Growing Cannabis Industry Creates Space for New Strategies

CannabisNewsWire Editorial Coverage: As the cannabis industry continues to grow, companies are using a variety of strategies to secure their places within the sector.

The cannabis sector, currently worth over $9 billion in North America, is expected to hit $57 billion globally by 2027.
This growth is being fueled by changes in the legal climate and a range of business strategies.
These strategies range from R&D focus to M&A, vertically integrating supply channels in the process.

Youngevity International, Inc. (NASDAQ: YGYI) (YGYI Profile), a relative newcomer to the sector, is bringing its vertically integrated strategy from the coffee market to cannabis. GW Pharmaceuticals Plc (NASDAQ: GWPH) is focused on the medical market, developing prescription medicines among other products. Charlotte’s Web Holdings, Inc. (OTCQX: CWBHF) (CSE: CWEB) is focused on reaching more retail outlets, pushing its CBD products out through a growing number of channels. CV Sciences, Inc. (OTCQB: CVSI) is primarily research oriented but is also raising its profile through sponsorship of a hemp industry conference. In Canada, Aurora Cannabis, Inc. (NYSE: ACB) (TSX: ACB) is making use of recent changes by establishing a range of new supply agreements.

To view an infographic of this editorial, click here.

A Changing Business

This year has seen huge developments for the cannabis industry in North America. In Canada, recreational cannabis became legal in the middle of October, after a year of political debate and commercial preparation. South of the border, pressure mounted for reform of federal laws to support states making their own choices, with 64 percent of Americans now saying that they favor legalization. While political maneuvering ahead of the midterm elections delayed efforts to legalize industrial hemp through the 2018 Farm Bill, voters supported the legalization of medical cannabis in Missouri and Utah and of recreational cannabis in Michigan. With cannabis now legal for medical use in 33 states and for recreational use in 10, prohibition is clearly on its last legs.

This wave of change is leading to staggering growth in the cannabis industry. Companies are seeing dramatic rises in revenue as new markets open up, new products are created and new customers cast off tradition to give cannabis a go. This is creating a new space for cannabis companies to work in, where new strategies are being tested alongside new products.

Cannabis Market Keeps Growing

For companies such as Youngevity International, Inc. (NASDAQ: YGYI) that have a significant investment in cannabis, the past few years have been promising ones. The cannabis market has steadily grown as popular sentiment-driven legalization has opened the way for companies to thrive, which in turn has strengthened their campaigns for further legalization. The success of first medical and then recreational legalization in many states and Canada has reassured others that this is a safe path to follow, creating a North American industry that was worth over $9 billion in 2017, according to a Forbes report. That value is forecast to keep rising, with a predicted value of $47.3 billion by 2027.

With notable exceptions such as Uruguay and Israel, the rest of the world has been slower to follow, but that too is changing. Germany permitted the sale of medical cannabis through pharmacies in 2017. Even Britain, one of Europe’s most conservative countries, opened the door to doctors prescribing cannabis products this year after a high-profile campaign by the mother of an epileptic child. Taken all together, the global market is expected to be worth $57 billion by 2027, according to the Forbes report.

A significant part of that industry is made up of cannabidiol (CBD) products. Derived from both marijuana and industrial hemp, CBD is used in health and wellness products such as Youngevity’s Hemp FX™ range. Though some industry predictions may be unreasonably optimistic, performance indicates that CBD products are increasingly popular and are expected to give a significant boost to cannabis businesses. With Congress expected to legalize widespread hemp cultivation as part of the current Farm Bill, the supply of CBD has the potential to soar.

Developing New Strategies

In the early days of the cannabis industry, corporate strategy was simple. Produce the best cannabis possible, market it within the limited options regulations allowed, and soak up the demand from customers. Now the industry is a more diverse one, from focused pharmaceutical brands to the likes of Youngevity, which combines an interest in CBD with other lifestyle products. Strategies have evolved to match the changing market.

One common path has been that of mergers and acquisitions. In a market full of small businesses, there’s plenty of potential for the big movers to swallow up competitors. This has really taken off in 2018, a year that saw 145 mergers and acquisitions during its first six months, compared with 79 M&As in the first half of 2017.

Investment by and in cannabis companies has also increased. From Sugarmade’s investment of a million dollars in Hempistry to Constellation Brand’s decision to pump billions into Canopy Growth, companies are investing in each other to profit from different parts of the market or to easily enter it for the first time.

For others, product diversification is a common way forward. As the market grows, so does the ingenuity of the companies involved. R&D departments are producing an increasingly wide range of products, whether strains of cannabis or derivatives using CBD. Youngevity has recently added sleep and hydration products to its existing range, as the company finds more uses for CBD and more corners of the market to expand into. The spread of legalization is making it easier for companies to carry out this R&D work, leading to ongoing acceleration in the number of products coming out.

Vertical Integration

While some companies are focusing on horizontal integration, absorbing potential competitors in the same part of the cannabis business, others are looking at vertical integration.

This is the approach taken by Youngevity, with a strategy it refers to as “field to finish.” This is an adaptation of the “field-to-cup” strategy the company takes with coffee, seeking to control the whole supply chain, from the cultivation of beans through to the moment the coffee is delivered to the customer. Except that this product is cannabis instead of coffee.

The field-to-finish strategy offers many advantages for a company that can achieve it. By controlling cultivation, processing and distribution, it can ensure high-quality standards, an important part of Youngevity’s lifestyle brand. It can also benefit from the efficiencies and improved communication that come with an integrated supply chain. Many of the blockages that introduce inefficiencies are more easily removed in a system such as this, leading to a leaner, more cost-effective operation.

Youngevity has only recently entered the CBD market, but the company has grand plans. “We firmly believe in plant-based nutrition, and hemp (CBD) oil perfectly complements our product development philosophy,” said Steve Wallach, the company’s CEO. “Entering this market, which is growing almost exponentially, also should offer a tremendous advantage to our many distributors around the world.”

As Wallach has repeatedly made clear, the products so far released are only the beginning for Youngevity.

Players Big and Small

With the market going through dramatic changes, both large and small companies are making significant moves to expand their slice of the pie.

GW Pharmaceuticals Plc (NASDAQ: GWPH) has built a strategy strongly oriented towards the medical market. This includes not just selling strains of cannabis but creating other medicines based on it. The company has created the first plant-derived cannabinoid medicine to gain U.S Food and Drug Administration approval, getting GW’s products into the prescription drug market across the United States. By creating new and valuable medicines, it is creating a place as a prestigious innovator with customers’ wellbeing at its heart.

Charlotte’s Web Holdings, Inc. (OTCQX: CWBHF) (CSE: CWEB) is catering to the broader health and wellness market with its CBD-based products. As mainstream acceptance of CBD grows, the company is expanding into a wider range of stores and has now reached 3,000 outlets.

Like GW, CV Sciences, Inc. (OTCQB: CVSI) has built its business around research, using its expertise to create new products and to sell its services to consumers. CV Sciences was the first hemp CBD nutraceutical company whose products were certified Generally Recognized as Safe (GRAS) by the FDA, helping improve the image of both the products and the cannabis market. The company is further raising its profile within the industry as a sponsor of HIACON 2018, the Hemp Industries Association’s 25th anniversary convention.

For Canadian companies such as Aurora Cannabis, Inc. (NYSE: ACB) (TSX: ACB), recreational legalization has opened up a whole new market that presents new opportunities and new challenges. With the market regulated province by province, companies have to set up supply agreements to cover different regions. Aurora has been busily setting up these agreements, giving it a wide distribution network over an important new market.

The expansion of the cannabis market has led to a range of strategies, from acquisitions and product development to opening up new distribution channels, leading to growth for a diversity of different companies. The next few years will show which strategies work best.

For more information on Youngevity, visit Youngevity International, Inc. (NASDAQ: YGYI)

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Bumper Hemp Crops Promise Profit for Farmers and Cannabis Companies

CannabisNewsWire Editorial Coverage: This year will see the largest U.S. hemp crop since changes to federal law created an avenue for production to start again, turning over decades of fallowed industry.

Thousands of acres of hemp will be harvested across 19 states.
Kentucky is seeing particularly good crops, due to near-perfect growing conditions over the summer.
The main product taken from these crops will be cannabidiol (CBD) oil, used in a growing range of health and wellness products.
Crop production is set to continue increasing in light of high demand and legal changes.

To view an infographic of this editorial, click here.

Sugarmade, Inc. (OTC: SGMD) (SGMD Profile) is profiting from this development by expanding from hydroponics into investment in hemp production, broadening its cannabis-related portfolio. Other companies are expanding internationally. Tilray, Inc. (NASDAQ: TLRY) is now working with affiliates and subsidiaries in Europe, South America and Australasia. Cannabis grower Canopy Growth Corp. (NYSE: CGC) (TSX: WEED) has drawn billions of dollars in investment from the beverages industry as big companies look to get into the market. And Aurora Cannabis, Inc. (NYSE: ACB) (TSX: ACB) has established an extensive network of supply agreements across Canada, which will help to raise sales and awareness of cannabis and related products. New uses are also set to increase demand, thanks to research by companies such as Cronos Group, Inc. (NASDAQ: CRON) (TSX: CRON).

Farmers Count the Green from Growing Hemp Harvest

As summer turns to fall, a small number of U.S. farmers are bringing in a new harvest — hemp. For some states, this is the first time that the crop has appeared in more than 50 years because hemp had been outlawed under sweeping anti-cannabis legislation. The last few years have seen significant changes, primarily because the nation’s 2014 Farm Bill funding provisions authorized limited hemp cultivation, and several states began supporting the crop. Now hemp is making a comeback.

This promises to be a good year for hemp. Early indications are that farmers will see a robust crop with a high market value. The growth of the market for CBD oil means that there are plenty of outlets not just for hemp fibers but also for the plant’s other derivatives. And these first successful harvests, accompanied by pending legal change on the federal level, are set to establish hemp as an important crop over the next decade.

The 2018 Hemp Harvest

The past year has seen big growth for hemp. In 2017, the acreage of hemp production expanded by 163 percent through agricultural sites in 19 states. Now the largest hemp harvest of the new era is expected. It’s good news for companies invested in hemp, such as Sugarmade, Inc. (OTC: SGMD).

Like several of the companies involved in the hemp industry, Sugarmade was drawn to the sector by an interest in the wider cannabis market. The company’s main business is the supply of hydroponic equipment used for indoor agriculture. The growth of the legal cannabis market has fueled profits for Sugarmade as growers have valued its supplies. Now the company is diversifying its presence in the thriving sector.

When it comes to driving business, hemp is a beast that is very different from recreational marijuana. While both are forms of cannabis, industrial hemp has very low quantities of tetrahydrocannabinol (THC), the ingredient in cannabis that gets users high. In Kentucky, for example, hemp plants must have no more than 0.3 percent THC. Hemp is also grown differently, using large-scale outdoor cultivation rather than the intensive indoor methods used for other forms of cannabis.

Moving into this part of the market involved a different approach by Sugarmade. Instead of simply relying on its presence as a supplier of tools and equipment for profits, the company has committed a million dollars to investment in Hempistry, Inc. Hempistry’s hemp cultivation is based in Kentucky, the state with the third largest acreage of hemp growth, just behind Oregon but far behind Colorado, which is home to nearly as much hemp as the next three states combined.

While the top states have thousands of acres of hemp under cultivation, others are just starting to get involved, thanks to smaller scale projects. Washington State saw its first 175 acres of hemp planted in 2017, while Minnesota went from 51 acres in 2016 to 1,205 acres in 2017.

Kentucky has seen a particularly good year for hemp. Almost perfect growing conditions over the summer and early fall are setting it up for a bumper harvest. Sugarmade executives, including CEO Jimmy Chan, have visited the Hempistry project to inspect it and found that it lived up to the hype. It is seen as ultra-premium-grade hemp, perfect for extracting one of the biggest products to come from hemp — CBD oil.

CBD — Key to the Hemp Market

Hemp isn’t a new crop, even if its appearance in current markets seems like a novelty. As long ago as the Mayflower pilgrimage, hemp fibers were used in North America to produce rope and canvas for sailing ships. Even in the early 20^th century, just before it became illegal, it was mostly grown for these fibers.

Now, that has changed.

Hemp fiber still has value in producing everything from cloth to construction materials. But the real wealth is in CBD oil. This is why Hempistry has built a crop labeled as ultra-premium and why Sugarmade determined to invest one million in the business.

While CBD doesn’t have the psychoactive effects of THC, it’s still an active ingredient in cannabis that produces a chemical response in users. Research into its effects is in its infancy, thanks to so many years without businesses backing. But studies over the past decade have led to its use in a wide range of health and wellness products. Some of the highest-profile research has focused on its potential use in tackling epilepsy, but CBD oil is turning up in a huge range of products that appear to impact everything from pain management to improving mental processes.

The CBD market is growing enormously in the United States and beyond. The large, healthy harvests coming out of Kentucky should find no shortage of demand for the oil extracted from its plants. Sugarmade’s first foray into CBD has all the signs of success.

Where Next for Hemp?

Based on these results, Sugarmade has already begun plans to significantly expand its hemp operations next year. Hempistry has optioned 23,000 acres for potential hemp cultivation, more than is currently growing in the top five states put together.

Statistics taken from the Hemp Business Journal show that the U.S. hemp industry saw at least $820 million in revenues in 2017. Some experts forecast that number to increase to more than a billion dollars in 2018 and continue to grow at a compound rate of 14 percent per year until 2022. This increase is driven in part by growth in demand and in part by changes to the status of the hemp industry.

Central to this is the new version of the Farm Bill currently being considered by the U.S. Senate. The bill includes clauses with cross-party support for hemp cultivation that would expand the potential for farming. Hemp is currently restricted to trial crops and scientific studies, but under the new bill, it could be grown as a regular crop by farmers across the country.

This legal change will let companies such as Sugarmade support the cultivation of large quantities of hemp to meet the huge demand for CBD oil. And if that demand keeps growing, the industry could take off at an exponential rate.

Reaping the Benefits

This growth isn’t just taking place in America. Demand for CBD oil and other cannabis-related products is expanding around the world, as is the industry meeting that demands. Tilray, Inc. (NASDAQ: TLRY) manufactures products used by thousands of patients, researchers and physicians across the globe, and is building that international reach. In addition to affiliates in Australia, Canada, Germany, New Zealand and Portugal, the company recently acquired Alef Biotechnology SpA in Chile.

One of Canada’s largest cannabis companies, Canopy Growth Corporation (NYSE: CGC) (TSX: WEED) has drawn jaw-dropping financial backing from beyond the cannabis industry. American beverage company Constellation Brands’ $4 billion investment will allow the two companies to develop CBD-infused drinks, building a leisure market for ingredients derived from hemp. With a corporate giant such as Constellation taking an interest, pressure is likely to grow for further reform in Washington, easing the way for growth in the hemp industry.

Canopy Growth isn’t the only big player in Canada, where the recent legalization of recreational cannabis is set to supercharge the industry. Aurora Cannabis, Inc. (NYSE: ACB) (TSX: ACB) is one of the big players and has already established supply agreements that will let it sell products in provinces across the country. Increasing public awareness of cannabis, driven in part by such supply channels, will also increase awareness of related CBD-based products, with a supplemental boost for hemp.

Meanwhile, researchers continue to find new uses for CBD and other cannabinoids. Cronos Group, Inc. (NASDAQ: CRON) (TSX: CRON) has recently announced new work with the Technion–Israel Institute of Technology to explore the use of cannabinoids in skin care. Not only are existing markets expanding, but new ones are being created as additional promising uses for cannabis-based products are found.

This year’s bumper hemp crop looks to be just the beginning of a burgeoning industry with an exciting future.

For more information on Sugarmade, visit Sugarmade, Inc. (OTCQB: SGMD)

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Canada Leads International Cannabis Boom — and It’s Not About Smoking

CannabisNewsWire Editorial Coverage: Legal changes in Canada are creating an ideal base for cannabis companies, which are shifting their focus away from smoking.

As the first G20 nation to make recreational cannabis legal, Canada is creating an opportunity for its cannabis companies to become global leaders.
Analysis shows that the global cannabis market is larger than expected — and set to keep growing.
Many new consumers prefer not to smoke their cannabis, leading to a shift towards cannabis-derived food and drinks.

Lexaria Bioscience Corp. (CSE: LXX) (OTCQX: LXRP) (LXRP Profile) has developed patented technology that helps make cannabis available to nonsmokers; the company’s innovative development methods make cannabis’ active chemicals more palatable and more effective in food and drink. Companies such as Tilray, Inc. (NASDAQ: TLRY) are expanding their production to cater to this growing market, resulting in rising share values. GW Pharmaceuticals Plc (NASDAQ: GWPH) has leveraged its position in the market to raise extra financing through a $345 million public offering. Aurora Cannabis, Inc. (OTC: ACBFF) (TSX: ACB) has been focusing on ensuring access to a broad market, setting up supply agreements across Canada. Meanwhile, other companies are evaluating international growth opportunities, with Cronos Group, Inc. (NASDAQ: CRON) (TSX: CRON) having established subsidiaries on five continents.

The Canada-led Revolution

This month marks one of the most dramatic changes ever in the cannabis market, a moment set to transform the industry and the way that it’s viewed. As of Oct. 17, consumers across Canada are able to buy cannabis for recreational consumption for the first time. Canada is the first G20 nation to make such a change, and the precedent could be critical. Other countries are watching what happens in Canada, as voters around the world push their governments toward similar legalization; there are already more than 30 countries around the world where cannabis is legal in some form for medical use.

The Canadian example comes just as analysis shows that the cannabis market is larger than previously realized and set for continued growth. This puts Canadian companies in a powerful position, able to make the most of being based in a country that’s friendly to the cannabis industry. By using the freedom and opportunities this presents, these companies could easily become global leaders in a fast-growing sector.

Canada Legalizes Cannabis

For Canadian companies working in the cannabis sector, such as Lexaria Bioscience Corp. (CSE: LXX) (OTCQX: LXRP), huge changes are coming.

After much political maneuvering, recreational cannabis is now legal in Canada in keeping with a promise made by Justin Trudeau when he was elected prime minister in 2015. The wait has been frustrating for some, but it has given companies such as Lexaria time to establish their leadership position.

Canada already has a thriving medical cannabis industry, in which tight regulation provides control over the use of drugs. The new regulations extend this careful approach to the recreational market. Using a model similar to liquor licensing, retailers will have to be licensed to sell cannabis and follow clear rules. Those who try to sell outside the system will be quickly shut down.

In setting up its system, the Canadian government and provincial authorities have learned from the example of legalization in certain U.S. states. They worked with cannabis companies to ensure that the licensing system for both production and retail was ready for the Oct. 17 deadline While there will undoubtedly be hitches, including the likelihood that demand will initially outstrip supply, this appears likely to be a smooth launch.

Companies have also been making adjustments. For example, Lexaria recently announced a new subsidiary, Lexaria CanPharm Corp., which is focused purely on applying the company’s technology to the cannabis industry. Because Lexaria sells technology, if is already earning revenue in several locations both within and outside of Canada without touching the plant. Lexaria has a Canadian base but international reach.

Cannabis Market Larger Than Expected

Judging the potential size of the legal cannabis market is a tricky business. The drug’s widespread illegality around the world means that data is almost entirely drawn from surveys, in which respondents may be wary of admitting their consumption. Legalization will likely lead to changes in consumption patterns; easier access will almost certainly increase both medical and recreational demand.

Despite the limitations on judging the market, observers have been keen to estimate what the market could represent. A survey from before legalization indicated that 4.2 million Canadians consume cannabis on a regular or occasional basis. Based on this data, companies and commentators have predicted an industry worth billions of dollars, which could quickly surpass the whiskey industry.

But leading cannabis commentators are now suggesting that previous estimates may have undervalued cannabis’ potential. The only specialist cannabis analyst for a major Wall Street trading firm believes that the impact of legalizing a previously illegal market has been underestimated. Legalization could lead not just to large-scale sales of cannabis but also to its use as an ingredient in other products. Because Fortune 500-type companies are now interested in the space, the market could eventually be worth hundreds of billions of dollars.

If that analysis is accurate, then many cannabis companies are being massively undervalued. That’s good news for the future prospects of businesses such as Lexaria.

Consuming Cannabis without Smoking

This growth is likely to be coupled with changes in the way cannabis is consumed — changes of huge relevance for Lexaria.

A recent survey of U.S. consumers showed that many would like to try cannabis if it became legal. They also said that they would be more likely to do so if they could consume the plant through food. Putting cannabis into drinks and snack foods will make it easier for people to enjoy in a social setting with friends, in a similar way that they currently consume alcohol. That would make it a more popular and accepted part of everyday life.

Lexaria’s patented technology could be invaluable for companies catering to this desire. Its lipophilic enhancement technology is designed to improve the biological conductivity of active compounds, including those found in cannabis. It increases their potential for absorption by the body, meaning that consumers get better value for their cannabis. It also improves the taste, which will be important in making cannabis food and drinks popular. Recent tests have shown good results for applying this technique to active ingredients derived from cannabis.

Lexaria plans on licensing this technology to third-party partners and was recently awarded its 9th and 10th granted patents applicable for cannabis beverages. With cannabis-infused food and drink set to hit the Canadian market next year, and with large companies eyeing its potential, plenty of companies are sure to be interested in such technology that takes advantage of Lexaria’s leadership position.

Growing with the Market

The legalization of recreational cannabis is good for companies already working in the Canadian medical market such as Tilray, Inc. (NASDAQ: TLRY). A company with a strong pedigree in research and development, Tilray is expanding its sales potential in preparation for the recreational market. Its High Park Farms subsidiary recently received a license to sell cannabis in Canada and has already carried out several harvests to get stocks ready for sale. Such moves have led to positive views of the company’s future, with Wall Street commentators predicting a huge rise in the value of its shares over the next year.

The expectation of huge growth in the cannabis industry is helping companies raise extra finance to tap into that market. GW Pharmaceuticals Plc (NASDAQ: GWPH) has just raised over $345 million through a public offering. A medical cannabis company, GW isn’t currently involved in the recreational sector but is still profiting from the growth it brings.

One of the big players in Canada’s medical cannabis market, Aurora Cannabis, Inc. (OTCQX: ACBFF) (TSX: ACB), has been laying the groundwork to make the most of recreational sales. The company has supply agreements with provinces across Canada, giving it the opportunity to reach a broad customer base. As well as providing quick profits, this will help to establish brand recognition early on for greater influence as the market grows.

While attention is currently focused on Canada, that is just one part of the cannabis market. As with other industries, global reach will eventually decide the biggest players, and Cronos Group, Inc. (NASDAQ: CRON) (TSX: CRON) is already working on such expansion. With subsidiaries in North and South America, Europe, Australia and Israel, the company is tapping into growing cannabis markets around the world. Lessons from Canada will help in developing these other markets and in positioning Cronos to make the most of them.

The legalization of cannabis in Canada is a critical part in an international puzzle, one whose pieces include unexpected growth, global connections and transformations in consumer habits. Put together, these pieces offer the hope of a profitable future for cannabis companies.

For more information on Lexaria Bioscience Corp., visit Lexaria Bioscience Corp. (CSE: LXX) (OTCQX: LXRP)

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Hemp and CBD Set to Eclipse the THC Marijuana Market

CannabisNewsWire Editorial Coverage: As the cannabis market continues to grow, hemp and cannabidiol (CBD) are occupying an increasingly large share of the escalating industry.

Hemp, the form of cannabis without psychoactive tetrahydrocannabinol (THC), is an important part of the cannabis market.
Hemp is common in many health and wellness products.
Total sales of hemp-derived products are expected to exceed $1 billion this year.
Some industry experts expect hemp products to soon exceed marijuana for their share of the cannabis industry.

Sugarmade, Inc. (OTCQB: SGMD) (SGMD Profile) is taking advantage of this shift by making a heavy investment in hemp production. Medical marijuana company Tilray, Inc. (NASDAQ: TLRY) bridges the gap between product types through its production of CBD oils. One of the largest cannabis growers in Canada, Canopy Growth Corp. (NYSE: CGC) provides plants used in a wide range of products. GW Pharmaceuticals Plc (NASDAQ: GWPH) has created the first cannabis-derived prescription drug approved by the U.S. Food and Drug Administration. Meanwhile, public acceptance and more positive perception of the cannabis sector are shifting, thanks at least in part to publicity efforts by shifted by cannabis companies such as Aurora Cannabis, Inc. (OTCQX: ACBFF) (TSX: ACB).

To view an infographic of this editorial, click here.

The Two Sides of the Cannabis Market

It’s all too easy to view the cannabis sector as a single market providing variations on the same product. In reality, it’s an increasingly complex and varied industry. Its primary plants and products can be divided into two groups: marijuana (and THC) in one category, and hemp (and CBD) in the other.

The marijuana piece of the cannabis market is the one more traditionally recognized. In this space, plants grown, cultivated and used contain THC, the psychoactive ingredient that gets drug users high. THC is the reason for cannabis’ ongoing popularity as a recreational drug worth hundreds of millions of dollars in both legal and illegal markets.

The other side of the market is centered around hemp. Hemp does not contain THC; rather it contains CBD, an active ingredient found in other cannabis plants. CBD has fueled the development of medical marijuana applications, but alternative products that utilize the substance are increasingly popular in the health and wellness markets, where they can be bought more widely than medical marijuana. As a result, some industry experts note that hemp may soon make up the larger part of the cannabis industry.

The Growth of the CBD Market

Though less well-known outside of specialist markets, CBD is becoming a more accessible way to benefit from cannabis. This has led to investment from companies across the cannabis sector, including Sugarmade, Inc. (OTCQB: SGMD).

Sales of hemp-based products in the United States reached $820 million last year, of which $190 million, or 23 percent of sales, consisted of CBD-derived products, according to Hemp Business Journal. That total for hemp is expected to pass a billion dollars this year.

Predictions for the future are even more promising. The same Hemp Business Journal article estimates that the hemp market will reach $1.9 billion in the United State by 2022, with $646 million of that coming from CBD and its derivatives. The Brightfield Group is even more optimistic in its assessment. The group’s industry specialists believe that CBD could outstrip the rest of the cannabis sector in size in the next few years.

For companies such as Sugarmade, whose business is closely tied to CBD, these developments create opportunities for expansion and innovation.

CBD Enters the Mainstream

A wide variety of end-use product potential is helping hemp gain mainstream use and acceptance. This market includes supplements, personal care products, textiles, and food and industrial applications, as well as CBD and the support services provided Sugarmade and other similar companies.

The hemp market has grown 15 percent per year over the past few years. Unlike marijuana sales, this growth isn’t driven by the medical and recreational sectors. Instead, body products and supplements have been key factors. Much of the hemp for these products has been imported from Canada and China, with imports totaling $78.2 million in 2015, not counting textiles, paper products or construction materials.

The hemp market is expected to be strengthened by the2018 Farm Bill currently making its way through the U.S. Senate. Legislation included in the act, supported by the Senate majority leader, would remove industrial hemp from the Controlled Substances Act, making it easier for farmers to grow hemp for CBD and other agricultural purposes. Since the last farm bill was passed four years ago, some farmers have been able to legally set up test production of hemp for CBD, but widespread cultivation has not been permitted.

The extent of the change permitted by the expected agricultural law remains uncertain. Other issues unrelated to cannabis are currently holding up the Farm Bill, despite widespread bipartisan support for the hemp provisions. Once the bill passes, the impact for CBD will also depend upon decisions made by state authorities and the FDA. But the bill will certainly ease the way for potential hemp growers in states that support the CBD industry. Until now, national law only allowed the growing of hemp and harvest of CBD in state pilot programs and for academic research; in the 2018 Farm Bill, those limitations are eliminated.

Clearly, The legalization of hemp and CBD on the federal level will only benefit companies such as Sugarmade. Previously, access to financial and support services could be difficult for companies working in the cannabis sector. Marijuana retailers had to resort to cash payments or newly developed electronic systems because banks feared doing business with companies defying federal law. Making hemp legal will allow a wide variety of support systems to evolve.

Innovating with CBD

The success of companies such as Sugarmade that are working in the CBD space comes in large part through innovation. These companies recognize the need to research, offer, and implement new products, services and investments to drive growth.

New products will take CBD into new commercial categories. Hemp-derived beverages and pet foods are both on the horizon. Medicines are being tested. Paper, cloth and construction are also industries that stand to benefit from additional hemp offerings.

Sugarmade’s success comes through expansion in hydroponics, the company’s entry into the cannabis space. Hydroponic equipment is key to cultivating cannabis and, as a result, hydroponic companies have seen substantial growth over the past few years. Sugarmade is building upon its existing growth by acquiring two other hydroponics companies, a move that turned the company into one of the leading players in hydroponics. This move is also expected to raise Sugarmade’s revenues next year from $30 million to $75 million as the market for hemp and its support services grows.

Sugarmade has also reinforced its position in the market through more direct investment in CBD. The company recently committed to investing a million dollars in Hempistry, Inc. The investment is targeted to support Hempistry’s work on an ultra-high CBD-content hemp strain being grown in Kentucky. It also positions Sugarmade to profit directly from the staggering growth in CBD.

The impact of the hemp industry extends beyond the United States. Sugarmade has made moves into Europe as well, selling hydroponics in the United Kingdom. While the current hemp market in Europe is small, savvy companies are evaluating opportunities to get in now. Where America leads, Europe is likely to follow, which means the road towards legalized cannabis and a thriving CBD market may be imminent.

Cannabis Competitors

A number of companies are competing for a share of the CBD market.

For medical marijuana company Tilray, Inc. (NASDAQ: TLRY), CBD is a natural extension of its other work. The company has developed CBD oil for medical use and is one of the first to sell such a product into the United Kingdom after top politicians intervened to make CBD available for treating rare childhood forms of epilepsy. A strong program of research and development has led to growth for the company, which is now making initial public offerings in the United States and Canada to finance further work.

Canopy Growth Corporation (NYSE: CGC) is one of the largest cannabis companies in Canada, a leading market for cannabis and CBD. With 5.6 million square feet of growing space spread across its facilities and subsidiaries, three-quarters of it licensed by Canadian authorities to grow cannabis, Canopy Growth has become a powerhouse within the industry and is breaking new ground for cannabis companies, having completed the first legal transfer of cannabis from Canada to the United States using a DEA-issued permit. This transfer, for medical research purposes, seems to reflect a softening of DEA attitudes as the agency adjusts to the changing status quo.

Medical cannabis research is also important to GW Pharmaceuticals Plc (NASDAQ: GWPH). The company created the first cannabis-based prescription medicine to gain FDA approval and continues to innovate through its research and product divisions. Like Tilray, the company is committed to growth, having recently announced new shares to raise $300 million of finance.

Aurora Cannabis, Inc. (OTCQX: ACBFF) (TSX: ACB) isn’t just selling its own CBD-rich health and wellness products — it’s also working to raise the public profile of the cannabis industry. It has partnered with Elevate, the annual citywide Toronto festival, to create tracks discussing cannabis and health issues. These events will encourage discussion about the health potential of CBD and marijuana, as both sides of the industry continue to gain in size and public recognition.

The cannabis industry has seen huge growth over the past decade, and now it’s going through big changes. Commercial CBD and hemp, until recently existing in the shadow of medical cannabis and recreational marijuana, could soon be the leading products in a growing global market.

For more information on Sugarmade, visit Sugarmade, Inc. (OTCQB: SGMD)

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Government Interest in Hemp Diversity Signals Strong Future for American Cannabis Industry

CannabisNewsWire Editorial Coverage: Recent U.S. government interest in ensuring industrial hemp supply signals a period of growth for the cannabinoid industry. Marijuana Company of America Inc. (OTC: MCOA) (MCOA Profile) is contributing to this growth through new hemp cultivation projects in both Canada and the U.S., to support its hempSMART subsidiary. Cronos Group Inc. (TSX: CRON) (NASDAQ: CRON) is benefiting from a cross-border venture that gives it access to new scientific advances and has seen its shares reach top exchanges. Canopy Growth Corporation (TSX: WEED) (NYSE: CGC) has secured government licensing needed to become one of Canada’s leading retailers, while acquiring a subsidiary company in Lesotho to cater to an international market. Aurora Cannabis Inc. (TSX: ACB) (OTCQX: ACBFF) has announced a new range of products that provide medical cannabis with a high concentration of active ingredients. OrganiGram Holdings Inc. (TSX-V: OGI) (OTCQB: OGRMF) has struck a deal for access to advanced extraction technology, while also gaining a license to export its products to Australia.

Senate Signals Support for Cannabis Seedbank

The United States government has a complicated relationship with cannabis. Since the mid-20^th Century, it has clamped down on the use of the plant for any purpose, particularly during the “war on drugs” from the 1980s onward. Over the past decade, some states have legalized the farming and sale of the cannabis sativa plant either as medicine, as a recreational drug, or in the form of industrial hemp. But the federal government has remained reticent about shifting its stance.

It seems that perceptions are now changing. The Senate Appropriations Committee, one of the most powerful bodies in government, has acknowledged the growing importance of industrial hemp for American farmers and called for the creation of a hemp seed back. Half a million dollars will be spent ensuring that America has a genetically strong stock of high quality hemp seeds, to support both farmers and researchers.

Building Better Strains

While the committee’s plan to build up seed stocks is intended to support the national interest, some companies are already working on improving industrial hemp growth for reasons of self-interest. Developing a diverse range of strains, each tailored to different purposes, is important for these companies. Industrial hemp is often valued for the quality of its fibres and the medicinal cannabinoids that can be extracted from the plant and implementing better growing techniques can lead to improved crops yields.

Among the companies looking to create more efficient hemp yields is the Marijuana Company of America (MCOA Profile). A company with a diverse portfolio of investments and joint ventures in the cannabis and industrial hemp sectors, MCOA is involved in several projects intended to improve the plants available to producers and consumers.

Together with the Global Hemp Group, MCOA has launched a project to encourage industrial hemp cultivation in New Brunswick. Previous attempts to develop the industry in the region failed twenty years ago, but now the market for the product has grown. The aim is to develop an industrial cluster around the hemp crop, ensuring a market for farmers, consistent job opportunities, and to implement the proper structure to develop Hemp Agro-Industrial Zones, or HAIZ, projects in other areas.

Scientific testing to improve the growing process is an important part of HAIZ. This has been made possible through cooperation with the Canadian government’s Department of Aquaculture Agriculture and Fisheries (DAAF). The department will be contributing fertilizers to the project and carrying out fertility trials on reserved plots of land. Together with soil testing and crop rotation, this will help to develop more fertile organic growing conditions for the hemp.

With legalization of the extraction of cannabinoids from industrial hemp on the horizon, Canada is an important market for cannabinoid-based companies. Recreational use alone is expected to contribute $900 million to the industry, which already serves medical users in Canada. The work in New Brunswick gives MCOA an important foothold in this market.

More Facilities for a Growing Market

The collaboration with GHG is now taking place on both sides of the border, thanks to the establishment of a new industrial hemp project in Scio, Oregon. Once again, the companies are collaborating to create a facility that will push forward techniques in hemp cultivation while providing a steady profit.

The heart of this operation is a 109-acre property in the Willamette Valley, a fertile area with a recent history of successful cannabis cultivation. The site has soil rich in organic matter and established irrigation infrastructure, meaning that it is well set to support a new agricultural project. The use of high yield hemp clones will help to maximise the output of the project.

Multiple approaches to cultivation will feed into the Scio facility’s output. Traditional outdoor cultivation will take place alongside five greenhouses, which will provide over 19,000 square feet of indoor growing space. This will ensure a year-round supply of hemp.

As in New Brunswick, data collection and analysis will play an important part at the farm in Oregon. By checking on the performance of the growing techniques and the quality of the plants, the companies aim to support strains which are rich in cannabidiol (CBD), an active ingredient important in derivative products designed to support well-being.

A Growing Global Industry

The new project comes at a perfect time for MCOA. Demand for CBD is high thanks to the growing global market for cannabinoid-based products. A facility that can provide the companies with a steady supply of high-quality CBD plants will make it easier to take a substantial place in this expanding sector.

One of MCOA’s most important subsidiaries is hempSMART. This company develops and markets hemp-based wellness products that make use of cannabinoids, the active compounds that can be extracted from the hemp plant. HempSMART also aims to educate consumers on the possibilities offered by hemp, possibilities that the U.S. senate has started to acknowledge through its establishment of the new seed bank. Educators and health professionals are among the experts hempSMART has brought into its team, to make it more than just a source of wellness products.

With investments in everything from payment systems to cultivation facility rentals, Marijuana Company of America has built a broad base of innovative cannabis-related products.

More Companies Signal Strong Future

It’s a sign of the health of cannabis industry that MCOA faces competition from a number of companies, both in hemp production and in the wider cannabis market.

Cronos Group, Inc. (TSX: CRON) (NASDAQ: CRON) is one of the highest profile companies in this sector. In February 2018, it became the first pure play cannabis company traded on the Nasdaq, a sign of the interest in cannabis by mainstream investors. A recent upgrade of its shares on the Toronto Stock Exchange reflects the way that cannabis companies are solidifying their position, proving that they are here to stay. A recently announced cross-border venture with MedMen means that Cronos will benefit from scientific advances being made by the Los Angeles company, which prides itself on its research work.

Canopy Growth Corporation (TSX: WEED) (NYSE: CGC) is becoming a leader in the cannabis retail field. Within Canada, it has established itself as a trusted company, being granted one of the first retail licenses in the province of Manitoba. This gives Canopy a strong starting point to sell to customers when recreational cannabis becomes legal in Canada later this year. Further afield, it recently acquired a cannabis company in the Kingdom of Lesotho. This will provide access to an African market largely ignored by western cannabis companies. It will also let the company grow medical cannabis in ideal conditions, with 300 days of sunshine a year, excellent humidity, and great growing conditions for greenhouse grown cannabis.

One of the largest cannabis companies, Aurora Cannabis Inc. (TSX: ACB) (OTCQX: ACBFF) has recently expanded its activities to cover both the recreational and medical sectors. The company leans heavily on research to improve its sales, with the announcement in late May of a new range of high-THC content cannabis products. It has also made moves to expand its market reach over recent months, with the largest corporate acquisition in the history of the cannabis industry in the form of the purchase of CanniMed, as well as a supplier agreement with Shoppers Drug Mart.

OrganiGram Holdings Inc. (TSX-V: OGI) (OTCQB: OGRMF) is looking beyond the American market. The company has recently been granted a license to export cannabis to Australia. This will introduce OrganiGram’s product to a new territory through a deal with a licensed Australian medical cannabis dealer. Organigram’s success will be further bolstered by a recent deal with TGS Colorado, a company with expertise in extract technology. This will provide Organigram with access to best-in-class technologies, products, and designs with which to make the most of its expanding cultivation base.

Increasing government backing, combined with advances in cultivation and technology, ensures that there’s a healthy future for all varieties of cannabis, from medical marijuana to industrial hemp.

For more information about Marijuana Company of America, please visit Marijuana Company of America (MCOA).

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PreveCeutical Medical Inc. (CSE: PREV) (OTCQB: PRVCF) (FSE: 18H) Details Cannabis Exportation Agreement for Sol-gel Research

Permits obtained for importation of cannabis into Australia
PreveCeutical conducting research at University of Queensland for cannabinoid-based Sol-gel products
Cannabis-based Sol-gel products targeted at relieving symptoms such as pain, inflammation, seizures and neurological disorders

PreveCeutical Medical Inc. (CSE: PREV) (OTCQB: PRVCF) (FSE: 18H), a health sciences company aiming to become a preventive health sciences leader, has announced the grant of three permits from the Australian government’s Department of Health allowing for the importation of cannabis into Australia for purposes of research. The permits, which have been granted to the Pharmacy Australia Centre of Excellence (PACE) at the University of Queensland, will allow PACE to import cannabis plant material shipments for research purposes. Aurora Cannabis Inc. (TSX: ACB) (OTCQB: ACBFF) (FSE: 21P) (WKN: A1C4WM) will export the cannabis to PACE and has obtained the necessary Canadian permits to do so. Once shipped by Aurora, the cannabis will be used in PreveCeutical’s drug delivery research program for its Sol-gel (soluble gel).

The Sol-gel drug delivery research program, which is being undertaken at the University of Queensland, targets the development of a system that will enhance the bioavailability of drugs using a nose-to-brain delivery system. The program is being conducted by PreveCeutical’s research partner, UniQuest Pty Inc., and is being led by PreveCeutical Chief Research Officer Dr. Harendra Parekh.

The intention of PreveCeutical is to apply its Sol-gel technology to cannabinoids for the development of therapies to relieve a variety of symptoms, including pain, inflammation, seizures and neurological disorders. The permits obtained by PACE will allow PreveCeutical to test various cannabis strains for the development and commercialization of cannabinoid-based Sol-gels. Sol-gels boast a variety of advantages over traditional liquid nasal sprays, offering longer therapeutic effects, lower dosage requirements and a reduction in irritation and other unwanted side effects.

In consideration of its cannabis shipment for the research program, Aurora Cannabis has been granted certain rights, including an option to either license (on a nonexclusive basis) the Sol-gel technology for Canada and Australia or to choose a royalty arrangement on product sales, along with an option to purchase PreveCeutical shares. Part of Aurora’s strategy in becoming involved with PreveCeutical’s initiatives is gaining access to cannabis-based products that are more narrowly targeted at specific therapeutic areas but with a higher value add.

For more information, visit the company’s website at www.PreveCeutical.com

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PreveCeutical Medical Inc. (CSE: PREV) (OTCQB: PRVCF) (FSE: 18H) Secures Australian Importation Permit in Support of Research into Sol-gels

Research will be conducted at PACE, a leading pharmaceutical research center in Australia
PreveCeutical’s unique technology promises to be the first FDA-approved, CBD-based nose-to-brain delivery system using a Sol-gel platform
Groundbreaking technology outstrips the benefits of any other delivery mechanism

On March 13, 2018, PreveCeutical Medical Inc. (CSE: PREV) (OTCQB: PRVCF) (FSE: 18H) and Aurora Cannabis Inc. (OTCQB: ACBFF) (TSX: ACB) (FSE: 21P) announced that they had received three permits for the importation of cannabis plant material into Australia for research purposes. The permits were granted by the Australian Government’s Department of Health, allowing shipment from Canada by Aurora Cannabis Enterprises Inc., a wholly owned subsidiary of Aurora Cannabis Inc.

Preveceutical’s research program will be conducted at the University of Queensland’s Pharmacy Australia Centre of Excellence (“PACE”), a leading center for pharmaceutical research, education and commercialization. PACE has been granted the permits to import the dried cannabis flower and oils that will be used in the company’s innovative soluble gel (Sol-gel) drug delivery research program. It will be led by Dr. Harendra Parekh, chief research officer of PreveCeutical. The research team will test a range of cannabis strains to determine candidacy for the development and commercialization of cannabinoid-based Sol-gels.

The primary goal of the research program is to develop a nose-to-brain delivery system that will increase the bioavailability of active drug ingredients. The focus of the research is to apply Sol-gel technology to develop cannabinoid-based therapies for the relief of symptoms associated with pain, inflammation, seizures and neurological disorders. In a news release detailing the announcement, Stephen Van Deventer, chairman and CEO of PreveCeutical, said, “We are extremely excited to receive the Permits, allowing us to further our Sol-gel research program with the high quality cannabis products provided by Aurora. The goal of the Program is to cultivate a range of therapies that will benefit people with ailments such as epilepsy, pain and inflammation, safely and economically.”

“We see an important market for cannabis-based products that are more narrowly targeted at specific therapeutic areas but that are higher value add and being involved with initiatives such as PreveCeutical’s is part of our strategy to gain access to these types of products,” added Terry Booth, CEO of Aurora.

PreveCeutical believes that its cannabinoid-based nose-to-brain delivery technology, using a Sol-gel platform, will be the first to gain Food and Drug Administration approval. Its water soluable, alcohol free nasal formulation which will be developed for use by adults, children and people of certain beliefs.

PreveCeutical’s groundbreaking Sol-gel delivery system displays significant benefits over other contemporary delivery systems. It bypasses first pass metabolism in the stomach, intestines and liver, exhibiting a dramatic improvement in bioavailability, even compared to nasal sprays and alternative delivery mechanisms. Unlike other delivery systems, PreveCeutical’s Sol-gel delivery technology enables ease of application and provides long-lasting effects, all while eliminating negative side effects.

This latest research initiative comes on the back of established innovative solutions for preventive and curative therapies. The company’s first product, CELLB9®, is a Caribbean blue scorpion venom-based product that has been successfully marketed and distributed worldwide. PreveCeutical is currently in the development phase of a product based on this venom for the treatment, regulation and prevention of cancer progression. The company is also developing solutions based on the peptides derived from Caribbean blue scorpion venom for pain management, cancers, cardiovascular conditions, metabolic disorders and infectious diseases.

For more information, visit the company’s website at www.PreveCeutical.com

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Acquisitions and Growth Expand in Canadian Cannabis Market

CannabisNewsWire Editorial Coverage: The first wave of companies to enter the Canadian cannabis industry were grounded in medical marijuana, which was legalized in 2001. As the country prepares for legalized adult recreational-use this summer, new recreational brands are joining the scene, and many companies rooted in medicinal cannabis are taking action to participate in this second wave of the Canadian market. With its strong branding and modern store design, Choom Holdings, Inc. (CSE: CHOO) (OTCQB: CHOOF) (CHOOF Profile) is branded to appeal to the Canadian adult consumer ready to experience the cannabis lifestyle. Aurora Cannabis, Inc. (TSX: ACB) (OTCQB: ACBFF) is making strategic investments to establish footing in the recreational sector, while OrganiGram Holdings, Inc. (TSXV: OGI) (OTCQB: OGRMF) is taking measures to increase its production capacity ahead of a surge in product demand. Supreme Cannabis Company, Inc. (TSXV: FIRE) (OTC: SPRWF) has entered into multimillion-dollar agreements to supply cannabis to retail-oriented companies, and in Quebec, Hydropothecary Corp. (TSXV: THCX) is expanding its greenhouse capacity to potentially increase its cannabis production to 30x its current volume.

Highs Coming for Canadian Cannabis

As established companies get serious about brand expansion, supply agreements, and potential retail revenues, investments within Canada’s cannabis sector are soaring. The industry saw $1.2 billion investments in January alone – a 600 percent increase over the previous year – setting an incredible pace for continued growth. Currently, the State of California is the largest legal cannabis market in the world. With a population nearly as large as California’s and an influx of cannabis capital, Canada is on track to potentially become one of the world’s largest recreational-use markets. The country’s combined medicinal and recreational market size is expected to reach $6 billion by the year 2021, surpassing the value of its whiskey and spirits industry.

While the Canadian cannabis industry has found impressive success with medicinal marijuana in recent years, a different approach will be needed to target recreational consumers. Cannabis producers that recognize this tremendous potential are pursuing investments in recreational brands that appeal to the retail market. One of Canada’s most recognizable cannabis producers, Aphria, Inc. (TSXV: APH) (OTC: APHQF), recently shelled out $230 million to acquire recreational brand Broken Coast – one of many M&A deals within the burgeoning industry.

A Relaxed Brand for a Relaxing Product

One of the new companies looking to stake a claim in the recreational market is Choom Holdings, Inc. (CSE: CHOO) (OTCQB: CHOOF). Choom is based in British Columbia, though its hip, modern brand has been designed around the tropical, relaxed ambiance of Hawaii. The company’s name, “Choom”, and style invoke Hawaiian culture, in particular easy days on the beach and in the countryside enjoying a casual atmosphere that connects with relaxation, which fittingly is one of the main appeals of cannabis. The company’s name, Choom, which means “to smoke marijuana” – comes from a slang word used by a fun-loving group of friends (including former U.S. President Barack Obama) who grew up together in Hawaii during the 1970s.

This relaxed, friendly and informal approach to selling cannabis is designed to tap into a younger market with socially liberal values and disposal income to spare, and differs radically from the marketing focus of medical marijuana companies. The look and feel more closely resembles a food or alcoholic beverage brand, evoking warm feelings instead of healing/medicinal properties, which are the focus of established brands. In short, it’s exactly the sort of approach the recreational cannabis industry will need.

Moving forward, the advantage in the legal cannabis sector seems likely to go to companies such as Choom, which are able to innovate with their branding, creating appealing lifestyle choices. Strict limitations on advertising cannabis will prevent the big medical marijuana players from using their financial clout to dominate the market through saturation advertising, which will create a space for young brands such Choom to grow via agile, modern techniques where traditional approaches aren’t an option.

From Seed to Sale

Choom appears to have another market advantage with its vertical integration. The business has a seed-to-sale model that covers the whole cannabis pipeline, from growing and processing the plants to selling the final product in its own stores. This control over the entire business process allows the company to maximize efficiencies and ensure integration along the supply chain.

This advantage starts in the growing facilities, where Choom will fully oversee the growth of carefully crafted strains of cannabis. Existing facilities are planned for Vernon and Chemainus, Canada, to ensure that the company is prepared for the market as soon as possible. Choom is refitting both facilities, a process scheduled to be complete by July, with more than 13,000 square feet of growing space in planning.

Choom has announced a clear plan for its move into this market. With the Canadian cannabis market expected to see dramatic growth in early stages, the company has capacity to expand as needed. A second phase of expansion is in place for both facilities, which will significantly increase the growing space and allow for doubling crop yields by early 2019.

At the sale end of this supply chain are Choom’s dispensaries, which are designed with a clean, stylish, and modern feel, much like a more relaxed version of an Apple store, a favorite of millennials and those with disposable income. These stores have been envisioned to appeal to two different but important market sectors. One is existing cannabis users, who will be looking for more convenient ways to buy their product once the law changes. The other is the group of “curious customers,” who weren’t willing to use cannabis while it was illegal but are interested in trying it now. Choom’s relaxing retail space is designed to draw in customers from both sides, quickly building up a strong high street brand.

Preparing for Change

To power further growth, the company also recently completed a financing initiative, exceeding expectations and raising CAD $2.7 million (http://cnw.fm/AkT9x). The funds are being invested in advancing the company’s development strategy, as well as for growth and acquisitions.

Having recently released the retail design for its dispensaries (http://cnw.fm/DIl3r), Choom is readying those facilities ready for legalization as well. And with the official launch of its retail program, the company has created the opportunity to develop a chain of branded cannabis dispensaries across Canada (http://cnw.fm/jqn8I).

“Choom is using design and retail strategies that have worked successfully at some of the most profitable storefronts in the country. We are telling our Choom story with our stores and will elevate the concept of a high-quality product though our new retail environments, and we’re inviting others to join us,” Choom president and CEO Chris Bogart stated in the press release.

As the legal cannabis market prepares to open in Canada, Choom appears to have all the pieces in place to create a national premium recreation brand.

A Sector in Waiting

As the creation of Canada’s legal recreational cannabis sector approaches, other companies are also preparing for the change.

One of Canada’s biggest cannabis producers, Aurora Cannabis (TSX: APH) (OTCQB: APHQF), is investing in a range of related companies to set itself up for expansion into the recreational sector. The Vancouver-based organization has invested in The Green Organic Dutchman, a company that produces farm grown, organic, pesticide-free medical cannabis in small batches using all natural, organic craft growing principles. It has also teamed up with Liquor Stores NA Ltd. (TSX: LIQ) to convert existing retail outlets into cannabis retail stores.

Another licensed producer of medical marijuana, OrganiGram Holdings (TSXV: OGI) (OTCQB: OGRMF), recently received an expanded cultivation license from Health Canada, enabling the company to move forward with its expansion strategy that would increase current capacity from approximately 5,200 kg/year to an estimated 16,000 kg/year. Its longer-term plan is to increase production to 65,000 kg/year over the next two years.

Supreme Cannabis Company (TSXV: FIRE) (OTC: SPRWF) has made its mission to grow sustainable cannabis companies to cater to the growing recreational market. To this end, it has invested in late-stage ACMPR applicant company BlissCo, and has agreed to provide cannabis to that company through its 7ACRES subsidiary. 7ACRES will also supply cannabis to Namaste (CSE: N) (FRA: M5BQ) (OTC: NXTTF) subsidiary, Cannmart.

Quebec-based Hydropothecary (TSXV: THCX) has signed a letter of intent with Société des alcools du Québec (SAQ) to supply 20,000 kg of cannabis to Quebec’s recreational cannabis market in its first year of operation. This recent announcement follows news in December that the company added 78 acres of land adjacent to its existing 65-acre facility, and that it is working on a 1 million-square-foot greenhouse designed to increase its production to 108,000 kg per year, 30 times the current capacity.

Based on all forecasts, Canada’s cannabis market is set for significant expansion in 2018. New actors and existing medical companies alike are preparing to seize this opportunity through production, distribution, and retail growth. With a clearly defined growth strategy, Choom Holdings is demonstrating its intention to rapidly become a recognizable national brand.

For more information on Choom Holdings, please visit Choom Holdings, Inc. (CSE: CHOO) (OTCQB: CHOOF)

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The Green Organic Dutchman is Farming One Million Square Feet of Organic Cannabis as Supply Shortfall Looms

Focused on medical market with organic marijuana
Large scale production to reap benefits from economies of scale
Partnerships with utilities to lower power costs

As one of just two producers of organic cannabis and with a million square feet of low cost production planned, the Green Organic Dutchman Holdings Ltd. (“TGOD”) is set to capitalize on Canada’s looming supply shortfall. The company is growing its competitive advantage in a way that appears to run contrary to established dictum by focusing not just on differentiation but also on cost leadership. Typical generic strategies are either one or the other. This unique approach is winning friends and influencing people. TGOD has, to date, closed $112 million in private placements, which includes $55 million from marijuana industry powerhouse Aurora Cannabis Inc. (OTCQX: ACBFF) (TSX: ACB). As Canada draws closer to legalization of the consumer market, TGOD is looking good. The company’s highly anticipated IPO is planned for March 2018.

Writing in the 1980s, renowned Harvard professor Michael Porter excited attention with his theory of how companies should pursue the elusive grail of competitive advantage. A company’s basic strategy should be based, he argued, either on producing at a lower cost than its competitors can or on differentiating itself by offering unique features. A company should also decide on market scope by selling to selected market segments or to the broad market.

As a guide, Porter’s analysis helps to develop strategic focus. However, real world conditions often blur the dichotomy between the cost and differentiation strategies that he detailed. While TGOD can attempt some differentiation by its concentration on organic methods of cultivation, such methods are obviously not unique to the company, which is why a hybrid approach may be the right one. As a result, TGOD is pursuing a low cost strategy in the limited scope market segment of organic cannabis.

The low cost aspect of its mixed strategy has a good chance of succeeding. The company’s production operations in Ontario and Quebec together command 970,000 square feet of ultra-high technology greenhouse facilities. With such a mammoth scale in play, TGOD should benefit from large economies of scale. Moreover, TGOD has an agreement with Eaton Corp., the $36 billion global power management company, under which Eaton, by providing research and optimization, will allow TGOD to have some of the lowest electricity input costs in the business. The collaboration has facilitated the development of a six-megawatt cogeneration natural gas power plant on TGOD’s Ontario property, which is expected to drive kilowatt-hour cost down from its present $0.13 to $0.045.

At that Hamilton, Ontario, facility, TGOD is planning a two-phased approach, under which annual production will be expanded from 1,000 kilograms per year to 14,000 kilograms by the end of 2018. At $8 a gram, this translates to revenues of $112 million. Total build-out capacity to achieve that output will be 150,000 square feet. The operation currently consists of a 1,000 kilogram-per-year indoor production facility, which acts as a beta facility for the larger expansion.

Construction at facilities located on TGOD’s 75-acre property in Quebec has begun. The facility covers an extensive 820,000 square feet capable of producing 102,000 kilograms of organic cannabis. The first phase of this expansion is underway, and construction is expected to be completed by Q2 2019. This first phase will consist of 220,000 square feet capable of producing 22,000 kilograms of cannabis. Second and third phases, which will add 250,000 square feet producing 26,000 kilograms of cannabis and 350,000 square feet producing 54,000 kilograms of cannabis, are expected to follow.

For more information, visit the company’s website at www.TGOD.ca

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The Green Organic Dutchman’s Strategy Ensures Sustainable Future Growth

The Green Organic Dutchman raised $112 million to fund 970,000 square foot expansion of cannabis cultivation facilities in 2018
This includes $55 million investment by Aurora Cannabis Inc.
Strategy positions The Green Organic Dutchman to be one of the world’s largest, most technically advanced cannabis producers

Headquartered in Hamilton, Ontario, The Green Organic Dutchman Holdings Ltd., known as “TGOD”, has formed strategic alliances with industry leaders with a view to becoming the world’s largest organic cannabis company. To achieve this goal, the company has taken an approach unique in the cannabis industry, by growing cannabis organically at a low cost, expanding its cultivation facilities to scale, hiring world class senior management and forming strategic partnerships with major players, including Eaton Corp. (one of the world’s largest power management companies) to lower electricity costs and Ledcor Group, the second-largest and one of most respected construction companies in Canada.

TGOD cultivates farm-grown, organic and synthetic pesticide-free medical cannabis using all natural, organic craft growing principles. The company is licensed to produce medical cannabis under Canada’s Access to Cannabis for Medical Purposes Regulations (“ACMPR”). TGOD is currently performing a 970,000 square foot expansion to its cultivation facilities, which will enable the company to produce 116 tons of cannabis annually. This expansion project is scheduled to come online in phases, beginning in 2018, to meet the increased demand expected with the legalization of recreational cannabis throughout Canada.

TGOD recently announced that it had secured $112 million in private placement financing, including a $55 million strategic investment by Aurora Cannabis Inc. (OTCQX: ACBFF) (TSX: ACB), an established company in the marijuana industry. This investment will fully fund TGOD’s planned expansion. Its strategic partnership with Aurora positions TGOD’s cannabis production facilities to be among the largest and most technically advanced in the world.

The project management consortium for this expansion includes Eaton Corp. and Ledcor, who will report to TGOD management on project progress. Both of these companies have extensive international experience in power, project and construction management. Eaton devises energy-efficient solutions for the efficient management of electrical, hydraulic and mechanical power. Ledcor will ensure an accelerated production schedule by using advanced multidisciplinary design/build processes and implementing scalable operational and project plans. These companies will deploy their world-class project teams to ensure that the projects are completed on time and on budget.

With this massive expansion to its facilities in Ontario and Quebec, and by leveraging innovative technology and low-cost power solutions, TGOD could be positioned as one of the most cost-efficient, high-quality cannabis producers in Canada. The company has formed an alliance partnership with Hamilton Utility Corp., which has enabled it to reduce its power cost from $0.13 per kWh to less than $0.05 per kWh. TGOD’s position as a low-cost cannabis producer will be strengthened in Quebec, the province with the lowest power rates in Canada, which can be as low as $0.04 per kWh.

TGOD also plans to secure a share of the growing cannabis oils market. It has commissioned a purpose-built extraction laboratory, a commercial-scale CO2 extraction unit which can process up to 12,000 kg of raw material per year for the production of around $170 million worth of organic cannabis oils. Cannabis oil is a critical raw material for the production of several recreational market verticals, including topicals, edibles, concentrates and beverages.

The company has a world-class management team with proven executive and operational experience in the cannabis, consumer products, consumer packaged goods (CPG) and finance industries. Plans for a public listing with the Toronto Stock Exchange are underway, with the launch of an initial public offering (IPO) expected imminently.

For more information, visit the company’s website at www.TGOD.ca

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