Craft Cultivators Make Their Presence Felt in the Highly Competitive Cannabis Industry
NEW YORK, Oct. 28, 2019 /PRNewswire/ -- While the cannabis industry was picking up steam, companies grappled to capture the attention of consumers. Specifically, in the U.S. and Canada, federal regulators provided limited amounts of operation licenses, meaning companies applying for licenses were aggressively competing against one another. However, early moving states like Colorado had originally opened 147 dispensaries in 2014 when the state first legalized adult-use. By 2018, Colorado had over 500 recreational dispensaries across the state. And while it is rewarding to obtain a license, it eventually makes it increasingly more difficult for companies to distinguish themselves against their competitors. In particular, many dispensaries aim to provide their consumers with high quality and potent products. However, most of these dispensaries usually do not grow their own cannabis or produce their own products. Typically, dispensaries purchase their products wholesale from licensed producers, which means that selecting the perfect producer can be time-consuming and tedious. Additionally, most wholesale licensed producers tend to lack quality in their products because of their large-scale grow houses. And as a result, many large producers can only provide mediocre cannabis at an affordable price. And while that may be agreeable for an infrequent consumer, it is not this way for all. Savvy consumers are more interested in unique products that are much more potent compared to standard strains. And it is the combination of the two different consumer spectrums that further accelerates the industry. According to data compiled by MarketsandMarkets, the global cannabis market was valued at USD 10.3 Billion in 2018. By 2023, the market is expected to reach USD 39.4 Billion while exhibiting a CAGR of 30.7% during the forecast period. Pasha Brands Ltd. (OTC: CRFTF) (CSE: CRFT), Cronos Group Inc. (NASDAQ: CRON) (TSX: CRON), OrganiGram Holdings Inc. (NASDAQ: OGI) (TSX-V: OGI), Neptune Wellness Solutions Inc. (NASDAQ: NEPT) (TSX: NEPT), Charlotte's Web Holdings, Inc. (CWBHF) (CWEB).
The quality of a cannabis strain is directly dictated by its complex breeding processes and technical grow methods. Specifically, the growing process of a cannabis plant can heavily determine the cannabinoid and terpene content within the strain. Generally, the cannabinoid content determines the potency of the strain, while the terpenes give it a distinct flavor and aroma. However, in order to grow high-quality products, cultivators have to provide the plants with optimal conditions, such as adequate lighting, airflow, and irrigation. However, most large-scale operators use machinery to completely automate their facilities, which can allow them to produce tons of cannabis each harvest. The machinery typically cut and collect the plants, but sometimes the harvesting process can erroneously cut off buds on the plant as well. The buds on a cannabis plant are predominantly where most of the cannabinoid content is contained. And while machinery can automate a grow-house and efficiently harvest plants, it can also severely damage the overall quality of the strain. As a result, smaller cultivators have engaged in "craft cannabis" to provide consumers with all-natural and premium-grade products. Craft cultivators strive to provide consumers with high-quality products by avoiding the use of artificial products and machinery. Artificial products such as pesticides and growth stimulants can also damage the cannabinoid content. And in order to ensure an organic plant, craft cultivators closely monitor each and every individual plant to check if there is any molding or bug infestations. Moreover, craft cultivators tend to hand-trim the plants in order to preserve the buds and maximize their cannabinoid content. "The staggering number of marijuana strains being developed is creating a connoisseur culture that favors small-scale, artisanal farms that can nimbly adapt to shifts in market demand. Because such farms can market themselves as small, sustainable, and local, they can better reflect 21st-century food movement ideals," said Ryan Stoa, Associate Professor of Law at Concordia University School of Law. "It is probably inevitable that Big Marijuana will take hold in some form, but that doesn't mean the market can't support the small businesses that have enabled marijuana to become a uniquely local and artisanal industry."
Pasha Brands Ltd. (OTC: CRFTF) (CSE: CRFT) is also listed on the Canadian Securities Exchange under the ticker (CSE: CRFT). Earlier this month, the Company announced breaking news that, "its wholly owned subsidiary, BC Craft Supply Co. Ltd. ("BC Craft"), has signed a supply agreement with Waterloo, Ontario based Greenterra Cannabis ("Greenterra").
The founders of Greenterra, Adam and Drew Anger, 30 and 24, are two brothers and successful businessmen who saw a tremendous opportunity to get into legal cannabis with a minimal investment. They completed their application using Tamra Follett's do-it-yourself standard operating procedure kit, and will be cultivating cannabis in a greenhouse using hand-mixed soil and organic inputs.
Adam has owned several companies in the trucking and transportation industries and will be operating the business side of the greenhouse, while Drew, the owner of a marketing company, will be lead cultivator.
"Adam and Drew bring a youthfulness and excitement to their business that made signing a supply agreement with them so attractive to us," said Patrick Brauckmann, Executive Chair of Pasha Brands. "They truly represent what it means to be a family-oriented business in the cannabis industry and we're excited to get their product on the shelves of retailers across the country."
With Canada's current licensed cannabis producers only able to supply an estimated 15 percent of what Canadians are consuming, Pasha is optimistic that yet another new supply agreement will help correct the cannabis supply imbalance. Each micro cultivator in Canada will be allowed to produce approximately 500 kg of cannabis per year. Canada has tens of thousands of craft producers operating in the illicit cannabis market and BC Craft is focused on helping as many small farmers transition into the regulated market as possible.
"It's hard to believe that we're breaking into this industry and turning our hobby into a business," said Adam Anger. "We're really excited to partner with a company like BC Craft because we know that they prioritize not only craft cannabis but a sense of family the same way that we do."
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) 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, 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."
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. Organigram Holdings Inc., the parent company of Organigram Inc., recently announced that it had entered into an advance payment and purchase agreement with 703454 N.B. Inc. under which the Company will pre-fund hemp purchases to receive access to as much as 60,000 kilograms of dried hemp flower to be harvested in calendar 2019 for extraction into cannabidiol ("CBD") isolate. "Access to a large, consistent volume of CBD-producing hemp has become increasingly important as Canadians express their demand for CBD-rich products for use in both recreational and medical capacities," said Greg Engel, Chief Executive Officer, Organigram. "We've heard the call for CBD in the market and this agreement positions Organigram to meet that demand."
Neptune Wellness Solutions Inc. (NASDAQ: NEPT) (TSX: NEPT) specializes in the extraction, purification and formulation of health and wellness products. - Neptune Wellness Solutions Inc. recently announced that it entered into an agreement to provide extraction services to a large U.S.-based farming services operation. Under the contract terms, Neptune will receive hemp biomass to be processed and transformed into crude oil extracts. The 2-year agreement could reach a total value in excess of USD 20 Million. The first shipment of biomass is expected to arrive at Neptune's North Carolina facility in the coming weeks. "This large contract will support our capacity expansion at our North Carolina facility and better position us to serve the growing United States market. Our expansion in North Carolina is on time and on budget with extraction capacity expected to reach an annual run-rate of 1,500,000 kg of biomass by December 2019. Demand for extraction and formulation services in the U.S. is currently strong with the ongoing harvest season and our tolling and formulation pipeline to deliver high quality full and broad spectrum extracts remains robust. This announcement represents a further step towards our customer and geographic diversification strategy," said Michael Cammarata, Neptune's Chief Executive Officer.
Charlotte's Web Holdings, Inc. (CWBHF) (CWEB) is the market leader in the production and distribution of innovative hemp wellness products. Charlotte's Web Holdings, Inc. recently announced that The Vitamin Shoppe, 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."
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