Maturing Cannabis Markets Offer Consumers Various Boons
NEW YORK, June 5, 2019 /PRNewswire/ -- The cannabis market has strategically integrated into major markets worldwide. Primarily, most countries are moving towards adopting cannabis for medicinal applications. However, there are a handful of countries that have either decriminalized or legalized its recreational use as well. While medical cannabis is much more widely accessible and available, the recreational market is growing at a much more rapid pace, largely due to the North American region. Currently, the medical cannabis sector accounts for the majority of the market share, but as the U.S. and Canadian market continue to mature, the recreational sector is expected to prevail. The cannabis market is still relatively new, meaning that some companies aren't fully efficient and operating at maximum capacity. For instance, Canada recently legalized cannabis entirely in late 2018 but despite fully legalizing the plant, the Canadian government has imposed strict restrictions on cannabis-related operations. In this case, cultivators are limited in how many cannabis plants they can grow in their facilities and retailers in certain provinces even face curtailed hours, which significantly impacts their financials as well. As a result, newer markets tend to have higher prices for products, whereas U.S. states that have adopted cannabis legislation early have significantly lower prices per package or price per gram. As of 2019, Colorado's average price across all product segments was approximately USD 23.95, while Washington's average price was USD 15.33, according to Leafly. On the other hand, California and Nevada adopted recreational legislation nearly four years after Colorado and Washington and California's average price across all products segment is approximately USD 30.90, while Nevada's average price is USD 26.94. As legalization continues to spread, regions that have adopted cannabis, as well as companies, are maturing, leading to a decline in prices. These declining prices, in turn, make cannabis-based products much more affordable for new consumers to try, thus leading to a growing user base. According to data compiled by GlobalInfoResearch, the global legal marijuana was valued at USD 7.97 Billion in 2019. By 2024, the market is expected to reach USD 35 Billion while registering a CAGR of 28% over the next five years. Blueberries Medical Corp. (OTC: BBRRF) (CSE: BBM), Tilray, Inc. (NASDAQ: TLRY), Aurora Cannabis Inc. (NYSE: ACB) (TSX: ACB), Khiron Life Sciences Corp. (OTC: KHRNF) (TSX-V: KHRN), PharmaCielo Ltd. (OTC: PHCEF) (TSX-V: PCLO)
While Washington has the cheapest average price in the U.S., that was not the case when the state first adopted recreational cannabis. According to Headset data, a gram of cannabis flower costs approximately USD 4.90 in Washington. During the early stages, a gram of flower cost nearly USD 30 in Washington. Headset's report highlighted that the entry of thousands of distinct brands as well as vertical integration allowed companies to reduce their prices. Moreover, the thousands of players within the marketspace also created a less hotly contested landscape. The price of cannabis is determined by various factors such as taxes, availability, competition, and most importantly, cultivation costs. Typically, the cultivation cost in North America is steep, which results in a more expensive product. As a result, U.S. and Canadian cannabis-based companies have begun to establish operations in the Latin American region in an effort to offset costs. In particular, large markets such as Argentina, Brazil, Colombia, and Peru are highly attractive. These specific countries have a large medical cannabis user base, but notably, cultivation costs are significantly cheaper. Many companies are specifically targeting Colombia because the country offers favorable growing conditions, allowing companies to cultivate high quality and natural cannabis at a fraction of the cost compared to North America. "The legalization and use of cannabis is becoming more and more popular not only in North America and Europe, but in Latin American countries as well. Investment is flowing into the region as it positions itself to be a leading supplier of the world's cannabis market," said BizLatin Hub. "With stable legal frameworks supporting cannabis production processes, Latin America is expected to become a dominant supplying region of cannabis extracts and derivatives to the global market in the coming years."
Blueberries Medical Corp. (OTCQB: BBRRF) (CSE: BBM) is also listed on the Canadian Securities Exchange under the ticker (CSE: BBM). Just earlier today the Company announced that it has, it has entered into a letter agreement (the "Letter Agreement") to become a strategic supplier of medical cannabis products to Canurius UG ("Canurius"), for the sale and distribution of cannabis products in Germany with the potential for expansion into Austria, Switzerland and the Netherlands. Pursuant to the terms of the Letter Agreement, Blueberries will provide Canurius with approximately 100 litres (100 kg) of cannabis oil extract per month for an initial 12-month term. The completion of the transaction is subject to and conditional upon satisfactory legal and financial due diligence and the execution of a definitive agreement.
Canurius is an independent cannabis distributor with a network of 100 pharmacies in Germany that is expected to expand to approximately 1,000 pharmacies by 2020. The agreement provides for the immediate import, sales and distribution of Blueberries CBD-based cannabis products for health and wellness purposes, including extracts, finished products, cosmetics, dietary supplements and other medicinal-grade cannabis products under German regulations by Canurius for its authorized market and territory. Canurius is also currently in the process of negotiating with large German pharmacy wholesalers to increase its market penetration to more than 10,000 pharmacies.
"Germany has a medicinal cannabis supply shortage and Canurius is an ideal partner to take Blueberries' cannabis products into Germany as one of Europe's most promising cannabis distributors with a potential network of 10,000 pharmacies," stated Dr. Patricio Stocker, Chief Executive Officer, Blueberries. "This is also an important step towards our entry to the broader European market, an evolving jurisdiction with a total population of over 740 million people. The specialized import and distribution partners that the Canurius team has will expedite our movement into these additional countries."
"We are looking forward to the opportunity to bring Blueberries' exclusive cannabis strains and unique product offerings to the European market. There is tremendous demand for premium medical-grade cannabis oils with high CBD content, making Blueberries' catalogue of over 140 proprietary strains and related products ideally suited to our distribution network," stated Bekir Ari, Managing Partner of Canurius. "The team at Blueberries is truly world-class and we are confident that their expertise in agriculture, genetics, manufacturing and marketing will make them ideal partners as we scale to meet the growing demand in Germany, Austria, Switzerland, the Netherlands and the greater European Union in the future. The innovative products being developed by Blueberries including cannabis-based beverages, cosmetics and medical products will be extremely valuable as the cannabis industry in Europe evolves and consumers look to consume diversified cannabis-based products."
Germany alone has a population of over 80 million people and is Europe's largest potential regulated medical cannabis market (Source: Prohibition Partners - The European Cannabis Report 4th Edition, January 2019). The current German medical cannabis regulations came into effect on March 10, 2017 and the country is heavily reliant on imported cannabis to meet the growing demand. Blueberries and Canurius will work collaboratively to prepare and obtain the necessary export and import approvals to begin importing Blueberries' products and cannabis extracts, formulations and products to Germany.
Canurius has committed to purchase from Blueberries a quantity of up to 100 litres (100 kg) of CBD oils per month, for a period of 12 months, subject to renewal thereafter. It is anticipated that it will take the parties 6 months to ramp up to these quantities.
About Canurius UG
Canurius is an independent cannabis distributor in the final stages of becoming a licensed importer and distributor of medical cannabis products in Germany. Canurius will fulfill the functionality of a sales office in Europe focused on increasing producer's market penetration in the EU. The company specializes in logistics and organizing commercial agreements within Europe in order to offer added value to its partners and help to bring their products to the European market. The company will distribute cannabis-based products directly to its customers which includes direct reach to a network of over 100 pharmacies in Germany expected to expand to approximately 1,000 by 2020. In addition to Canurius' own distribution network, the company is working with the biggest wholesalers in the pharmaceutical industry its market penetration to more than 10,000 pharmacies. For more information visit http://www.canurius.com/en.
About Blueberries Medical Corp.
Blueberries is a Latin American licensed producer of naturally grown premium quality cannabis with its primary operations ideally located in the Bogotá Savannah of central Colombia and operations currently being established in Argentina. The Company is led by a specialized team with proprietary expertise in agriculture, genetics, extraction, medicine, pharmacology and marketing, Blueberries is fully licensed for the cultivation, production, domestic distribution, and international export of CBD and THC-based medical cannabis in Colombia. Blueberries' combination of leading scientific expertise, agricultural advantages and distribution arrangements has positioned the Company to become a leading international supplier of naturally grown, processed, and standardized medicinal-grade cannabis oil extracts and related products.
Additional information about the Company is available at www.blueberriesmed.com."
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Tilray, Inc. (NASDAQ: TLRY) is a global pioneer in the research, cultivation, production and distribution of medical cannabis and cannabinoids currently serving tens of thousands of patients in twelve countries spanning five continents. Tilray, Inc. recently announced that after completing an acquisition of its existing import and distribution partner Alef Biotechnology SpA, the company had officially relaunched as Tilray Latin America SpA, a wholly-owned subsidiary of Tilray. Tilray Latin America will further strengthen Tilray's position as a global leader in the medical cannabis market. Tilray currently has medical cannabis products available in twelve countries and operates globally through its wholly-owned subsidiaries in Australia & New Zealand, Canada, Germany, and Portugal. Tilray Latin America will import, produce and distribute Tilray branded medical cannabis products in Chile and create a hub to distribute Tilray products throughout Latin America, subject to local laws. Tilray previously announced a partnership with Alef Biotechnology in February 2017 to import and distribute Tilray products in Chile and Brazil. Alef, now Tilray Latin America, is currently licensed by the Chilean government to commercially produce medical cannabis and is planning a state-of-the-art facility to domestically produce and process medical cannabis products. Chilean law permits patients to access medical cannabis products under the supervision of a recommending physician.
Aurora Cannabis Inc. (NYSE: ACB) (TSX: ACB), headquartered in Edmonton, Alberta, Canada with funded capacity in excess of 500,000 kg per annum and sales and operations in 22 countries across five continents, is one of the world's largest and leading cannabis companies. Aurora Cannabis Inc. previously announced that, further to the Company's press release dated December 7, 2018, the Company had entered into a Letter of Intent to acquire all of the issued and outstanding shares of Farmacias Magistrales S.A., subject to customary due diligence provisions, the completion of definitive agreements, and regulatory and government approval. As previously announced, Farmacias recently became Mexico's first and only federally licensed importer to date of raw materials containing THC, gaining the necessary licenses, facilities, and permissions to import raw THC material, and manufacture, store, and distribute medical cannabis products containing over 1% THC. This transaction firmly establishes Aurora's first-mover advantage in one of the world's most populous countries, where more than 130 million people will have federally legal access to a range of Aurora's non-flower medical cannabis products containing THC. "This transaction positions Aurora with exclusive access to supply THC-containing medical cannabis to a large market of more than 130 million people, while also enabling us to capture the full margin of the medical cannabis we sell there," said Terry Booth, Chief Executive Officer of Aurora. "Farmacias has a large distribution network of both retail outlets and pharmacies, which will enable us to quickly scale up our operations across Mexico. Integrating Farmacias with our operations in Canada and Latin America will not only accelerate growth, it will build substantial long-term shareholder value."
Khiron Life Sciences Corp. (OTCQB: KHRNF) (TSX-V: KHRN) is positioned to be the dominant integrated cannabis company in Latin America. Khiron Life Sciences Corp. recently announced the completion of construction and the initiation of operations in its cultivation, extraction, and analysis facilities in Ibague, Colombia, where significant progress has been made towards the commercial registration and production of medical cannabis products targeting 6 million potential patients across the country. Khiron currently owns and operates one of the most sophisticated medical cannabis cultivation and processing facilities in Latin America. To date, the company has: Completed development of a state-of-the-art, 14,000 sq. ft. GMP and ISO 17025 compliant extraction and analysis lab; Obtained approval from the National Cultivar Registry and Colombian Institute of Agriculture (ICA) to list a proprietary selection of strains forming a targeted portfolio to address the major conditions of pain, epilepsy and sleep disorders. This approval positions the company to initiate commercial registration, production and sale of its medical cannabis products across Colombia; Begun construction of additional greenhouses to complement Khiron's initial 80,000 sq. ft. greenhouse; Established distribution networks to supply high quality medical cannabis produced in Khiron's main facility, with signed agreements with 903 pharmacies across Colombia and Khiron Clinics.
PharmaCielo Ltd. (OTC: PHCEF) (TSX-V: PCLO) is a global company, headquartered in Canada, with a focus on ethical and sustainable processing and supplying of all natural, medicinal-grade cannabis oil extracts and related products to large channel distributors. PharmaCielo Ltd. recently announced the Company had received the ISO 9001:2015 certification for its cultivation and extraction operations. The ISO 9001 certification, awarded to PharmaCielo, covers the production of vegetable materials for the propagation, flowering and production of both psychoactive (THC) and non-psychoactive (CBD) cannabis. It was achieved following a rigorous audit process conducted at the Company's Colombian facilities by inspection and certification company SGS. "PharmaCielo and our people continue to be the trailblazers of the Colombian cannabis industry, and we keep raising the bar. We were Colombia's first licensed producer, and first recipient of quota for propagation, among other milestones of industry leadership. Now, we are the first and only local cannabis producer to receive this coveted quality assurance certification," said David Attard, Chief Executive Officer at PharmaCielo. "Receiving and adhering to the high quality requirements of the ISO 9001 standard truly sets PharmaCielo apart and further attests to our commitment to production of the highest quality medicinal cannabis oils."
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