Top Officials Signal Major Regulatory Developments for the Cannabis Industry
NEW YORK, July 26, 2019 /PRNewswire/ -- Earlier this week, a top Congressional Chairman and Presidential candidate filed legislation to federally legalize marijuana. Representative Jerrold Nadler (D-NY) and 2020 Democratic contender Senator Kamala Harris (D-CA) signaled that a floor vote to end federal cannabis prohibition could come before the end of the year. If the legislation passes, the Marijuana Opportunity Reinvestment and Expungement Act would remove marijuana and its psychoactive compound, THC, from the Controlled Substance Act. Additionally, federal legalization will also expunge previous criminal records and prevent agencies from using cannabis as a reason to reject benefits or employees. Furthermore, the legislation also proposes a 5% federal tax rate on all marijuana-based product sales. A portion of the taxes would be used for a new Opportunity Trust Fund to help people troubled during the prohibition era. Many other representatives and senators such as Cory Booker, Elizabeth Warren, Jeff Merkley and Ron Wyden have all co-sponsored the bill. Now, if the U.S. moves to federally legalize cannabis, it would be the third nation to end prohibition. Notably, Canada was the second nation to legalize cannabis entirely back in late 2018, following Uruguay's decision in 2013. While Uruguay was the first country, investors and entrepreneurs are more attracted to the U.S. and Canadian markets as the two have a large recreational user base, making them the primary growth drivers for the global industry. Should the U.S. federally legalize cannabis, it would establish the cannabis industry as a prominent global marketplace. Overall, according to data compiled by GlobalInfoResearch, global legal marijuana market was valued at USD 7.97 Billion in 2019. And by 2024, it is expected to reach USD 35 Billion while registering a CAGR of 28% over the next five years. Pasha Brands Ltd. (OTC: CRFTF) (CSE: CRFT), Canopy Growth Corporation (NYSE: CGC) (TSX: WEED), Aurora Cannabis Inc. (NYSE: ACB) (TSX: ACB), OrganiGram Holdings Inc. (NASDAQ: OGI) (TSX-V: OGI), The Green Organic Dutchman Holdings Ltd. (OTC: TGODF) (TSX: TGOD)
Despite having federally legalized cannabis, Canada is still overshadowed by the U.S., which maintains its dominance in the cannabis industry because of its early adoption. California was the first state to legalize medical cannabis back in the 1990s. Moreover, Colorado and Washington became the first two states to legalize recreational use several years ago. On the other hand, Canada recently legalized recreational cannabis, meaning that the market needs time to mature. While many Canadians are still skeptical to try cannabis because it was previously prohibited, the market continues to progress and it is expected that more first-time users will enter into the industry in the shortcoming future. Overall, during the first quarter of legalization, Statistics Canada reported that 646,000 users reported trying cannabis for the very first time. The number nearly doubled from 327,000 from a year ago when only medical cannabis was legal. Now, while there is a multitude of new consumers entering the market, a large pre-existing user base is still heavily prevalent. Specifically, medical cannabis patients have been around for a while and in some instances, medical users are among the most frequent smokers depending on the severity of their conditions. The combination of the developing cannabis industry and already established, frequent medical consumers has caused the "craft cannabis" marketplace to rapidly emerge. Craft cannabis is known as the product of an artisanal profession of cultivating premium, high-quality cannabis that is both organic and natural. The meticulous process cultivators undergo creates top-shelf quality that both recreational and medical users can enjoy. And as the industry continues to grow, craft cultivators can stand out among competition against large-scale licensed producers. "Legalization always creates consumers who are new to cannabis, and their profiles and habits stand apart," cannabis research firm BDS Analytics said. "Brands must remain highly attuned to their customers and offer a wide range of products to achieve and maintain marketplace triumph. Depending on one winning product is not enough to carry a brand."
Pasha Brands Ltd. (OTC: CRFTF) (CSE: CRFT) is also listed on the Canadian Securities Exchange under the ticker (CSE: CRFT). Earlier this week, the company announced breaking news that, "it has signed an agreement with Great North Distributors, Inc. ("Great North"), Canada's first national sales broker for legalized adult-use cannabis, to distribute Pasha's craft cannabis products throughout Canada.
Through the newly formed partnership, Great North will give Pasha Brands access to its nationwide sales and distribution network, which includes experienced sales and marketing teams, established relationships with all government cannabis distribution boards, as well as coverage with Canada's numerous private retailers.
'Our agreement with Great North is very significant for a variety of reasons,' said Jason Longden, CEO of Pasha Brands. 'Through BC Craft Supply Co., small craft producers throughout Canada will now have nationwide sales representation for their world-famous craft products - without ever having to make a sales call. The Great North leadership team's experience in the wine and spirits sector translates well into the newly established Canadian cannabis industry and is of great value as we look to build our business throughout Canada.'
Established by the owners of Southern Glazer's Wine & Spirits, the world's preeminent distributor for beverage alcohol, Great North has reach across every province in Canada, including established relationships and expertise in working with provincially-owned and operated retailers and private retailers. Great North applies industry-leading data analytics capabilities from the wine and spirits industry to the new cannabis industry, providing suppliers with a powerful data-driven approach to cannabis sales.
Doug Wieland, Executive Vice President and General Manager of Southern Glazer's Wine & Spirits of Canada and Great North Distributors, provided insight into the decision to partner with Pasha Brands, saying, 'Having spent the past year meeting the Pasha team and craft producers in BC Craft Supply Co.'s supply chain, we believe that the next big move in Canada's cannabis sector will be craft products. We look forward to bringing these products to market in a timely and accessible fashion and can't wait to see how Canadians react to this highly coveted class of cannabis products.'
With a proven track record of performance and driving sales from coast-to-coast, Great North will ensure that Pasha Brands, its subsidiaries and their products will be well-represented at cannabis retailers across the country. Great North's established cannabis sales team has been operational pre-legalization and will be responsible for selling Pasha's growing portfolio of brands and products to Canadian cannabis retailers.
Under the agreement, BC Craft Supply Co. will purchase cannabis products from licensed micro-cultivators for processing and sell the finished products through provincial and territorial government distribution systems in Canada.
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 license 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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Canopy Growth Corporation (NYSE: CGC) (TSX: WEED) is a world-leading diversified cannabis, hemp and cannabis device company, offering distinct brands and curated cannabis varieties in dried, oil and Softgel capsule forms, as well as medical devices through the Company's subsidiary, Storz & Bickel GMbH & Co. KG. Les Serres Vert Cannabis Inc., a subsidiary of Canopy Growth Corporation and a portfolio company of Canopy Rivers Inc. has received its final cultivation from Health Canada. All 700,000 sq. ft. of operating space at Vert Mirabel is now licensed for cannabis production. Vert Mirabel was established in December 2017 between Canopy Growth, Canopy Rivers, and Les Serres Stéphane Bertrand. The license for Vert Mirabel increases the facility's growing space by 190,000 sq. ft. It brings Canopy Growth's total Canadian licensed production footprint to approximately 4.6 million sq. ft, another step towards its nearly 5.6 million sq. ft. national platform. The Vert Mirabel facility leverages Bertrand's multi-generational greenhouse operational expertise to produce high-quality cannabis. "The final license for Vert Mirabel strengthens our operations and will allow us to increase supply to meet the recreational market demand," said Mark Zekulin, President and Co-Chief Executive Officer, Canopy Growth. "From everyone at Canopy Growth, we congratulate the Bertrand family and their team for achieving a fully licensed, large-scale cannabis operation in under 18 months."
Aurora Cannabis Inc. (NYSE: ACB) (TSX: ACB), headquartered in Edmonton, Alberta, Canada with funded capacity in excess of 625,000 kg per annum and sales and operations in 24 countries across five continents, is one of the world's largest and leading cannabis companies. Aurora Cannabis Inc. and UFC, the world's premier mixed martial arts organization, recently announced the launch of a joint clinical research program that will produce multiple studies under the terms of their recently announced partnership. The research will examine the use of hemp-derived CBD as an effective treatment for pain, inflammation, wound-healing, and recovery on MMA athletes. Once research is complete, any resulting product will come to life in the U.S. under the new high-performance sports brand ROAR Sports, a portfolio of high-quality, hemp-derived CBD topical treatments scientifically formulated with elite athletes in mind. Through analysis of athlete needs and scientific data, ROAR Sports will challenge the status quo, seek to alleviate the stresses of competition, and earn designation as the "Official CBD product of UFC." "Our partnership with UFC is about committing to the science that will educate and advocate," said Aurora Chief Executive Officer Terry Booth. "We are going to work together to change the way people think, to change the industry, and to launch the first hemp-derived CBD products that are backed by scientific research. The brand-building and product development are all part of our move into the U.S., and in collaboration with UFC, and we intend to play a major role in that market."
OrganiGram Holdings Inc. (NASDAQ: OGI) (TSX-V: OGI) is a NASDAQ Global Select and TSX Venture Exchange listed company whose wholly-owned subsidiary, Organigram Inc., is a licensed producer of cannabis and cannabis-derived products in Canada. In anticipation of the legalization of adult-use recreational cannabis edibles in Canada, as well as consumer demand for cannabis-infused beverages, Organigram Holdings Inc. recently developed a proprietary nano-emulsification technology that will allow for the production of both liquid and powdered cannabinoid products. In addition to the Company's previously announced plans to launch a range of premium cannabinoid-infused chocolates, Organigram is planning to launch a variety of dried powder formulation beverage products in early 2020 in Canada. "This is an exciting time for cannabis product development, says Greg Engel, Chief Executive Officer, Organigram. "We know that predictability and reliability are important to adult consumers of cannabinoid-infused products. We also believe that a powder additive will offer consumers a unique and differentiated offering, along with convenience and discretion. Allowing consumers to make their own choice as to which beverage they will infuse opens up a new consumption experience for Canadian cannabis consumers."
The Green Organic Dutchman Holdings Ltd. (OTCQX: TGODF) (TSX: TGOD) is a publicly traded, premium global organic cannabis company, with operations focused on medical cannabis markets in Canada, Europe, the Caribbean and Latin America, as well as the Canadian adult-use market. The Green Organic Dutchman Holdings Ltd. recently announced that its flagship Valleyfield, QC facility had received its organic certification from Pro-Cert, an internationally recognized leader in organic certification. Once completed, TGOD's Valleyfield facility is going to be the world's largest organic cannabis facility at over 1.3 million sq. ft. This Pro-Cert recognition adds another certification to the Company's portfolio, in addition to TGOD's already certified organic growing facilities in Canada and Europe, and shows TGOD's commitment to cement its position as the leading organic cannabis brand globally. "It's exciting to reach new milestones as we begin commercial production. Growing certified organic cannabis at scale is a highly complex process which has taken time, great care and extensive research to refine. Each of our facilities goes through a robust certification process, in line with the high standards we have set, ensuring operational excellence at all stages," commented Brian Athaide, Chief Executive Officer of TGOD. "The proprietary methods our team has developed leverage the benefits of growing in living soil and guarantees the organic integrity of the products throughout the entire production chain."
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