Major Industries eye the Cannabis Market in Search of Renewed Growth Opportunities – iCrowdNewswire
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Apr 15, 2019 2:38 AM ET

Major Industries eye the Cannabis Market in Search of Renewed Growth Opportunities


iCrowd Newswire - Apr 15, 2019

NEW YORK,– Canadian cannabis companies have recently begun launching operations within the U.S. due to the attractive growth opportunity the country presents. In particular, states that have legalized recreational use, such as CaliforniaColoradoNevada, and Washington, have become popular regions. Furthermore, as they expand operations around the country, cannabis-based companies are also looking to list either on the New York Stock Exchange or the Nasdaq Exchange, the two largest exchanges in the world. As legalization efforts continue to ramp up, more and more companies are listing or uplisting onto these major exchanges. The explosive growth of the cannabis marketplace has allowed the industry to become a trending topic among investors and analysts alike. As such, investment banks such as Piper Jaffray, RBC Capitals, and Cowen have backed the industry by covering publicly traded cannabis-based companies. For example, RBC Capitals analyst Nik Modi believes that cannabis is the next up and coming global industry. Modi expects the legal U.S. cannabis market to grow at a CAGR of 17% and reach as much as USD 47 Billion within the next decade. Globally, the medical cannabis sector accounts for the majority of the overall market share, however, Modi suggests that the industry will continue to grow due largely to the recreational sector. The only countries that have fully legalized cannabis are Canada and Uruguay, however, a handful of countries maintain lenient regulations regarding personal consumption. Despite Canada and Uruguay both having legalized cannabis entirely, the U.S. is still the biggest market driver. Although the U.S. has only 10 states and the District of Columbia that have legalized cannabis, the U.S. alone is positioning the industry to become the next disruptive market. WeedMD Inc. (OTC: WDDMF) (TSX-V: WMD), Pyxus International Inc. (NYSE: PYX), Aphria Inc. (NYSE: APHA) (TSX: APHA), CannTrust Holdings Inc. (NYSE: CTST) (TSX: TRST), HEXO Corp. (NYSE-A: HEXO) (TSX: HEXO)

Modi focuses on two key aspects of the recreational sector; the analyst suggests that the growing prevalence of cannabis concentrates and edibles will significantly accelerate the sector. The two segments are already seeing large investments pour in from various public sectors. For instance, beverage and tobacco producers have invested in the cannabis marketspace in order to offset their declining revenues as many of those players in their respective industries believe that cannabis is the next major market. Specifically, those companies are either integrating cannabis into their business operations or simply holding a stake within a cannabis company. Moreover, the cannabis marketspace could see other sectors get involved as well. The evolution of cannabis has completely changed from decades ago, when it was most commonly smoked. Nowadays, consumers are enjoying cannabis in a variety of ways such as vapes, oils, tinctures, and creams. The development of the cannabis industry could lead other industries, such as the health and wellness sector, to explore the cannabis marketplace. “Driving the growth is recreational use of the product, particularly concentrates and edibles. Estimates already suggest that the US category alone is USD 50 Billion, which compares to spirits USD 58 Billion, wine USD 65 Billion, and beer USD 117 Billion,” said Modi, “We think this is exactly the type of move that more companies should be making (not in cannabis necessarily, but having the foresight to invest in future revenue streams, especially at a time when the core business is performing),” Modi said.

WeedMD Inc. (OTCQX: WDDMF) (TSX-V: WMD) is also listed on the TSX Venture Exchange under the ticker (TSX-V: WMD). Earlier this week, the Company announced that, “it has closed on the purchase of an additional 60 acres of prime land located directly adjacent to its 98-acre Strathroy property. WeedMD’s outdoor grow now has the potential to increase to more than 100 acres. As previously announced, the Company has applied to Health Canada for an amendment to its Strathroy licence to expand beyond its greenhouse cultivation with an initial 25-acre, low-cost, outdoor grow operation in 2019. Link to release here. An additional 25 acres had previously been planned to come online as Phase II in 2020. With today’s announcement, Phase II will increase to 75 acres for an overall outdoor cultivation of 100 acres online by 2020.

Pending Health Canada approval, WeedMD’s outdoor grow is expected to increase its total yield to more than 100,000 kgs of cannabis in 2020 and more than 150,000 kgs when combined with its greenhouse cultivation.

“With the amalgamation of this property and our existing licensed footprint, we now own more than 160 acres of contiguous land in Strathroy – that’s 100 adjoining acres of prime workable agricultural land for outdoor cultivation. WeedMD is well-positioned to be the industry leader setting the benchmark for low-cost, scalable, quality-driven outdoor production in Canada,” said Keith Merker, CEO of WeedMD. “As one of the first out of the gate, our experienced cultivation team has started onsite preparedness with ready-tested genetics and clones being propagated at our state-of-the-art greenhouse. The ability to produce consistent strains for dried flower, extracts and concentrates at a fraction of the cost of other production platforms will give us a strategic edge as we expand our product lines and commercial reach with our first outdoor harvest expected in fall 2019.”

“Our Strathroy property was strategically selected in 2017 for its modern greenhouse and future growth potential. The vast outdoor property has full sunlight, an abundance of air flow, a protective buffer zone of trees and proximity to our infrastructure and propagation operations at the greenhouse. We have now capitalized on the opportunity to expand across perfectly-maintained adjacent lands already primed for outdoor cultivation – all of which can now be easily folded into our licensed property,” said Derek Pedro, Chief Cannabis Officer of WeedMD. “With the purchase of the adjacent 60 acres of land for outdoor grow, we’re well on our way to rapidly scaling production, with Phase II bringing us to full capacity in 2020.”

About WeedMD Inc: WeedMD Inc. is the publicly-traded parent company of WeedMD Rx Inc., a federally-licensed producer and distributor of cannabis products for both the medical and adult-use markets. The Company owns and operates two facilities: a 26,000 sq. ft. indoor facility in Aylmer, Ontario and a state-of-the-art greenhouse and outdoor facility located in Strathroy, Ontario. The Company currently has 136,000 square feet of licensed production space and is expected to have a total footprint of more than 550,000 square feet of indoor and greenhouse production in addition to more than 25 acres of outdoor cultivation space online in the first half of 2019. WeedMD has a multi-channeled distribution strategy that includes selling directly to medical patients, strategic relationships across the seniors’ market and supply agreements with Shoppers Drug Mart as well as six provincial distribution agencies.”

Pyxus International Inc. (NYSE: PYX) is a global agricultural company with 145 years’ experience delivering value-added products and services to businesses and customers. Pyxus International, Inc. recently announced the opening of its affiliate, Criticality, LLC’s, industrial hemp extraction and purification facility located in Wilson, North Carolina. The 55,000 sq. ft. state-of-the-art facility was unveiled during a ribbon cutting ceremony and grand opening event on March 12th. The facility is designed to follow good manufacturing practices and operate in compliance with dietary supplement standards. The hemp processed at the facility will be used to expertly craft and responsibly produce “Korent,” Criticality’s line of cannabidiol oil (CBD) products, as well as develop new products in its innovation pipeline. “Through our investment in Criticality—a North Carolina-based hemp processor—our goal is to become a leader in the production of CBD and related consumer products,” said Pyxus President, Chief Executive Officer and Chairman Pieter Sikkel. “The opening of the facility is a critical step in achieving that goal and is a glimpse of what’s to come in the future.”

Aphria Inc. (NYSE: APHA) (TSX: APHA) is a leading global cannabis company driven by an unrelenting commitment to our people, product quality and innovation. Aphria Inc. recently announced that its German subsidiary Aphria Deutschland GmbH has been selected by the German Federal Institute for Drugs and Medical Devices to receive a license for the domestic cultivation of medical cannabis. The provisional decision announced by BfArM is subject to a mandatory 10-day standstill period for public contracts, which permits unsuccessful bidders to challenge the decision before the final contract is signed. BfArM’s decision would grant Aphria 5 of the 13 available lots, each with a minimum annual capacity of 200 kg. “Aphria is proud to have been selected as a successful applicant in the German tender process, a testament to our high production quality standards,” said Hendrik Knopp, Managing Director of Aphria Germany. “The decision from BfArM is a validation of our strategic approach to supporting the German medical cannabis market, including with high-quality, domestic production to secure vital supply for patients. We are very pleased with our continued business momentum in Germany.”

CannTrust Holdings Inc. (NYSE: CTST) (TSX: TRST) is a federally regulated licensed producer of medical and recreational cannabis in Canada. CannTrust Holdings Inc. recently announced that it had obtained the necessary permitting from the Town of Pelham to proceed with its Phase III expansion with the construction process set to commence immediately. The revised Phase III expansion is permitted for a footprint of up to 390,000 sq. ft., compared to the 600,000 sq. ft. in the Company’s initial application. However, with enhancements to the Phase III facility above and beyond the specifications initially contemplated, CannTrust maintains its total production capacity forecast of 100,000 kg per year after completion of the Phase III construction. “We are pleased with the outcome of the discussions with the Town of Pelham,” said Peter Aceto, Chief Executive Officer of CannTrust. “We believe this decision reflects our view that we are a trusted member of the community and that we are intent on listening to our stakeholders. The demand for our medical and recreational products continues to be well in excess of supply and we are keen to move ahead with the Phase III expansion and meet our capacity targets. We also continue to evaluate several strategic alternatives to meet and increase our initial production capacity goals. We are actively pursuing strategic acquisitions of land and facilities, both inside and outside Ontario and hope to update shareholders with these initiatives in due course. Our active patient count continues to increase, and the recreational market is currently undersupplied. We intend to make every effort to serve these markets with our award-winning products.”

HEXO Corp. (NYSE-A: HEXO) (TSX: HEXO) is an award-winning consumer packaged goods cannabis company that creates and distributes prize-winning products to serve the global cannabis market. HEXO Corp. has recently completed the first harvest in its 1 million sq. ft. expansion, marking an important execution milestone in the Company’s continuous growth. Since early January, plants have been moving into the greenhouse and the first plants have now been harvested. The Company continues to ramp up to full harvest capacity using the continuous harvest methodology, the latest step towards reaching the full annual production capacity of 108,000 kg of dried flower per year. “Completing the first harvest in our 1,000,000 sq. ft. greenhouse expansion showcases the dedication and hard work of the entire HEXO team,” said Sébastien St-Louis, HEXO’s Chief Executive Officer and Co-Founder. “We are very proud of our continued ability to execute on our plans, creating value for our shareholders and demonstrating our commitment to our customers. This cultivation milestone means that an expanded HEXO product offering will be available to more Canadians shortly.”

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