Meticulous Processes Allow Craft Cultivators to Grow Superior Cannabis
Following the recent legalization of cannabis in Canada and the continued efforts in the U.S., a plethora of recreational dispensaries began to emerge. Recreational dispensaries sell cannabis-based products such as flowers, oils, tinctures, topicals, and many others, which anyone can purchase as long as they are of legal age. Notably, dispensaries offer a variety of products suited to each individual's needs, as every individual consumer has a different tolerance level, meaning that the products may have varying effects. For instance, a 1:1 CBD to THC ratio is a balanced potency and is recommended for users who can handle the psychoactive properties of THC. On the other hand, less avid users are encouraged to purchase an 18:1 CBD to THC ratio product. An 18:1 ratio is high in CBD and is geared towards more novice users who don't intend to get "high," according to Care By Design. A CBD dominant product is typically used for relaxation purposes or to alleviate minor medical issues such as headaches or soreness. Generally, most recreational dispensaries tend to sell THC dominant products, however medical dispensaries are more likely to offer a mix of both. Additionally, CBD and THC levels within the plant can be altered by using special farming techniques. Meticulous growing processes can enable a plant to achieve the maximum cannabinoid density that a seed allows. For instance, cultivators growing high-THC flowers are looking to produce more trichomes on the plant. Trichomes can be found on various plants, however, on the cannabis plant, trichomes can determine the strain's potency and effectiveness. The outcome of the trichomes' growth can be manipulated by prolonging harvest time, changing light levels, and curing the bud. By achieving the maximum cannabinoid content, cultivators are tapping into a new market for consumers searching for a potent and premium-grade product. According to data compiled by Ameri Research, the global legal marijuana market was valued at USD 14.3 Billion in 2016. By 2024, legal marijuana global sales are projected to reach USD 63.5 Billion while exhibiting a CAGR of 21.1% from 2017 to 2024. Pasha Brands Ltd. (OTC:CRFTF) (CNSX:CRFT.CN), Cronos Group Inc. (NASDAQ:CRON) (TSX:CRON.TO), Aphria Inc. (NYSE:APHA) (TSX:APHA.TO), Charlotte's Web Holdings, Inc. (OTC:CWBHF) (CNSX:CWEB.CN), Origin House (OTC:ORHOF) (CNSX:OH.CN)
Lower-quality cannabis buds tend to be affected by environmental factors such as a lack of light or excessive heat. Generally, most cultivators operate their farms indoors or inside greenhouse facilities as they allow cultivators to completely control the environmental factors. For example, a strain such as Fruit Spirit is typically grown in warm outdoor climates, however, with a controlled growhouse, cultivators can grow the strain in colder environments. Now, thanks to these techniques, cultivators have begun to engage in cultivating "craft cannabis." Craft cannabis is similar to other craft artisan professions where the producers are highly attentive to each individual part of the process. Specifically, cultivators monitor the plant throughout the process to ensure that the plants grow well without any disturbances such as molding or bug infestations. Moreover, craft cannabis growers stray away from using toxic chemicals and pesticides in order to produce a more natural product. Additionally, growers are more likely to hand-trim the flowers so the buds don't lose their potency and flavor. Consequently, the final product results in high-quality strains that wholesale cultivators cannot compete against in terms of quality. "In a marijuana industry landscape increasingly dominated by big companies, there remains a place for small, craft cannabis producers selling high-end products ranging from flower to edibles," said Omar Sacirbey, Marijuana Business Daily Science and Technology Report. "In fact, if the industry evolves under the right conditions, small marijuana business advocates say, craft will be the future of cannabis."
Pasha Brands Ltd. (OTC:CRFTF) (CNSX:CRFT.CN) is also listed on the Canadian Securities Exchange under the ticker (CNSX:CRFT.CN). Earlier this week, the Company announced that, "Between 2014 and 2018 global sales of legal cannabis more than tripled from $3.4 billion to $10.9 billion, according to the State of the Legal Cannabis Markets report from Arcview Market Research. BDS Analytics calls for a near-quadrupling from 2018 levels to $40.6 billion by 2024 at an annual growth rate of 21.9%. This has led many people to wonder, why the recent market downturn in the cannabis sector?
'Legal cannabis, particularly in Canada, has been struggling under the weight of burdensome regulations, poor supply-chain management, and quality issues,' said Jamie Shaw, Chief Communications and Culture Officer for Pasha. 'Coupled with that, companies in the sector were slow to deliver the results expected and were generally seen as overvalued. Share prices were determined at a time when there were relatively few licences that seemed to have a stranglehold on the regulated marketplace.'
While these challenges are most pronounced in today's market, for Pasha it has been an affirmation of its business plan. 'We never bought into the big-box mentality that's causing many of these problems," Shaw said. "Pasha has focused on small batch, craft producers, and has been meeting its goals at a quick pace, with the first micro-cultivation harvest expected in December.'
Pasha has been on-boarding brands and people that made legalization possible, including Baked Edibles, Earth Dragon Organics, and Beard Brothers Collective, and has acquired a Health Canada licensed facility on Vancouver Island. Pasha expects to be the first licensed, nation-wide, all-craft company to be operational by end of Q4 2019/early Q1 2020.
Of the first 5 micro-licences issued by Health Canada, Pasha has signed supply agreements with all of them. Pasha also has signed supply agreements with 60 more applicants currently in the CTLS queue with Health Canada, and another 40 navigating the licensing process with Pasha subsidiary, BC Craft Supply Co. Ltd. With 100 micro-cultivators each permitted to produce up to 500kg per year, Pasha could have the ability to bring up to 50,000kg per year of high-quality craft cannabis to Canadian consumers.
'The legal market has yet to see products with the same care and attention to detail that went into the highest quality, illicit products," said Patrick Brauckmann, Executive Chair of Pasha Brands. "Pasha is committed to bringing products to the marketplace that put the consumer first.'
Partnered with powerful distributors like Great North and developing innovative industry solutions like Craft Labs, Pasha looks to disrupt how people think of legal cannabis.
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."
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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 had entered into an agreement to acquire an 84,000 sq. ft. GMP compliant fermentation and manufacturing facility in Winnipeg, Canada from 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."
Aphria Inc. (NYSE:APHA) (TSX:APHA.TO) is a leading global cannabis company driven by an unrelenting commitment to our people, product quality and innovation. Aphria Inc., through its subsidiary Aphria Deutschland GmbH, recently launched the Company's first CBD-based nutraceutical, the first product in its CBD-based cosmetics line for the German market. Featuring CBD derived from hemp, the CannRelief brand of products are being produced in the European Union and distributed by the Company's subsidiary, CC Pharma, which has access to more than 13,000 pharmacies throughout Germany. "We are excited to introduce our first brand of CBD products for the German nutraceutical and cosmetics market," said Jakob Ripshtein, President of Aphria. "Supported by our extensive distribution network through CC Pharma, CannRelief provides a natural extension to Aphria's growing business opportunities in the German medical cannabis market. We look forward to providing a full range of CannRelief CBD products this year."
Charlotte's Web Holdings, Inc. (OTCQX:CWBHF) (CNSX:CWEB.CN) is the market leader in the production and distribution of innovative hemp wellness products. Charlotte's Web Holdings, Inc. recently announce that The Vitamin Shoppe (NYSE:VSI), an omni-channel, specialty retailer of nutritional products, has commenced selling the new line of Charlotte's Web CBD hemp extract-infused CBD gummies in 738 stores across 45 U.S. states. This expands Charlotte's Web product offerings carried by The Vitamin Shoppe to include CBD hemp extract oil tinctures, liquid capsules, and now gummies. Charlotte's Web gummies are a popular edible format providing measurable consumption of convenient bite-sized full-spectrum CBD hemp extract. "This nationwide pickup of our popular new gummy line by The Vitamin Shoppe is very exciting to report," said Charlotte's Web Chief Executive Officer Deanie Elsner. "Working with a trusted retail partner that is dedicated to helping its customers become their best self, allows us to effectively expand our national footprint giving more Americans retail access to our leading CBD hemp extract wellness products. We are thrilled about The Vitamin Shoppe's decision to expand their offering with our new chewable gummies."
Origin House (OTCQX:ORHOF) (CNSX:OH.CN) is a growing cannabis brands and distribution company operating across key markets in the U.S. and Canada, with a strategic focus on becoming a preeminent global house of cannabis brands. CannaRoyalty Corp. d/b/a Origin House recently announced its financial results for the three and six-month periods ended June 30, 2019. The following are financial highlights of Origin House's operating results for the three months ended June 30, 2019, compared to the three months ended June 30, 2018: Revenue was CAD21.4 Million as compared to CAD 3.5 Million; Gross margin including gains on biological assets was CAD 4.4 Million as compared to CAD 0.8 Million; Operating expenses were CAD 23.5 Million as compared to CAD 6.3 Million; Loss from operations was CAD 19.0 Million as compared to CAD 5.5 Million. Marc Lustig, Chairman and Chief Executive Officer of Origin House commented, "I am very proud of the entire Origin House team for generating another quarter of record revenue growth, leveraging the California brand support and distribution platform we built over the past several years, to deliver results for shareholders. It speaks to the strength and maturity of our organization that we were able to increase our share of shelf in California while preparing to integrate with Cresco Labs. To that end, in this quarter, we successfully executed on the sale of Alternative Medical Enterprises LLC generating a 156% return on investment, our distribution division Continuum entered into a distribution agreement with Cresco and began distributing Cresco branded products across California, and we have made substantial progress on post-closing groundwork."
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