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Data Projects Canadian Cannabis Legalization Will Spur Stronger Growth

V.ENTG, T.CRON, T.OGI

FinancialBuzz.com News Commentary

PR Newswire

NEW YORK, June 25, 2018 /PRNewswire/ --

According to research provided by Energias Market Research, the global medical cannabis market is expected to grow at a CAGR of 19.1% from 2018 to 2024, from USD 8.28 Billion in 2017 to USD 28.07 Billion in 2024. There are several important factors that boost growth in the market, including the growing recognition of medicinal benefits, increasing demand for cannabis in the treatment of various diseases, as well as a growing number of research and development investments. Legalization movements are currently succeeding in changing policies beyond the U.S. region. Canada has passed a nationwide legalization of recreational cannabis usage on June 19th, 2018, the second nation to do so after Uruguay. As for the U.S., the process of cannabis legalization for the majority of the West Coast states has already begun, while almost all states have medical use legalized to an extent. And while California is the largest market, Canada is projected to show strong sales as well; Deloitte's report projects the Canadian market will be worth at least USD 5 Billion in sales in 2018. WeedMD Inc. (OTC: WDDMF), Emerald Health Therapeutics Inc (OTC: EMHTF), Cronos Group Inc. (NASDAQ: CRON), Organigram Holdings Inc. (OTC: OGRMF), Aphria Inc. (OTC: APHQF)

Recent legislative victories for the cannabis industry are expected to have a highly positive impact on the economy as Canada has passed a nationwide legalization of recreational cannabis usage on June 19th, 2018. Despite the growing popularity of the market, education on cannabis products remains minimal. The Mount Royal University announced that it is partnering with Kwantlen Polytechnic University to offer three, non-credit, online courses on the business of cannabis. According to CBC, Brad Mahon, Dean of the Faculty of Continuing Education at Mount Royal University, explained that, "The idea was, we have a lot of courses connected to business and professional education, so this seemed like really, a natural fit; There is already a demand for the courses… We expect people who are kind of tire kickers, people who are curious and want to learn a little bit more, and we also expect people who are serious about learning more about this new industry. In many ways, these are business courses."

WeedMD Inc. (OTC: WDDMF) also listed on the Toronto Stock Exchange Venture under (TSX-V: WMD). Just earlier today, the company announced breaking news that, "a federally-licensed producer and distributor of medical cannabis, is pleased to announce that the first batch of cannabis plants have been transplanted to its modern greenhouse located in Strathroy, Ontario and are scheduled for harvest by September 2018.

"Our initial crop of plants successfully entered our recently-licensed Strathroy greenhouse last week and our first 10,000 sq. ft. grow room is now fully operational," said Keith Merker, Chief Financial Officer of WeedMD. "With this hybrid, large-scale, modern greenhouse, we will be able to produce quality cannabis with maximum efficiency. This facility will be the prominent source of supply for our medical cannabis patients and for future adult-use consumers across Canada and emerging international markets. I want to acknowledge and thank our incredibly dedicated, passionate and experienced best-in-class cultivation team."

Strathroy Greenhouse Facility Update : 

  • Secured Health Canada cultivation licence for the first four grow rooms at its Strathroy facility on June 11, 2018
  • Initial harvest expected by September 2018
  • Phase I, 220,000 sq. ft. retrofit is scheduled for completion this fall, with plans to progressively bring a total of 20 grow rooms online expanding annual production to more than 21,000 kg
  • Phase II fully-funded expansion is underway with an incremental 175,000 sq. ft. conversion representing additional potential annual yield of more than 12,000 kg, bringing the total to more than 33,000 kg by this year-end
  • Phase III involves retrofitting the remaining 215,000 sq. ft., bringing total square footage to 610,000 sq. ft, and total annual production capacity to more than 50,000 kg

For more information, access our investor presentation here and corporate video here.

About WeedMD Inc. - WeedMD Inc. is the publicly-traded parent company of WeedMD Rx Inc., a federally-licensed producer and distributor of medical cannabis and oils under the Access to Cannabis for Medical Purposes Regulations (ACMPR). The Company operates a 26,000 sq. ft. indoor facility in Aylmer, Ontario, and a second cultivation site at its greenhouse facility located in Strathroy, Ontario, representing 610,000 sq. ft. or 14 acres under glass. WeedMD has entered into supply agreements in addition to strategic relationships with established cannabis brands. WeedMD is focused on providing medical cannabis to the seniors' markets in Canada through its proprietary seniors care program. It is dedicated to educating healthcare practitioners and furthering public understanding of the role that medical cannabis plays - including as it pertains to regulatory requirements, indications and potential side effects."

Emerald Health Therapeutics Inc (OTCQX: EMHTF) is a Licensed Producer under Canada's Access to Cannabis for Medical Purposes Regulations and produces and sells dried cannabis and cannabis oil for medical purposes. The Company recently announced that it has entered into a supply agreement with Pure Sunfarms, its 50/50 joint venture with Village Farms International Inc. In this agreement, Emerald will purchase 40% of Pure Sunfarms' production in 2018 and 2019, or approximately 21,000 to 24,000 kilograms using currently projected production targets, at a pre-determined price per gram.  Pure Sunfarms has substantially completed the conversion of the first 250,000 ft2 of its existing 1.1 million ft2 greenhouse in Delta, BC to cannabis production, with the balance of the 1.1 million ft2 expected to be completed by year-end. The Company's design for the Delta 3 greenhouse is based on decades of large-scale, low-cost agricultural production experience and extensive cannabis expertise, resulting in a state-of-the-art facility with 17 individual grow rooms optimized for year-round harvesting (more than 85 harvests annually) and low-cost production. "As a co-owner of Pure Sunfarms, we are pleased to see the maturing of Pure Sunfarms' business plan and the rapid conversion of its impressive production facility. We look forward to the significant sales we expect Pure Sunfarms to generate and supporting Pure Sunfarms in the distribution of its production," said Avtar Dhillon, MD, Executive Chairman of Emerald.

Cronos Group Inc. (NASDAQ: CRON) is a globally diversified and vertically integrated cannabis company with a presence across four continents. Cronos Group recently announced that, Cronos Australia Pty Ltd. has been granted a medicinal cannabis Manufacture License by the Australian Office of Drug Control. This license permits manufacturing of cannabinoid-based products in Australia and is required for all forms of extraction, refining, concentration and transformation of the cannabis plant. Cronos Australia, a joint-venture between Cronos Group and Australian-based NewSouthern Capital, serves as the Company's hub for Australia, New Zealand and Southeast Asia. Cronos Australia will soon begin construction of its first purpose-built facility located on a 120-acre production campus in regional Victoria. "We are thrilled that Cronos Australia was granted the Manufacture License, circling out the licenses for domestic production which include the medicinal cannabis Cultivation License and Research License," said Mike Gorenstein, CEO of Cronos Group. "This is a key step for expanding our research and product development while also allowing us to produce the full scope of cannabis products for the region."

Organigram Holdings Inc. (OTCQB: OGRMF) is a TSX Venture Exchange listed company whose wholly owned subsidiary, Organigram Inc., is a licensed producer of medical marijuana in Canada. The Company recently announced that it has received an expanded cultivation license from Health Canada related to its previously announced Phase 3 expansion. As a result of this approval, cannabis plants will be moved into these new rooms on a rolling basis beginning on June 6, 2018. The Company will be able to begin staggered harvests from these new rooms by the first week in August. The remaining ten Phase 3 rooms are expected to come online on or before June 30, 2018, in stages pending Health Canada approval. As per the expansion, the refined functional design on an already improved Phase 2 design including slightly higher grow rooms and the location of HVAC units entirely on the outside of the rooms for enhanced ergonomics and improved airflow.

Aphria Inc. (OTCQB: APHQF) is one of Canada's lowest cost producers, produces, supplies and sells medical cannabis. Located in Leamington, Ontario, the greenhouse capital of Canada. Aphria recently announced the successful first step of their previously announced U.S. expansion strategy. Aphria, through a strategic investment into DFMMJ Investment Ltd., a special purpose private company, entered into an exclusive Management Agreement with Chestnut Hill Tree Farm, LLC. Chestnut is a Florida nursery authorized by the Florida Department of Health, Office of Compassionate Use, as a dispensing organization of medical cannabis to patients in need in the State of Florida. Chestnut currently holds one of seven licenses granted in Florida, which currently represents approximately 14% of the US medical cannabis market with a total estimated market size at maturity, as calculated by ArcView Market Research, of over USD 1.1 Billion. Over the next six months, DFMMJ plans to significantly increase the size of Chestnut's operations while introducing processing automation and other operational improvements.  These improvements will largely stem from the greenhouse growing intellectual property that Aphria has licensed to DFMMJ in exchange for additional common shares in DFMMJ.

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