have legal adult recreational use, and 34 states have legal medicinal use. The U.S. legal cannabis market was valued $11.9 Billion USD in 2018 and is projected to expand at a CAGR of 24.1% from 2019 to 2025. (Grand View Research) The majority of Americans support legalization, and several bills are presently tabled that would reform federal marijuana laws. As a result, consumer acceptance of legal cannabis for both medicinal and recreational use is increasing the demand for cannabis products across North America.
Driven by consumers’ demand for safe, reliable access to cannabis and cannabis products, the legal market is experiencing explosive growth as legalization spreads worldwide. The global market is projected to reach $40.6 Billion USD by the end of 2024 , with a CAGR of 24% between the end of 2018 and 2024. (BDS Analytics) Globally, spending on legal cannabis is projected to reach $130 Billion USD by 2029 according to an article from Jaffray’s.
Already, cannabis dispensaries outsell (per square foot of shopping space) the largest organic food chain, Whole Foods – $974 to $930, according to Marijuana Business Daily. Retail commerce on this scale requires (in addition to the cannabis itself) vast amounts of packaging and branding, the ingredients necessary to transform a raw commodity into a consumer product. The latest opportunity on the Stockhouse DealRoom is a Canadian-based cannabis company with a focus on ancillary products (premier vape hardware), and compliant packaging and branding for the cannabis industry.
Cannary Packaging Inc. is an emerging leader in ancillary products, custom cannabis packaging and branding services sector. 2020 is poised to be its breakout year, as the Company leverages it strategic operations across North America to expand its sales and distribution platform.
Cannary is a private company (at present), meaning an entry opportunity for investors at the earliest level. While this may be a concern with some investors, the Company is currently in negotiation with a U.S. publicly listed company for a potential merger in 2020. Providing additional reassurance for investors, Cannary is experiencing strong revenue growth, and is establishing industry leading margins, reporting $4 Million USD in revenue in its first full calendar year of operations.
In 2019, the Company expanded its operations by completing the acquisition of a California-based ancillary products company from KushCo Holdings. This strategic acquisition provides Cannary exposure to their client base and distribution channels across the U.S. strengthening the Company’s market penetration. California is the largest cannabis market in the world. In California, consumer spending on cannabis is forecast to reach $7.2 Billion USD in 2024, with a CAGR of 19% over the next five years. (Arcview Market Research and BDS Analytics) By 2025, California is forecast to be responsible for 27.4% of the entire U.S. legal market. (Statista) Vaporizer cartridge sales in California are also booming, increasing to $75.6 Million in May 2019 from $26.8 Million in January 2018. (Arcview Market Research and BDS Analytics)
As thought leaders, Cannary has identified the opportunity to proactively respond to vape safety issues in the marketplace by seeking out a long-term solution. After extensively vetting vape hardware and evaluating the products capable of meeting increasing regulatory requirements, Cannary became the distribution agent for Verified® Vapes, a product line of premier vaporization hardware. The Verified® product line includes high quality products that exceed all North American standards for heavy metals and leads the industry for consumer safety and reliability. Verified® Vapes competitively priced products pair product quality and performance, resulting in a strong foundation for Verified®’s success in North America. Verified® leading vape products feature anti-counterfeiting stickers, certificates of authenticity, and employs strict supply chain management which serves to displace illicit market operators.
Cannary’s management team continues to identify, evaluate and act on strategic acquisition opportunities in the U.S. that will enable it to launch new product lines in emerging high value legal cannabis markets.
Terms of the Deal
The terms of the private placement in the Cannary Dealroom are based upon a Pre-Money Valuation of $4 Million USD and a Post-Money Valuation of $6 Million USD. This assumes a maximum offering of $2,000,000 USD (40,000,000 shares) at the unit price of $0.05 per share USD. The Company reserves the right to waive this maximum.
Cannary Packaging expects to have 80,107,834 million common voting shares, post-financing. The Company is exercising its prerogative with respect to the private issuer exemption, section 2.4 of NI 45-106. Cannary Packaging Inc. intends to apply the proceeds of the financing towards its North American expansion, purchasing bulk inventory, as well as general working capital.
The estimated breakdown of the Company’s funding activities can be seen below.
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Use of Proceeds ($2M USD Pre-Merger Financing)
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Bulk purchasing inventory
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$ 1,250,000
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U.S. Expansion
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$ 400,000
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Working Capital
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$ 250,000
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Capital raise & Merger expenses
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$ 100,000
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Total Proceeds Used
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$2,000,000
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More information is available Cannary Dealroom and the full subscription agreement is available upon request from investors@cannary.com
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FULL DISCLOSURE: Cannary Packaging Inc. is a paid client of Stockhouse Publishing. Stockhouse Publishing Ltd. (Stockhouse) is not registered as a broker, dealer, exempt market dealer, or any other registrant in any securities regulatory jurisdiction and will not be performing any registerable activity as defined by the applicable regulatory bodies. This deal room is for informational purposes only and does not constitute an offer to sell or a solicitation to buy the securities referred to herein. Offers to sell, or the solicitations of offers to buy, any security can only be made through official offering documents that contain important information about risks, fees, and expenses. The information contained in this deal room is selective and does not purport to contain all the information relating to Cannary Packaging Inc. In all cases, parties should conduct their own investigation and due diligence, not rely solely on the data provided herein and are encouraged to consult with a financial adviser, lawyer, accountant, and any other professional that can help to understand and assess the risks associated with any investment opportunity.