In order to maintain a competitive edge within any form of manufacturing, technological innovation and creative ways of thinking are imperative. Within the rapidly maturing cannabis sector, several game-changing technologies, strategies, and research breakthroughs are taking place. These include everything from robotic cranes, to genetic libraries, to even new types of financial arrangements to facilitate these advancements.
Significant innovations in the sector, both technical and financial are coming from players large and small, including Aphria Inc. (TSX: APHA) (OTC: APHQF), Aurora Cannabis (OTC: ACBFF) (TSX: ACB), Auxly Cannabis Group Inc. (TSX.V: XLY) (OTC: CBWTF), CannaRoyalty Corp (CSE: CRZ) (OTC: CNNRF), and CROP Infrastructure Corp. (OTC: CRXPF) (CSE: CROP).
The term “state-of-the-art” is becoming more commonly used with each new growing facility that’s planned and erected. However, on the world’s stage, many of the biggest innovators are coming from the minds of Canadian corporations, despite where their operations land them.
The highly-anticipated Aurora Sky facility, developed by Aurora Cannabis is at the cutting edge of the industry. Designed to have slightly higher pressure than the normal atmosphere outside, so that any leaks flow outward not inward, preventing any unwanted contaminants from entering the growing space. Come harvest time, the operation has automated robotic cranes that pick up entire tables to be moved to the growing bay, into the harvest area.
Not every new entry into the cannabis space can position themselves to have the sorts of nifty toys that Aurora can use. In fact, in many cases, new companies are still having intense difficulty acquiring the capital to carry out their own plans, whether they’re grandiose or small.
This is where another innovation is entering the scene, in terms of financial and technical assistance. Vancouver-based CROP Infrastructure Corp is offering several private companies and brands an opportunity to join the sector, through a creative business model not unlike real estate income trusts (REITs), in that it’s real estate focused and asset backed. CROP is an acronym for Cannabis Real estate Opportunity Portfolio, with the company’s express mission to provide tenant-growers with capital to invest in land and equipment, and the expertise to manage, brand, and license their products effectively.
Competition drives innovation, and through CROP’s intervention, the number of individual operators able to achieve sector growth will be increased. The sector as a whole is expanding outward into new markets, or innovates itself inwardly by increasing yields, dropping production costs or developing new products and services.
INVESTMENT AND INNOVATION GO HAND IN HAND
The sheer size and scale of the global cannabis industry is expanding rapidly. In fact, according to a newly released report titled ‘The State of Legal Marijuana Markets’ put out by Arcview Market Research and BDS Analytics, the market is expected to triple within the next four years.
By 2022, it’s estimated that the global cannabis market could be worth as much as $32 billion. Growth in the US alone is expected to bring in $23.3 billion. Two thirds of spending is expected come from the adult-use (recreational) market, while medical marijuana covers the remaining third.
As the United States and the World open up to cannabis offerings, it’s Canadian companies that seem to be leading the charge, both technologically and financially.
CANADIAN CANNABIS INNOVATORS
Aphria Inc. (TSX: APHA) (OTC: APHQF)
Recently Aphria announced its intentions to build a state-of the-art Extraction Centre of Excellence in Leamington, Ontario. Equipped to conduct a wide range of cannabis extractions, including CO2, butane and ethanol, Aphria is hyper-focused on becoming world leaders in extraction. Aphria also earlier this year added the continent of Africa to its world map through a series of agreements to acquire an interest in a licensed producer of medical cannabis extracts in Lesotho. The strategy is to gain a supply of high-grade low-cost cannabis isolates in Africa, for world distribution.
Aurora Cannabis (OTC: ACBFF) (TSX: ACB)
Adding to the high-tech envy to many of its peers brought on by its Aurora Sky facility and its robots and other cutting edge tools, Aurora Cannabis just became even brainier. Recently Aurora acquired industry leading science, genetics, and independent cannabis product testing firm, Anandia Laboratories Inc. The newly acquired firm’s intellectual property (“IP”) includes the rights to a number of key genes in the cannabinoid pathway, as well as patents pending for genetic markers. Further R&D expansion is planned, including a new 12,700 sq ft head office, testing lab, and research and tissue culture facility in Vancouver, BC, as well as a new 22,500 sq ft Cannabis Innovation Centre focused on breeding and genetics in Comox, BC.
Auxly Cannabis Group Inc. (TSX.V: XLY) (OTC: CBWTF)
Formerly known as Cannabis Wheaton, the Auxly Cannabis Group turned analyst heads in May, officially courting the first ever blue stamp of approval from a major Canadian banking institution, namely the Bank of Montreal. The bank raised $100 million for the company in a bought deal. Auxly went on to use the proceeds from the offering on domestic and international operations, capacity expansion, acquisitions and some other general expenses. Among the more recent announcements was an update on the development of the company’s joint venture with FV Pharma Inc. on an existing 620,000 sq ft building space, with a portion already currently licensed for cultivation.
CannaRoyalty Corp (CSE: CRZ) (OTC: CNNRF)
CannaRoyalty recently received a reward for its initial investment in a leading R&D firm, namely the above-mentioned Anandia Labs, which was acquired by Canopy. The initial investment of $4 million paid off handsomely for Cannaroyalty, which walked off with a cool $19 million in the deal. CannaRoyalty prides itself on seeing the long-term potential in analytics, testing and genetics verticals. However, the company has also seen benefit from advancements in cannabis distribution, namely by partnering with Posh Green Collective delivery, a California-based licensed cannabis delivery service with a license to sell adult-use cannabis through San Francisco’s equity permit program, and previously acquiring Rivers Distribution (RVR) for roughly $20 million earlier in the year.
CROP Infrastructure Corp. (OTC: CRXPF) (CSE: CROP)
Through a deal with tenant grower “HEMPIRE COMPANY LLC”, CROP recently received final approval to triple its growing space on its Humboldt Campus, located in Humboldt, California. Prior to that, CROP secured a 30% interest in a state-of-the-art Washington greenhouse, by advancing its tenant the capital required to purchase equipment, and completely retro-fit the complex with upgrades. CROP also recently acquired US distribution and Italian territory rights to 50 cannabis innovative wellness products, expanding its footprint into Europe.
CROP INFLUENCING INNOVATION AND INFRASTRUCTURE
Unlike most players in the sector, CROP Infrastructure Corp. (OTC: CRXPF) (CSE: CROP) has cleverly positioned itself as a facilitator in the space. By advancing upstart tenants and partners with the capital and resources needed to grow and thrive, CROP is securing a series of interests in tomorrow’s biggest cannabis brands.
Across its 12 greenhouse projects, CROP has already signed with a full slate of tenants who are happy to grow their plants under CROP’s roof. CROP is currently involved in the operation of facilities in Washington, and in California, where it recently tripled its growing space capacity.
A typical CROP-Tenant agreement involves an advancement of capital, secured by a 60% stake on all product until the initial loan is repaid. Upon repayment, CROP continues to retain a 30% stake indefinitely. The innovative model provides CROP with secure revenue streams, de-risked across a series of tenants.
CROP isn’t just a lender though. The company works hard for its clients, by securing brands to license and signing supplier deals for them to provide ingredients to other established brands and products. By doing this, CROP is fashioning itself as a sort of one-stop-shop for entrepreneurs looking to make it big in the cannabis sector.
With a steady stream in place, and several other markets openly announced for future projects, CROP has been very clear that it plans an aggressive expansion in 2018. Demand for investment and expert assistance has drawn several clients already into CROP’s flock, which is provided with opportunities for land expansion, turnkey state-of-the-art greenhouse facilities, brand positioning opportunities, specialized equipment, and access to approved nutrients for select licensed producers in legal growing regions.
For a more in-depth look into CROP Infrastructure Corp., visit the following report from USA News Group on the company - http://usanewsgroup.com/2018/06/19/cannabis-real-estate-solutions-giving-cultivators-and-investors-plenty-of-space-to-grow/
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