Policymakers Begin to Change Course on Cannabis Regulation
The support for cannabis legalization is growing every year as more countries continue to explore opportunities within the cannabis industry. In particular, the North American region is witnessing an immense swelling of support for legalization. For instance, last year Canada's federal government decided to legalize adult-use cannabis, making it the second nation to ever do so. Now, the U.S. and Mexico are also experiencing strong advocacy for the legalization of cannabis and although citizens from both nations are actively supporting legalization, the federal government has not implemented a program yet. However, the U.S. government has granted the power to legalize the plant to each individual state. As a result, more than half the U.S. has legalized cannabis for medical use, while just over a fifth has permitted its legal, recreational use. To better illustrate the shift, in the early 2000s, approximately 31% of Americans supported the legalization of marijuana. By 2018, six in every ten Americans, or more precisely, 62% said that marijuana should be legalized, according to Pew Research Center's survey. Specifically, most millennials are in favor of legalizing marijuana compared to other generations, as approximately 74% of millennials advocated for legalization, while 63% of Gen Xers and 54% of Baby Boomers supported the movement. Furthermore, politicians have also begun to change their stance on cannabis legalization because of the positive data flowing in from clinical trials. The survey also highlighted that 69% of Democrats said marijuana should be legal while the Republican party remains split with 45% in favor and 51% opposed. Nevertheless, support among Republicans has risen from just 39% in 2015. Meanwhile, Canada's legalization marked a historic milestone in the cannabis industry, creating a global powerhouse. Moreover, if the U.S. and Mexico were to also legalize cannabis, it could potentially influence other nations to explore the industry as well. And, as more countries decide to legalize cannabis for medical use and potentially recreational use, the overall industry is positioned to experience exponential growth. According to data compiled by Mordor Intelligence, the global cannabis industry was valued at USD 14.5 Billion in 2018. By 2024, the market is expected to reach USD 89.1 Billion while registering a CAGR of 37% during the forecast period from 2019 to 2024. Pasha Brands Ltd. (OTC:CRFTF) (CNSX:CRFT.CN), Cronos Group Inc. (NASDAQ:CRON) (TSX:CRON.TO), KushCo Holdings, Inc. (OTC:KSHB), The Green Organic Dutchman Holdings Ltd. (OTC:TGODF) (TSX:TGOD.TO), MariMed Inc. (OTC:MRMD)
Canada moved to legalize cannabis entirely back in October 2018 and during the first several months of legalization, the country experienced nationwide shortages. Cultivators and retailers were heavily limited because of federal restrictions that curtailed their business operations. For instance, Statistics Canada reported that on average, Canadian cannabis consumers paid approximately USD 6.83 per gram. Some provinces reported that prices per gram could reach as high as USD 10. Moreover, some Canadian consumers were still purchasing their supply on the black market to obtain high quality and potent products. James Walsh, a consultant at Maple Ridge, noted that consumers were paying nearly triple the average price for products on the black market compared to legal vendors, indicating that consumers were willing to pay more for illegal premium products rather than mediocre legal products. However, the major drawback of the illicit market is that consumers typically do not know where their supply is coming from and what it is treated with during the growing process. As a result, the "craft cannabis" industry emerged in order to meet the demands of consumers seeking higher quality products. Craft cannabis is an organic and natural growing process that aims to provide consumers with premium products that stand out amongst competitors. Typically, craft cultivators control nearly every aspect of the growing process from the lights to irrigation and airflow. Additionally, craft cultivators generally abstain from using artificial products to avoid harming the plants, which in return maintains the cannabinoid content and provides a higher yield per harvest. Overall, the intense efforts that craft cultivators rely on, create a premium product that large scale licensed producers are simply unable to compete against. Furthermore, despite the two operating in the same market segment, craft and mass-produced cannabis appeal to two different consumer markets. Large scale cultivators attract consumers looking for more supply at a cheaper rate. On the other hand, craft cultivators target consumers that are demanding high quality and organic cannabis. "We don't see large-scale cannabis as the future of cannabis," said Michael Steinmeta, Founder of Flow Canada, a California-based cannabis company. "We see the model as aggregating all of these small farmers to collectively bring massive amounts of craft cannabis to the market."
Pasha Brands Ltd. (OTC:CRFTF) (CNSX:CRFT.CN) is also listed on the Canadian Securities Exchange under the ticker (CNSX:CRFT.CN). Yesterday, the Company announced that "its wholly owned subsidiary, BC Craft Supply Co. Ltd ("BC Craft"), has signed a supply agreement with Canada's first licensed micro processor, North 40 Cannabis ("North 40").
Founded by Gord Nichol in Nipawin, Saskatchewan, North 40 Cannabis received its micro-cultivation and micro-processing licences from Health Canada on July 26, 2019. Under the agreement with Pasha, North 40 will supply BC Craft with North 40's annual production, to be sold as dried flower and other cannabis products in Canada.
"I'm absolutely thrilled to have signed an agreement with a company like Pasha," said Gord Nichol, founder of North 40 Cannabis. "They have shown micro cultivators like me that they are dedicated to ensuring craft producers in Canada will flourish under legalization. I'm excited to move ahead and looking forward to our first harvest this year." North 40 Cannabis will plant its first legal crop in August 2019 and harvest later in the fall.
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, in addition to its previously established supply agreement with Hearst Organic, this new supply agreement with a licensed micro cultivator and micro processor will help correct the cannabis supply imbalance and bring exciting new products to market. Each micro cultivator in Canada will be able to produce approximately 500 kilograms of cannabis per year, while each micro processor can process up to 600 kilograms of cannabis per year. Canada has tens of thousands of craft producers operating in the illicit cannabis market and Pasha's wholly-owned subsidiary BC Craft Supply Co. is focused on helping as many small farmers transition into the regulated market as possible.
"Signing this agreement with Canada's first micro processor is very significant as it affirms BC Craft's business model with not only the micro-cultivation market but also now with processors," said Jason Longden, CEO of Pasha Brands in reaction to the news. "North 40 has established a state-of-the-art cultivation and processing facility and we are proud to work with such an innovative team. This is simply the next step in fulfilling our goal of becoming the biggest producer of craft cannabis products in Canada and I'm confident North 40 will help us bring Canadians more of the cannabis that they're looking for."
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". For more information, please visit www.pashabrands.com"
For our latest "Buzz on the Street" Show featuring Pasha Brands Ltd. recent corporate news, please head over to: https://www.youtube.com/watch?v=DiuXVssrpos
Cronos Group Inc. (NASDAQ:CRON) (TSX:CRON.TO) is an innovative global cannabinoid company with international production and distribution across five continents. Cronos Group Inc. recently announced that it has entered into an agreement to acquire an 84,000 sq. ft. GMP compliant fermentation and manufacturing facility in Winnipeg, Canadafrom Apotex Fermentation Inc. The state-of-the-art facility, which will operate as "Cronos Fermentation," includes fully equipped laboratories covering microbiology, organic and analytical chemistry, quality control and method development as well as two large scale microbial fermentation production areas with combined production capacity of 102,000L, three downstream processing plants, and bulk product and packaging capabilities. As previously announced, Cronos Group has entered into a partnership with Ginkgo Bioworks, Inc. to produce cultured cannabinoids. Research and development under this partnership is progressing, and as associated milestones are hit, this new facility is expected to provide Cronos Group with the ability to produce cultured cannabinoids at commercial scale with high-quality and high-purity. "This acquisition will provide the fermentation and manufacturing capabilities we need to capitalize on the work underway with Ginkgo once the milestones under that partnership are achieved," said Mike Gorenstein, Chief Executive Officer of Cronos Group. "Together with Ginkgo, we are bringing innovation and the power of biological manufacturing to the cannabis industry, aiming to allow for cannabinoid production at large scale and with greater efficiency than is currently possible with traditional cultivation and extraction. We continue to be very excited about the opportunities ahead."
KushCo Holdings, Inc. (OTCQX:KSHB) is the premier producer of ancillary products and services to the cannabis and hemp industries. KushCo Holdings, Inc. recently announced the creation of its new Retail Services division. The new business unit will focus on providing comprehensive retail solutions, through strategic partnerships with best-in-class sales agencies, to leading CBD brands. KushCos retail services division will focus on industry education and compliance, as well as building distribution networks of CBD brands across conventional retail channels. With Retail Services experienced leadership optimizing growth opportunities, this division will expand the Company's platform and fuse two industries that have historically operated independently of each other. In his position as Vice President of Retail Services, Ryan Savage will oversee sales agency partnerships, including C.A. Fortune, a leading full-service national consumer products sales and marketing agency focused on lifestyle brand partnerships. In addition, he will manage the expansion of CBD into the retail space across all channels, driving sales through management of brands, brokers and customers to increase distribution and revenue growth. Ryan Savage has spent the past 15 years gaining knowledge of multiple aspects of the consumer packaged goods (CPG) industry. He has worked with many diverse, major retailers including Sprouts, Trader Joes, Target, Amazon, and Kroger, in both a branded and private label capacity.
The Green Organic Dutchman Holdings Ltd. (OTCQX:TGODF) (TSX:TGOD.TO) is a publicly-traded, premium global organic cannabis company, with operations focused on medical cannabis markets in Canada, Europe, the Caribbeanand Latin America, as well as the Canadian adult-use market. The Green Organic Dutchman Holdings Ltd. recently announced that it has submitted an application to list its common shares on the NASDAQ. The listing of TGOD's shares on the NASDAQ will be subject to a number of regulatory requirements, including registration of the common shares under the U.S. Securities Exchange Act of 1934 and a determination by the NASDAQ that TGOD has satisfied all applicable listing requirements. Subject to approval for listing, the common shares will continue to trade on the TSX Exchange (TSX) under 'TGOD', which is also the reserved symbol for the NASDAQ application. "This is an important step in the growth of TGOD, one that will broaden our investor base and increase access for international investors as we build the leading global organic cannabis brand", commented Brian Athaide, Chief Executive Officer of TGOD. "Our team remains focused on executing our business plan and creating value for our shareholders."
MariMed Inc. (OTCQB:MRMD) is dedicated to improving health and wellness with the highest quality hemp and cannabis products. MariMed Inc. recently reported its record results for both the three and six month periods ended June 30th, 2019. Results reflect consistent, dynamic growth in the company's cannabis businesses as well as momentum in its MariMed Hemp subsidiary, which posted significant initial transactions during the second quarter. Financial comparisons are to the same year-ago periods unless otherwise noted. Revenues increased 774.0% to USD 25.7 Million. Revenue from cannabis business increased 24.5% to USD 3.7 Million. Gross profit up 341.1% to USD 8.9 Million. Net income increased to USD 4.7 Million. MariMed's core cannabis businesses continued to demonstrate organic growth fueled by expansion of facilities and branded product lines, both in-house and licensed brands. Subsequent to the close of the quarter, MariMed announced a licensing agreement with Denver-based Binske to distribute its popular and diverse cannabis products in several important markets east of the Mississippi. "The second quarter of this year marks a milestone," said company President and Chief Executive Officer, Bob Fireman. "Both of our business divisions--cannabis and hemp--delivered this quarter to drive record results.
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