Solid Profits Show Strength of Growing Cannabis Space

CannabisNewsWire Editorial Coverage: The cannabis markets have already produced some amazing financial results, but all indications are the industry is only at the beginning of an impressive ascent.

Quarter-over-quarter sales growth is one of the indicators used to indicate upside potential. With that in mind, Wildflower Brands Inc. (CSE: SUN) (OTCQB: WLDFF) (WLDFF Profile) revenues have increased 11 consecutive quarters, quarter on quarter, ever since the company started selling its hemp-based CBD products. Similar quarterly sales spikes and strategic acquisitions foreshadowed dramatic price increases in some of the largest names in the cannabis universe. Green Thumb Industries Inc. (CSE: GTII) (OTCQX: GTBIF) more than tripled its revenues from one year ago, both on a year-over-year and quarter-over-quarter basis, and Scotts Miracle-Gro Company (NYSE: SMG) announced company-wide sales increased 17% in its fiscal second quarter. Trulieve Cannabis Corp. (CSE: TRUL) (OTC: TCNNF) grew its first-quarter 2019 revenues by 192% year-over-year to $44.5 million while Acreage Holdings Inc.’s (CSE: ACRG) (OTCQX: ACRGF) first-quarter 2019 performance showed revenues up 487% to $12.9 million.

Cannabis run is far from over, new winners emerging
Branding, marketing and retail reach signals of success
Year-over-year and sequential growth helps identify future potential

To view an infographic of this editorial, click here.

Good Times Have Just Begun

Legal cannabis is a recent worldwide phenomenon, and the emerging market seems to have almost unlimited potential. The global legal marijuana market, valued at just $9.3 billion in 2016, is expected to blow past $146 billion within the next six years.

According to a United Nations report, cannabis is the most widely consumed drug on the planet, with approximately 270 million global consumers using cannabis, equivalent to about 4% of the world’s population, barely a dent in market penetration. As marijuana makes its way into the mainstream, usage among all age groups seems certain to increase. However, among the most coveted 18-to-34-year-old demographic, the acceptance appears to be increasingly widespread.

Millennials are about three times and Gen Z about four times more likely to use cannabis than aging Boomers. Seeing the numbers, savvy cannabis companies are moving forward full speed in product and brand development to capture this coveted demographic and market share, now and for decades to come. As public perceptions change and legalization increases, the number of users is certain to skyrocket in an essentially untapped market. A global transition is already underway. Growth trajectory is virtually vertical, presenting a once-in-a-generation investment opportunity.

Retail Reach

Founded in 2012 as a private company, Wildflower Brands Inc. (CSE: SUN) (OTCQB: WLDFF) went public in 2014 and has seen impressive growth since day one. Wildflower is an integrated health-and-wellness company creating distinct brands that incorporate the synergistic effects of plants and their extracts. The company’s latest quarterly sales set records, up 78% over the previous quarter, validating corporate strategy, the popularity of its products and the continued expansion of market share. Intent on boosting revenue and earnings even further, Wildflower is about to finalize the acquisition of a preeminent cannabis retailer in Vancouver that also owns multiple cannabis licenses.

Wildflower’s latest press release is further evidence of the company’s rapid growth and global reach. The company reported third-quarter sales were up by 78% over the second quarter, the 11th consecutive quarter of revenue growth, since Wildflower Brands began selling products. On top of these stellar results the company is further expanding its retail footprint and product distribution with the accretive acquisition of Vancouver-based City Cannabis Corp.

City Cannabis is a premier cannabis retailer holding two of the three City of Vancouver licenses to sell cannabis and is the only company with multiple licenses in British Columbia. With margins of 50%, City Cannabis had revenues of $1.8 million for the reporting period that began with the opening of its two stores in early January. The combined quarterly revenues of Wildflower Brands and City Cannabis equates to an impressive $4.3 million. Wildflower expects to close on the City Cannabis deal before the end of June, and the acquisition will immediately be accretive to Wildflower’s earnings upon closing.

Bringing City Cannabis and Wildflower together will result in revenue operations in three U.S. states and two Canadian provinces with a combined North American target market of more than 75 million people. The positive net income generated by City Cannabis comes from just two operating properties, even though the company holds an additional seven leases at various stages of permitting approvals.

Commenting on the financials, Wildflower CEO William MacLean stated, “We are pleased with the financial results of both Wildflower and City Cannabis. Sales through every Wildflower distribution channel are up, and sales at City’s licensed retail outlets continue to grow month over month. The positive net income is particularly impressive with City Cannabis carrying a total of nine leases, which are at various stages of the permitting process.”

Grow, Grow, Grow

Already a solid presence in California, Wildflower owns 14 cannabis licenses for recreational and medical cannabis cultivation, manufacturing, retail distribution and delivery. Wildflower’s expansion into Canada with the acquisition of City Cannabis strengthens the company’s global growth strategy, which includes strategic distribution deals already in place in the European Union and South Africa. In addition to capturing revenues from retail operations, the City acquisition gives Wildflower another channel to market its enormously popular products and launch into the over-the-counter market with its CBD formulations and accessories.

Wildflower continues to capture ever-greater market share with innovation, retail expansion and a growing family of popular brands. The company’s strategic partnerships, acquisitions and organic growth are all bolstered by its marketing genius to lock in more loyal consumers. Grabbing national and celebrity attention, Wildflower used ingenious product placement during the 2019 Oscars by including its CBD+ Healing Stick in each of the gift bags of the stars.

The company has also employed an innovative pop-up store approach in SoHo, New York, to introduce Wildflower Wellness products. Wildflower identified a compatible high-profile retail venue and struck a deal with the outlet, then marketed its products in the upscale establishment for a limited time period, raising market uptake and visibility.

Big Names

In addition to fourth-quarter growth, Green Thumb Industries Inc. (CSE: GTII) (OTCQX: GTBIF) reported increased revenue generation from two states to five states by operationalizing both consumer packaged goods and retail business units, including strong branded products distribution and the opening of seven new Rise™ stores nationwide. “In just six months following our RTO in June and in the beginning of 2019, we have expanded the infrastructure for our consumer products and retail businesses to now include 13 production facilities and the ability to open 88 retail locations across 12 states including pending acquisitions,” said GTI founder and COE Ben Kovler. “At the same time, we have built an incredible team that is over 500 strong to support our strategy to distribute brands at scale. With the growth of our branded product distribution, new store openings and adult-use markets coming on line, we are very pleased to have more than tripled our revenues from one year ago both year-over-year and quarter-over-quarter.”

Scotts Miracle-Gro Company (NYSE: SMG) earns its spot as a marijuana stock thanks to the company’s Hawthorne Gardening subsidiary, which ranks as the top supplier of hydroponic gardening products to the U.S. cannabis industry. In Scotts’ fiscal 2019 first quarter, this business contributed 47% of the company’s total revenue. SMG notes that each state’s cannabis industry and regulatory system are still in the process of maturing and says that “our experience growing an expansive, thriving business enterprise, and the company’s history of collaborating with government entities and other stakeholders to address difficult regulatory issues can provide invaluable insight and expertise to officials grappling with the challenges inherent in building comprehensive regulation for the cannabis industry. We are committed to working with regulatory bodies at all levels of government to help achieve these goals.”

Trulieve Cannabis Corp. (CSE: TRUL) (OTC: TCNNF), a vertically integrated “seed-to-sale” company and the first and largest fully licensed medical cannabis company in the State of Florida, achieved its goal of reaching 30 stores by end of Q2 with 28 Trulieve dispensary locations operating in Florida, one in California, and one added through its Connecticut acquisition. As noted in announcing its first-quarter results, Trulieve estimates that its expansion into Massachusetts, along with its continued growth in Florida, Connecticut and California, will push 2020 revenues in the range of $380 million-to $400 million, generating $140 million-$160 million in adjusted EBITDA. “Our first quarter results reflect our ability to deliver on our strategic initiatives, translating into continued strong financial performance,” said CEO Kim Rivers. “In addition to delivering on strong financial results we also achieved many significant milestones in the first quarter of the year. Growth continued in Florida with the opening of four new dispensaries, completing the first sale of smokable flower in Florida, and settling with the Florida Department of Health, allowing us an additional 14 stores above the state cap…”

Acreage Holdings Inc. (CSE: ACRG) (OTCQX: ACRGF) is gaining ground as it works toward increasing its national footprint and expanding in the western United States. Despite delayed dispensary openings caused by local regulators in both Massachusetts and Ohio, the company grew its Q1 revenues by 487%. The company is also on the fringe of an acquisition by Canopy Growth (TSX: WEED) (NYSE: CGC), a move Acreage founder, CEO and Chairman Kevin Murphy said “will provide us the ability to rapidly accelerate our growth plan as the transaction makes us the most attractive partner in U.S. cannabis.” Shareholders from both companies are voting on Canopy Growth’s potential acquisition of Acreage expected to “create greater shareholder value than as competitors in the U.S.”

Skepticism about the cannabis has disappeared; there’s little question about either the viability or the profitability of the newly respected cannabis sector. Significant money has already been made in the nascent industry, and it appears that a plethora of new winners will be created in the burgeoning sector.

For more information on Wildflower Brands, visit Wildflower Brands Inc. (CSE: SUN) (OTCQB: WLDFF)

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Sector ETFs Provide Diversified Entry Point for Fast-Moving Industries

CannabisNewsWire Editorial Coverage: Individuals hoping to gain exposure to the movement of the markets have two primary options: spend a lot of time and effort researching public companies, or put faith into a fund. A solid investment strategy is key to keeping pace with inflation and reaching your financial goals, but the significant risk and volatility that can come with investing in a small group of companies is a real turn-off for most part-time investors.

Increasingly, novices and seasoned traders alike are turning to mutual funds for their stability and ease of use. According to data from the Investment Company Institute, mutual funds were the most common type of investment company owned in 2018, with 44.8 percent of U.S. households owning shares of mutual funds or similar U.S.-registered investment companies – including exchange-traded funds (ETFs), closed-end funds and unit investment trusts. As Matthew P. Fink notes in The Rise of Mutual Funds: An Insider’s View, “Today U.S. mutual funds are the largest financial industry in the world, with over 88 million shareholders and over $11 trillion in assets.”

Index vs Actively Managed Funds

Deciding on a mutual fund can be tricky. Data from Morningstar, published in 2018, indicates that the number of mutual funds and ETFs now stands at more than 10,000. You can begin to narrow this total down by exploring the differences between index funds and actively managed funds.

Index funds aim to track the performance of a specific market benchmark as closely as possible. The Vanguard 500 Index Fund is a prime example, with its holdings consisting of weighted positions in S&P 500 companies. Although investment firm Vanguard suggest that “only about 16 percent” of investments in domestic mutual funds are in index-based options, these funds have some noteworthy proponents.

In 2007, American business magnate Warren Buffett made a $1 million bet with Protégé Partners claiming that hedge funds wouldn’t outperform an S&P index fund, and he won. As reported by CNBC, Buffett’s choice investment, the Vanguard 500 Index Fund, “returned 7.1 percent compounded annually, while the basket of hedge funds his competitor chose returned an average of only 2.2 percent.”

Unlike index funds, actively managed funds rely on the skill and insight of their managers to not just match the performance of the larger markets, but beat them. History shows these funds to be considerably less consistent than their index-focused counterparts. According to Standard & Poor’s, roughly three-quarters of actively managed domestic stock funds underperformed the S&P 1500 Total Market Index in the decade ended June 30, 2015. Additionally, 40 percent of actively managed equity funds available to investors on June 30, 2005, were no longer in existence just 10 years later.

While exceptions do exist (Fidelity Blue Chip Growth has outperformed the S&P 500 by 2.8 percent over the past decade, for example), the upside and relative stability of index funds make them worthy of consideration for risk-averse investors.

Alternative Indexes

The upside of major indexes like the S&P 500 are apparent, but investing solely in the performance of the larger market can limit your exposure to faster-moving investment opportunities. Consider, for example, the cannabis industry. According to Marijuana Business Daily, legal cannabis sales in the U.S. alone were on pace to grow by nearly 50 percent in 2018 to $9.7 billion, with legal sales expected to rocket past $22 billion by 2022.

The Prime Alternative Harvest Index (“Prime”) gives fund-focused investors an opportunity to cash-in on the expanding repeal of cannabis prohibition without digging through the mountain of fly-by-night entries to the space. The Prime aims to take advantage of both event-driven news and long-term trends in the cannabis industry, as well as the industries likely to be influenced by the medicinal and recreational cannabis legalization initiatives that are taking shape in many forms around the globe. Utilizing a modified market cap weighting scheme, the index features some of the fledgling cannabis industry’s most recognizable names, including GW Pharmaceuticals (NASDAQ: GWPH), Cronos Group (NASDAQ: CRON) (TSX: CRON) and The Green Organic Dutchman Holdings Ltd. (TSX: TGOD) (OTCQX: TGODF), alongside a roster of established upstarts and ancillary companies defined by a set prospectus.

The Benefit of Exchange-Traded Funds

When investing in a fund based on a more fluid index like the Prime, the benefits of exchange-traded funds over more traditional mutual funds are particularly noteworthy. While traditional open-end mutual fund shares are only traded once per day, limiting your ability to capitalize on sudden market moves, ETFs are bought and sold during the day just like stocks, opening the door for short selling, futures and options.

ETFMG Alternative Harvest (ARCA: MJ) is an ETF that tracks the Prime in an effort to “measure the performance of companies within the cannabis ecosystem benefitting from global medicinal and recreational legalization initiatives.” To date, it is the first and only U.S. ETF to target the cannabis industry, providing direct exposure to the ongoing “green rush” taking place across North America and around the world.

The Alternative Harvest ETF turned its focus to the cannabis space in late 2017, shifting away from a prior basis of Latin American real estate to invest in both cannabis cultivation firms and a few outside operators that you may not expect to see in a cannabis-centric fund, such as Philip Morris International (NYSE: PM) and Scotts Miracle-Gro (NYSE: SMG).

Importantly, the ETF requires that all holdings have a minimum market cap of $200 million, giving investors a degree of insulation from the marijuana penny stocks and upstart companies that continue to flood the sector.

A Closer Look at the Alternative Harvest ETF

Since rebalancing its holdings to focus on the cannabis space, the Alternative Harvest ETF has established a strong position on the radars of investors eying the industry. In early January 2018, The Motley Fool issued a report stating that MJ was bought and sold more than the $145 billion iShares Core S&P 500 ETF, which the publication touted as a testament to “just how big [MJ] has become in marijuana stock circles.” In the year-plus since that report was issued, interest in the cannabis-focused ETF has remained strong, with current average trading volume exceeding 900,000.

Throughout the first two months of 2019, the sustained interest in MJ has been supported by its upward trajectory. Entering the year with a market price of $26.42, the fund’s YTD return clocks in north of 40 percent, with a market price of $37.43 during mid-day trading on March 5 that marked a new high for 2019.

This strong performance lines up nicely with the broader cannabis sector, which is supported by MJ’s current asset holdings. Canadian shares of The Green Organic Dutchman, for example, which currently represent 4.34 percent of MJ’s portfolio, are up more than 60 percent YTD. Similarly, U.S.-listed shares of Canopy Growth Corporation (TSX: WEED) (NYSE: CGC), which make up 7.16 percent of MJ’s current holdings, are up roughly 63 percent YTD. Canadian shares of OrganiGram Holdings Inc. (TSX.V: OGI) (OTCQX: OGRMF) make up 3.35 percent of MJ’s current holdings, and they’re up more than 60 percent YTD, as well.

The impressive YTD performance of MJ’s smaller holdings, including The Supreme Cannabis Company Inc. (TSX: FIRE) (OTCQX: SPRWF), Canopy Rivers Inc. (TSX.V: RIV) (OTC: CNPOF) and VIVO Cannabis Inc. (TSX.V: VIVO) (OTC: VVCIF), each of which makes up less than 1 percent of MJ’s current portfolio, continues to highlight the current opportunity presented by the North American cannabis industry. The Canadian shares of each of these companies are up more than 40 percent YTD.

After a turbulent 2018 for the cannabis industry, the first quarter of 2019 has shown incredible promise for established operators throughout the space. In early January, The Motley Fool forecast huge growth for a number of companies currently included on the Prime Alternative Harvest Index and held by MJ, including 407 percent sales growth for Aphria (NYSE: APHA) (TSX: APHA), 440 percent sales growth for The Supreme Cannabis Company, 891 percent sales growth for OrganiGram Holdings and 930 percent sales growth for cannabinoid drug maker GW Pharmaceuticals, whose shares currently represent 9.1 percent of MJ’s total holdings.

A Diversified Entry Point

It’s easy to be drawn to the cannabis sector for its promise of significant growth in the coming years, particularly as legalization measures continue to gain steam in the United States. However, choosing a winner in this nascent market has already proven to be both difficult and risky for investors of all skill levels. A proven way to avoid backing the wrong horse in this great green race is to diversify your investment, focusing more on the overall success of the industry than on that of any individual company or management team.

With more than 86 percent of its current holdings providing exposure to U.S. and Canadian markets and broad industry focuses spanning pharmaceuticals, tobacco and biotechnology, the Alternative Harvest ETF provides an intriguing and diversified entry point for investors seeking a foothold in the continued emergence of the legal cannabis industry.

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Political Wins Hold Promise for Strong Cannabis Strategies

CannabisNewsWire Editorial Coverage: State ballots and the departure of Jeff Sessions have led to fresh confidence in the cannabis sector.

The cannabis industry is going through a period of huge growth.
Two states recently voted to legalize medical cannabis and one voted to legalize recreational cannabis.
The departure of Jeff Sessions removes a significant block for the industry.
A variety of strategies—some focused on product and others on support services—are emerging to make the most of this market.

Generation Alpha, Inc. (OTCQB: GNAL) (GNAL Profile) has developed a dual strategy to make the most of this opportunity, investing in both product and supplies for producers. MedMen Enterprises, Inc. (CSE: MMEN) (OTCQX: MMNFF) is financially supporting further legal reform while building up a cultivation and retail business across several states. KushCo Holdings Inc. (OTCQB: KSHB) has grown from a packaging company to one providing a range of support services. As new niches emerge, The Green Organic Dutchman (OTCQX: TGODF) (TSX: TGOD) is staking its claim through a focus on organic, sustainably grown cannabis. Even non-cannabis companies are profiting from this growth, with Scotts Miracle-Gro Company (NYSE: SMG) investing in hydroponics offerings that will supply crucial equipment to cannabis cultivators.

To view an infographic of this editorial, click here.

A Blooming Industry

Cannabis companies are in a jubilant mood following the results of last week’s events in American politics. At the polls, two states voted to legalize medical cannabis while another voted to permit its recreational use. Though Congress lost several pro-cannabis Republicans, a majority for the Democrats, America’s less conservative party, is a good omen for reform. And with President Trump’s sacking of Jeff Sessions, the country is now rid of a staunchly anti-cannabis attorney general.

This opens the way for companies with strong cannabis strategies to make bold moves in the coming year. From entering new states to producing fresh product lines, the options for growth and development are many. A few key considerations define the strategies of the current cannabis players.

Product Versus Infrastructure

Two basic approaches to business strategy currently dominate the cannabis market — one based on infrastructure and the other based on product. However, these strategies don’t have to be separate, and Generation Alpha, Inc. (OTCQB: GNAL) is building strong businesses by combining them. And the way this strategy plays out shows a lot about where the industry is at.

The product strategy is an obvious one and typically garners the most public attention. Companies going down the product path focus on the production, processing, and retail side of cannabis. These are the companies setting up farms and dispensaries, feeding the growing demand from consumers across North America. It a strategy that Generation Alpha recently moved into, under its previous name of Solis Tek, with the acquisition of cultivation and processing facilities.

The other strategy is to provide support services and supplies for product-oriented companies. As the market grows, there will be more and more need for such services, which profit off cannabis but are better insulated from shifts in the market and its political oversight. Generation Alpha started out with this strategy, as a vertically integrated technology innovator, developer, manufacturer and distributor bringing products and solutions to cannabis growers. Providing horticultural and lighting supplies, the company grew by providing cannabis growers with the equipment they needed.

Each strategy can work well on its own, but running a double strategy, while more complex, has real potential benefits. As both supplier and customer for cultivation equipment, companies such as Generation Alpha can create great efficiencies in their supply chains. And by developing both business streams, they can benefit from the security of a picks-and-shovels approach while also accessing the growing profits of the front-line cannabis trade.

Location, Location, Location

Choosing which states to operate in is an important consideration for American cannabis companies. Although it is widely anticipated to change, cannabis currently remains illegal at a federal level, and it is only through state-level initiatives that the market has been allowed to emerge. Cultivation and retail effectively operate on a statewide scale at best, so looking at where a state stands now and where it is likely to go in the future is vital to making savvy business decisions.

Arizona, where Generation Alpha recently acquired cultivation and processing facilities, provides a useful example of how local conditions shape the market. The state made medical cannabis legal in 2010. Despite a closely fought vote, opponents of cannabis have failed to overturn or limit the market despite ongoing campaigns. The state’s supreme court even overturned a rule keeping medical cannabis off college campuses. Arizona’s medical cannabis market seems secure.

In 2016, an attempt to legalize recreational cannabis in the state failed by a narrow margin. Medical legalization faced a similar setback in 2002, only eight years before passing. As recent generations are generally more liberal toward cannabis than their elders, it is likely that a similar pattern will play out for recreational cannabis, with a successful vote almost inevitable. Companies that have become established under the medical licensing laws will be in a strong position to make the most of this.

“We are excited about this opportunity in Arizona and its growth and profitability potential,” said Generation Alpha CEO Alan Lien. “We are pleased to have partners such as Future Farm Technologies and Yorkville Advisors to collaborate and support the build-out and growth of this facility. Our collective experience and knowledge in cannabis will position this Arizona operation for success. We are excited to commence Phase 1 of the development and construction of our state-of-the-art cultivation and processing facility and look forward to many additional opportunities in the cannabis industry.”

Expanding Operations

The potential of the Arizona market hasn’t gone unnoticed by other companies. MedMen has invested heavily in getting into the state, acquiring a top Arizona medical cannabis wholesaler.

This is part of a wider pattern of companies spending big to secure their spots in a burgeoning cannabis sector. For example, drinks giant Constellation Brands has spent billions investing in a Canadian cannabis company to give itself a foothold in the industry. Canadian and American companies are looking at cross-border investment, while outsiders are moving into the market as well.

This big spending only adds to the strength of infrastructure plays such as Generation Alpha’s strong position in cultivation equipment. Much of the money being invested will go into growing more cannabis. That means more hydroponics, lighting and related services will be needed across the legalized states. Any investment in cannabis cultivators ultimately becomes an investment in their suppliers.

Where Next for Cannabis?

The next few years promise solid growth for the cannabis industry in North America. Even before this month’s political upheavals, analysts projected that the $9 billion industry would grow to $47.3 billion by 2027.

The fallout from the mid-terms means that investors can be even more confident about what happens next. The forced resignation of Jeff Sessions removes one of the biggest obstacles to growth for the cannabis industry in the United States. Sessions, a staunch opponent of cannabis, had rescinded the Obama-era memo committing federal law enforcement to non-intervention in state-level cannabis industries. With him gone, cannabis shares rose as businesses and investors looked forward to a more tolerant regime.

This won’t mean an end to campaigning for MedMen Enterprises, Inc. (CSE: MMEN) (OTCQX: MMNFF), the largest financial supporter of progressive marijuana laws, but it does mean that the company’s campaigning efforts are more likely to pay off, creating space for expansion of its cultivation and retail business. The company already operates 19 facilities in four states and has recently announced the addition of a fifth, through a move into Arizona. Despite the limitations created by federal laws, MedMen is showing that cannabis companies can operate on an inter-state level.

Like Generation Alpha, KushCo Holdings Inc. (OTCQB: KSHB) entered the sector by providing support services to cannabis producers, in the form of packaging solutions. The company has since expanded its operations, creating a one-stop shop for the cannabis market. Seeing the huge potential currently available, it has recently formed an advisory board to guide strategic growth initiatives, making the most of a constantly expanding market.

While KushCo provides another example of the infrastructure strategy, The Green Organic Dutchman (OTCQX: TGODF) (TSX: TGOD) is focused on product. A producer of organic, sustainably grown cannabis, the company is making the most of the connection between cannabis consumption and concern with environmental issues. In a market large enough to start dividing into specialist niches, it is tapping into the higher prices people will pay for organic products.

Not every company profiting from cannabis is focused on that market. Lawn, garden and outdoor living company Scotts Miracle-Gro Company (NYSE: SMG) has been benefiting from the demand for cultivation equipment that cannabis’s success brings. It recently acquired the United States’ foremost distributor of hydroponic equipment, which is crucial to the cultivation of cannabis. As the cannabis industry grows, so too does hydroponics.

Political change offers further growth for an already flourishing industry, allowing profits from a wide range of strategies.

For more information on Generation Alpha, visit Generation Alpha, Inc. (OTCQB: GNAL)

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Cannabis Stocks Defy Gravity During Market Plunge

CannabisNewsWire Editorial Coverage: In the recent broad stock market sell-off, one sector resisted the market plunge.

Cannabis stocks shined during the market rout.
Global cannabis market is expected to exceed $146 billion by 2025.
Cannabis market analysts predict CAGR of 34.6 percent during next seven years.
Cannabis markets spawn dynamic ancillary businesses.

Multiple marijuana stocks shined in the sea of red during mid-October’s rout, racking up gravity-defying gains. The sizzling sector is sending signals of being uncorrelated with markets that are driven by the imperatives of institutional traders. Being untethered from the vagaries of institutional intentions is most likely advantageous for individuals intent on profiting from the impending cannabis tsunami. Marijuana sector growth has spawned a realm of new dynamic businesses in previously unimagined arenas. Leveraging the immense opportunity, NUGL, Inc. (OTC: NUGL) (NUGL Profile) has developed a first-of-its-kind, cutting-edge search app and comprehensive online directory exclusively for the marijuana industry. Heralded as a global first-mover cannabis connectivity business, NUGL just signed a deal that significantly expands its footprint and reach. The global growth in marijuana has also spurred investments in the sector by such well-known names as Constellation Brands Inc. (NYSE: STZ) and The Scotts Miracle-Gro Company (NYSE: SMG),and has launched marijuana-centric companies such as Terra Tech Corp. (OTCQX: TRTC) and KushCo Holdings, Inc. (OTCQB: KSHB).

To view an infographic of this editorial, click here.

Cannabis Jackpot

Cannabis is understandably generating intense global interest from business interests and investment communities. It’s impossible to ignore a market sector valued at an estimated $7 billion two years ago that’s now projected to exceed $146 billion worldwide by 2025 — a 20-fold increase. The stratospheric growth in the global marijuana market is anticipated to achieve a mind-boggling CAGR of 34.6 percent between 2018 and 2025.

Marijuana markets started gaining global traction in tandem with increased consumer demand for medicinal marijuana utilized for chronic pain and myriad other disorders. Medical marijuana was, in fact, the largest segment of the cannabis sector in 2016, and its value is expected to surpass $100 billion by 2025. The legalization of recreational marijuana use in multiple states and various countries has propelled demand into overdrive. The industry is now on track to bring in $8 billion by the end of this year. The research and development of safer forms of ingesting marijuana such as tinctures, oils, vapes and other edibles are expected to bolster market growth.

Connecting All Things Cannabis

On the cutting edge of the development of organic data analytics in the cannabis industry, NUGL, Inc. (OTC: NUGL) is focused on clearing up consumer confusion about the wide number of product options and becoming an integral asset to the burgeoning sector. While other attempts to connect and codify the spider web of interactions in the legal cannabis community have fallen short of expectations, NUGL expects its first-to-market, best-in-class technology platform to snag the lion’s share of this invaluable new market.

Since cannabis ads are prohibited on most social media networks, including Facebook, NUGL seized the opportunity to create the largest, most robust cannabis business networking platform in the world. The company’s internet-based search apps and online directory are the first ever to deliver global cannabis users networking power with unbiased search results, eliminating paid placement listings and skewed reviews. NUGL’s networking platform employs both business-to-consumer and business-to-business applications, providing the tools the industry needs to connect both pieces of the industry together. This allows all cannabis services, events and brands the ability to network and bring their companies to market.

NUGL’s platform is designed to serve cannabis-related businesses, products, services and users by building a community that meets the needs of each segment. NUGL puts the power of connection and self-promotion back into the hands of cannabis companies, giving them the tools to build a dedicated profile featuring their brands and services. The NUGL cannabis community is experiencing significant growth as dispensaries, strains, doctors, lawyers, service professionals, vape shops, hydro stores and brands are joining daily.

Profiles for Every Community Member

NUGL offers four types of profiles: brands, events, services, and retail. Each of these profiles can connect and interact with each other, allowing an unprecedented level of communication between each segment of the cannabis market. For instance, using the NUGL app, brands can explore and develop their distribution capabilities by connecting with retail locations. Brands can even use the app to market their products, letting stores know about special order discounts, specials, and other marketing information.

When a brand and retail store have inked a distribution deal, the store can benefit by being included on the NUGL store locator. That means that when a user searches for a specific cannabis brand, the retail store appears on a source map, driving consumers to the location.

Cannabis service providers can use NUGL to reach out to everyone on the app, advertising the unique services they provide. For instance, a CPA firm that specializes in the cannabis market can communicate directly with the niche clients it is looking for. And finally, events such concerts or other occasions that either focus on or are open to cannabis users can extend invitations and attract participants.

NUGL’s iOS and Android apps are available in the Apple and the Google Play stores, and the company is intensely consumer focused. Future software development is directed and driven by community feedback. Reinforcing its credo of “for the people, by the people,” NUGL just announced major updates to its app in response to community feedback asking for a more robust mobile application.

In tune with consumer input, NUGL proactively launched major mobile application updates that included, in part, newly redesigned profile pages and updated brand profiles. The company also added new swipe gestures and social media links to profile pages, as well as menu tabs and social share links to profiles. And NUGL simplified search functions with an updated search bar, new filters, improved brand search functionality and redesigned icons.

Multiple Platforms Expand Reach

There’s little doubt about consumer demand for cannabis or the void of platforms to efficiently connect consumers to cannabis-related companies and services. NUGL is rapidly filling that void and expanding at breakneck pace. NUGL’s user sign-ups and mobile app downloads in September eclipsed expectations and surpassed industry standards for comparable tech start-ups.

“We not only saw great returns on our initial spend but also saw the beginning of a viral push. Our next step is to scale our marketing model and watch NUGL grow its user base and app downloads even more,” NUGL CMO Ryan Bartlette stated.

Last month NUGL expanded its footprint and reach through a national joint venture marketing agreement with Nichols Publishing Company. NUGL is adding tens of thousands of print readers and online visitors with cannabis-centered magazines Garden & Greenhouse and Professional Marijuana Grower). Together, the magazines reach a cornucopia of small commercial growers, hobby growers, hydroponic and indoor gardeners, licensed cannabis growing facilities, processors and dispensaries. The magazines complement NUGL Magazine, which covers cannabis industry news and how it affects the cannabis community.

In a dramatic development, NUGL just announced a binding letter of intent to purchase Nichols Publishing Company. In what can be viewed as complete confidence in NUGL’s future, Nichols Publishing agreed to be acquired in exchange for $1 million in NUGL common stock. Nichols Publishing was founded by Robin Nichols more than a decade ago, and its cannabis trade magazines have grown into well-known brands. Nichols will join NUGL following the acquisition and run the publications’ operation under the NUGL name.

With clear intentions to dominate the market for global connectivity as it relates to cannabis consumers and businesses, NUGL’s decision to acquire Nichols Publishing is likely just a beginning as it expands its platforms and global footprint to synergistically support cannabis consumers and cannabis industry growth.

The Epiphany

There’s zero question about the past growth of the marijuana market, and future growth looks even brighter. Although the sector shines even during market sell-offs and marijuana stocks are reaching new highs, some say the sector is top heavy and frothy. If true, from this point forward, nascent ancillary business that feed and support consumers, services and businesses in the cannabis industry may hold much greater upside potential.

Constellation Brands Inc. (NYSE: STZ) just made the largest investment to date in the cannabis space. The company is already a leading international producer and marketer of beer, wine and spirits. With the recent $4 billion investment, Constellation looks to accelerate market position, perhaps create cannabis-infused drinks and expand its portfolio in emerging cannabis markets around the globe.

The Scotts Miracle-Gro Company (NYSE: SMG) is the world’s leading marketer of branded consumer lawn and garden products as well as hydroponic growing products. The company’s wholly owned subsidiary, The Hawthorne Gardening Company, is a leading provider of nutrients, lighting and other materials used in the hydroponic growing segment and now cannabis. The lawn and garden giant invested more than $1 billion in the past few years on a wide variety of companies that produce items connected to cannabis cultivation.

Terra Tech Corp. (OTCQX: TRTC) operates through multiple subsidiary businesses to provide both medical cannabis to patients and premium cannabis to the adult-use market in Nevada and California. The company’s wholly owned subsidiary, Edible Garden, cultivates a premier brand of local and sustainably grown hydroponic produce. Terra Tech’s MediFarm LLC subsidiaries are focused on medical and adult-use cannabis cultivation and permitting businesses throughout Nevada.

KushCo Holdings, Inc. (OTCQB: KSHB) is the parent company to a diverse group of business units in the cannabis, cannabidiol (CBD) and cannabis-related industries. KushCo’s subsidiaries and brands provide exceptional customer service, product quality, compliancy knowledge and a local presence in serving a diverse customer base. KushCo Holdings’ brands include Kush Supply Company, Kush Energy, Hybrid Creative and Koleto Packaging Solutions.

For more information on NUGL, visit NUGL Inc. (OTC: NUGL)

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Hydroponic Hardware Key to Tapping Long-Term Profits of Burgeoning Cannabis Market

CannabisNewsWire Editorial Coverage: The North American cannabis market continues to accelerate as Canada rockets towards the October 17 deadline for the nationwide legalization of recreational marijuana.

Hydroponic market trying to keep up with booming cannabis market set to exceed $25 billion by 2021.
Continued expansion of cannabis cultivation and demand for controllable production parameters are a boon to hydroponics industry.
Healthcare sector increasing demand for CBD from sources such as industrial hemp.
Regulatory reform throughout North America and Europe driving change in overall space.

The milestone legislation appears set to open the door wider for companies pursuing a position in the promising sector, including those consolidating vectors within the still highly fragmented hydroponics supply sector. The global hydroponic market alone was worth nearly $3.5 billion last year and is set to break $10 billion by 2023, maintaining a healthy 18.2 percent CAGR. Recently projected revenue growth to more than $30 million next year illustrates the lofty aspirations of hydroponics supplier Sugarmade, Inc. (OTC: SGMD) (SGMD Profile), a company that recently reported a sequential revenue increase of some 215 percent and a year-over-year revenue increase of approximately 228 percent for revenues of just under $3 million in the most recent quarter. Scotts Miracle-Gro Company (NYSE: SMG) is another one to watch in this space, with an already well-established presence and the recent announcement that the company will acquire general hydroponics equipment supplier Sunlight Supply, Inc., for $450 million. An acquisition may also benefit Aurora Cannabis, Inc. (OTC: ACBFF), which recently announced its procurement of MedReleaf. The huge announcement of an additional $4 billion investment in researcher, cultivator and seller of extracts/flowers Tilray, Inc. (NASDAQ: TLRY), by beer giant Constellation Brands, Inc., has been unmistakable “handwriting on the wall” to many investors that the cannabis industry is here to stay. And Canopy Growth Corporation (NYSE: CGC) has also been bitten by the sector consolidation bug, as evidenced by the company’s recent snapping up of premium cannabis lifestyle brand Hiku Brands Company Ltd.

To view an infographic of this editorial, click here.

Hydroponic Picks and Shovels

With the North American Marijuana Index up 33 percent over the last month and up nearly 550 percent over the last three years, it appears that this could be the front end of an ongoing boom that may have yet to even see its true heyday — something that could be triggered by the adoption of more widespread legislative reforms across several U.S. states, occurring in ways similar to California’s cannabis reforms.

It is a well-known investing adage that those who developed long-term success during California’s gold rush made their money not from mining claims but from selling the necessary accoutrements miners needed, such as picks and shovels. The same phenomenology holds true today during the ongoing green rush, with hardware manufacturers and suppliers of grow systems poised to reap the rich, long-term rewards of an industry that is still just getting off the ground in many respects. Leading cannabis sector analysts at ArcView recently detailed how the North American market saw sales growth of 33 percent last year and projected that the market will reach $25 billion a year by 2021, maintaining a CAGR of 28 percent.

Cannabis prohibition will most likely come to an end in the United States, just as it has in Canada, echoing what previously occurred with the end of alcohol prohibition. To many analysts in the sector today, the legalization question is not if but when. Savvy investors seem to understand the naked reality that humans have been consuming cannabis for likely well over ten thousand years, stretching back to the apparently widespread consumption of seeds and oils in China, where the first recorded medical uses of the plant occurred almost five thousand years ago. Little wonder that the cannabidiol (CBD) market is growing by leaps and bounds, as the infusion of CBD into healthcare products becomes more prevalent. The Brightfield Group recently projected faster-than-anticipated growth for the CBD market, with sales projected to reach $22 billion or more by 2022.

A Rollup Strategy in Hydro Hardware

Product and brand marketing outfit Sugarmade, Inc. (OTC: SGMD), whose brands include ZenHydro.com, CarryOutSupplies.com and BudLife Cannabis Storage Solutions, is currently focused on increasing revenues by repeating the success of the company’s past strategic moves, such as last year’s master market agreement with BizRight Hydroponics, a highly successful and rapidly growing manufacturer and distributor of intelligently designed hardware geared specifically for the needs of the cannabis cultivation sector. The company recently revealed that, as part of a growing emphasis on exploiting a “picks and shovels” rollup approach to the burgeoning cannabis sector, Sugarmade is in acquisition talks with multiple hydroponic supply companies having parallel competencies.

Sugarmade CEO Jimmy Chan explained in a recent shareholder Q&A that targeting home growers as well as smaller, profitable companies in the sector — companies that already have exceptional hardware offerings for professional cannabis processors and cultivators — is something that looks to be highly accretive. The strategy is quite simple, because while there is an explosion of new cannabis ventures in the market, few of these pioneering entrepreneurs of profitable operations possess access to public markets or equity-financed capital.

Branching Out into CBD and Industrial Hemp

Sugarmade’s revenue generation plan isn’t limited to relying on expanding North American markets either. The company was obviously happy to announce expansion into the European hydroponics supply market recently, through a sizeable order via Amazon UK. This announcement comes amid an ongoing shift for the company from a majority of hydroponic-related revenue growth occurring in California and other West Coast markets to more geographically dispersed growth throughout other U.S. states that are also seeing regulatory easing.

In addition, Sugarmade announced in late August that the company has committed to investing $1 million over the next 12 months in Hempistry, Inc., the privately held cultivator of an ultra-high CBD strain of industrial hemp (less than 0.3 percent THC), which has reserved 23,000 acres of prime Kentucky farmland for the task. Moreover, Chan has been made an advisor of Hempistry, and the company’s investment will be in the form of common shares, positioning SGMD shareholders quite well should a Hempistry IPO ever come to the fore. A cultivation supply agreement signed between the two companies is the icing on the cake and demonstrates to investors how such a rollup strategy also represents additive revenue growth that will magnify Sugarmade’s already robust top-line growth rate.

Sugarmade is already in formal acquisition negotiations with at least two companies in online and retail hydroponics, as well as other agricultural cultivation supplies, and the company has made a special filing with the SEC to formally address these acquisitive ambitions. Together with the industrial hemp and CBD initiative engaged in via the Hempistry investment, SGMD’s management team feels that shareholders are now well-positioned for considerable upside, as the company skillfully manages its aggressively planned growth rate and hones its focus more toward cultivation-related revenue sources.

Cannabis-Related Hydroponics — A Tricky Market

The retail market for hydroponics, generated by cannabis growers who are often highly knowledgeable about different types of grow equipment, is expected to become an increasingly contested arena in the coming years. For a disruption-minded brand marketing company such as Sugarmade, which is now one of the biggest publicly traded companies in cannabis-related hydroponics, the need to speak directly to consumers in a language they understand is readily apparent. The BizRight deal speaks volumes, given that BizRight has developed an impressive rapport with customers and partners over the last seven years, becoming one of the most trusted names today in world-class hydroponics.

Scotts Miracle-Gro Company (NYSE: SMG) had a strong quarter recently, with consumer purchases up 5.4 percent amid continued strength of the company’s core consumer lawn and garden products. The aforementioned acquisition of Sunlight Supply will reportedly bring the company’s Hawthorne Gardening segment up to an estimated $600 million a year in total sales, giving the company an impressive footprint across the general hydroponics supply market.

Aurora Cannabis, Inc. (OTC: ACBFF) is one of the biggest and fastest growing cannabis companies in the game today, with a currently funded capacity of nearly 950,000 pounds of product per year and an annual production target over 1.256 million pounds post-acquisition of Ontario-based MedReleaf. With a production footprint spanning nine Canadian and two European production facilities, Aurora is one of the most enviably positioned cultivators in the industry and has the scale necessary to ensure low production costs as well as consistently high yields. The MedReleaf acquisition brings even more high-yield cultivation technology firepower to the table.

Tilray, Inc. (NASDAQ: TLRY), which is focused on research, cultivation, production and distribution of medical cannabis and cannabinoids, has seen some impressive share price appreciation since the company’s IPO in July. The announcement in September that the company was granted DEA approval to import a cannabinoid study drug to the United States from Canada for use in a neurological movement disorder (essential tremor) study has really attracted a lot of investors to the company’s unique offerings and global reach. Tilray’s sophisticated array of full-spectrum and highly purified extracts deserves a second look from investors who may just be caught up in the hype and do not fully appreciate the company’s portfolio and value proposition.

Canopy Growth Corporation (NYSE: CGC) is riding high on a huge capital injection from Constellation Brands, which controls approximately 38 percent of the company post-expansion of this important strategic partnership, which has also served as something of a watershed moment for the cannabis industry. Canopy is wasting no time when it comes to exploiting this new muscle, recently announcing a multiyear supply and service agreement with Centric Health Corp. Canopy also recently announced that its Tweed Farms subsidiary received license amendments approving all remaining greenhouse space at its primary site, expanding Canopy’s total licensed grow footprint to an impressive 3.2 million square feet.

Lean, Mean, Green Machine

Sugarmade has put together a straightforward revenue growth strategy that has been tried and tested in other markets. Successfully executing a rollup strategy in the highly fragmented hydroponics space will come down to the company’s ability to continue picking superb targets that will be genuinely accretive to shareholder value over the longer term and directly additive to the company’s already impressive top-line growth. The Hempistry investment, as well as further expansion into hydroponics supply, is a win-win for both target companies and investors alike.

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

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Canada Leads the Way as North America Embraces a Diverse Cannabis and Hemp Industry

CannabisNewsWire Editorial Coverage: The pending legalization of recreational cannabis and the extraction of cannabinoids from hemp in Canada is only one in a series of changes bringing expectations of new growth to these industries.

Legalization of recreational cannabis in Canada is set to establish an industry worth billions of dollars every year.
American companies can make the most of this change through cross-border partnerships and Canadian subsidiaries.
Industrial hemp offers another option for companies in this sector, producing and extracting cannabinoids, including CBD and other cannabinoids, from the flowers and leaves will become legal on October 17, 2018.

Marijuana Company of America Inc. (OTC: MCOA) (MCOA Profile) is making the most of these changes, developing CBD products and industrial hemp cultivation processes alongside its Canadian partner, Global Hemp Group Inc. (CSE: GHG) (OTC: GBHPF). Scotts Miracle-Gro Company (NYSE: SMG) has acquired Sunlight Supplies to give it a larger hold in the hydroponic cultivation market. GrowGeneration Corporation (OTC: GRWG) is also specializing in hydroponics, which it expects to become a $4.5 billion industry. Micron Waste Technologies, Inc. (OTC: MICWF) (CSE: MWM) is creating a specialist onsite waste management system for cannabis farmers. And as hemp cultivation appears to be on the cusp of expansion, Future Farm Technologies (OTC: FFRMF) (CSE: FFT) is producing millions of seeds with which to get farmers started.

New Laws and New Crops

The legalization of recreational use cannabinoids in Canada is set to make waves in the market this year. As the first G7 country to legalize recreational cannabis on a national scale, Canada is leading the world in taking this lucrative trade out of the hands of criminal gangs and making it part of the legitimate economy. With the global cannabis market to reach a value of $57 billion by 2027, Canada provides a great opportunity for companies to capture a piece of this rapidly emerging market.

With sales worth close to $6 billion, the Canadian cannabinoid industry has plenty of potential. It’s drawing the attention of big business, with Corona’s parent company investing billions in a cannabis beverage partnership. It is also opening a new market for companies in the related industrial hemp industry. On October 17, 2018, farmers who hold valid hemp cultivation licenses will be allowed to begin to “harvest and store flowering heads, leaves and branches of the industrial hemp plants cultivated during the 2018 growing season.” Companies will now also be able to transport, sell, import and export any part of the industrial hemp plant legally. This allows those involved in the industry to take advantage of an entirely new product market utilizing hemp-derived cannabinoids. For companies already invested in this sector, changes in Canada may open the way for a vast increase in revenues.

The Canadian Cannabis Market

It’s easy to see the appeal of the Canadian hemp and cannabis markets for the companies moving into those markets, such as Marijuana Company of America (OTC: MCOA). Estimates by Statistics Canada indicate that Canadians spent around $5.5 billion on cannabinoids in 2017. As many commentators have pointed out, this places cannabinoid-based product potential in the market on par with alcohol for value to Canadian businesses, and close to the total spent on wine each year.

With around 450,000 people using hemp and cannabis products each day in Canada, this promises to be a stable market with a steady stream of income. It’s one on which businesses can reliably build. And it’s not just about the sale of smokable cannabis. There’s potential for hemp and cannabis-based food and drink, as well as all the paraphernalia used in consumption and the supporting functions needed by the industry and retailers.

Hemp is used in a growing list of products, including dietary supplements and skin products, and even clothing and accessories. Overall, hemp is known to have more than 25,000 possible applications. And Marijuana Business Daily reported that the U.S. market for hemp-derived CBD hit $291 million last year and is projected to explode to $1.65 billion by 2021.

Cross-Border Work

The existence of a government regulatory framework for the medical cannabis industry has made it easier for companies to prepare for full legalization in Canada. Companies, such as MCOA with its joint venture partner Global Hemp Group Inc., are already cultivating industrial hemp and have production in place that can be increased to cater to a growing market.

Though MCOA is an American company, it has gained a solid foothold in Canadian hemp cultivation through a partnership with Global Hemp Group, a Canadian public company. The companies have established two agricultural projects together — one of them in New Brunswick and the other south of the border in Oregon. Both sites are being used to develop better techniques for growing industrial hemp.

At the New Brunswick site, the work is being supported by government research investment to help advance the local hemp industry. Aided by drone technology, the companies are gathering data on the impact of pests on hemp production, ways of correcting soil acidity for better growth, and the impact of nitrogen fertilizers. The resulting crops will provide materials for MCOA’s branded hempSMART™ products as well as a rich harvest of data.

In Oregon, the focus is on growing hemp strains with a high yield of cannabidiol (CBD). CBD is one of the active chemicals in cannabis that does not get users high, unlike marijuana’s tetrahydrocannabinol (THC), though CBD still can be used for a variety of medicinal uses. Using a mixture of seeded and cloned plants, staff at the Oregon facility are growing high-CBD-yielding crops while gathering data on their progress.

The Potential of Hemp

MCOA’s investment in industrial hemp means that the company may be set to benefit from a revival in this long-suppressed superior crop as well as the changing U.S. and Canadian laws. A century ago, hemp fiber was used in the production of rope and cloth. Laws aimed at outlawing marijuana killed the industry, but as the interest in other strains of cannabis has grown in recent years, so too has attention on hemp.

In the United States, the 2018 U.S. Farm Bill is set to strike hemp from the definition of “marijuana” under the Controlled Substance Act. This would mean the revival of an industrial agricultural crop that has been repressed for almost 100 years. Language within the Farm Bill could ease regulations for CBD companies such as MCOA by allowing extracts from the hemp plant to now become legalized.

Hemp’s financial potential now lies in its use as a source of CBD oil and other cannabinoids such as CBC, CBN and CBG. The industrial applications of hemp in areas such as textiles, bio-composites and building materials will become increasingly viable as more biomass is generated in the cultivation of hemp to produce cannabinoids.

CBD has become a hot ingredient in medicine and wellness products in recent years, offering great potential for farmers. Even with the growth of hemp tightly restricted, farmers in the United States have predicted revenues of as much as $90,000 per acre from producing hemp oil. For struggling farmers, that compares favorably with the $600 per acre they can get for alfalfa and other traditional and specialty crops. CBD is the oil that goes into MCOA’s hempSMART products. There are currently less than 300,000 acres of hemp grown worldwide, compared to traditional crops such as wheat and corn, with hundreds of millions of acres of each being grown. With the potential disruptive applications for hemp from industrial to medicinal, it will ultimately compete with traditional crops as it is adopted by many sectors of the economy.

In addition, hemp has the advantage of being good for the environment as well as for business. It uses less water than many other crops, needs little in the way of pesticides and herbicides, sequesters significant carbon dioxide and can be rotated with other crops to improve the fertility of fields. Using hemp fibers for paper may reduce the number of trees chopped down, thereby protecting woodland and maintaining carbon dioxide at healthy levels.

A Growing Industry of Growing Things

The spread of cannabis legalization, alongside the increasingly well-recognized potential of hemp, is spurring growth for a number of companies.

Scotts Miracle-Gro Company (NYSE: SMG) is one of several companies providing the support services that cannabis companies need. It recently expanded by acquiring Sunlight Supply, Inc., the United States’ foremost distributor of hydroponic equipment. Hydroponics is fundamental to growing cannabis in indoor facilities, which are often more effective and secure than outdoor cultivation. The $450 million deal will double the company’s share of the market in cannabis growing equipment.

GrowGeneration Corporation (OTC: GRWG) also provides equipment needed by cannabis growers in the form of hydroponic systems, nutrients and materials for hydroponic cultivation. The growth of the legal cannabis market in North America caused an 80 percent increase in the company’s sales in 2017. GrowGeneration predicts that this continuing market growth will turn hydroponics into a $4.5 billion industry in the United States alone by 2020. To make the most of this growth, GrowGeneration has acquired several smaller companies.

Like most industries, cannabis cultivation produces waste. Micron Waste Technologies, Inc. (OTC: MICWF) (CSE: MWM) is developing specialist technology to deal with this concern. A producer of onsite waste management systems, Micron’s products create clean water out of organic waste. With cannabis cultivation growing, the company is targeting this sector with a purpose-built cannabis waste digester. It even ran a competition with a $2,000 prize for the person who came up with the best name for the waste digester, a move that helped to publicize cannabis cultivation.

Future Farm Technologies (OTC: FFRMF) (CSE: FFT) provides another of the pieces of specialist equipment needed for indoor cultivation: lighting. The company makes indoor lighting and vertical farming setups suitable for cannabis cultivation. Future Farm is also preparing for the expansion of the hemp market in the United States by producing millions of hemp seeds ready to be sold to farmers. If expected changes to the federal law in the United States make it easier for farmers to cultivate hemp, then the company will be in a position to equip new entrants to the market, letting them quickly get in on a valuable cash crop.

Between the revival of hemp and legal changes, the cannabis sector is growing. It’s an increasingly diverse industry, covering medical and recreational cannabis, industrial hemp and CBD food products. Canada now provides an ideal area for companies to build up their presence in the industry, but the potential for growth is international.

For more information on Marijuana Company of America, visit Marijuana Company of America, Inc. (OTC: MCOA)

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As Senate Brings Legal Change, Hemp Offers Hope for American Farmers

CannabisNewsWire Editorial Coverage: The hemp industry is growing in North America and appears to be set for further expansion thanks to legislation making its way through the U.S. Senate.

Hemp is a cultivar of the cannabis sativa plant that lacks the active drug ingredient that makes marijuana users high.
It can be used to produce medicinal CBD oil as well as fibers for rope, paper and canvas.
Even in difficult growing conditions, hemp can provide higher profits than many other crops.
It has a lower environmental impact thanks to low water consumption and little need for chemical fertilizers or pesticides.

Marijuana Company of America, Inc. (OTC: MCOA) (MCOA Profile) has hemp already growing at cultivation sites in Canada and the United States, experimenting with improved strains and cultivation techniques. As a provider of hydroponic equipment, Scotts Miracle-Gro Company (NYSE: SMG) is benefiting from the growing cannabis industry and will likely see increased sales thanks to a recent acquisition. Another provider of hydroponics, GrowGeneration Corporation (OTC: GRWG), has already seen a dramatic increase in sales thanks to acquisitions and the rise of cannabis. Micron Waste Technologies, Inc. (OTC: MICWF) (CSE: MWM) is launching specialist waste treatment equipment for cannabis growers. And as federal hemp legislation comes closer to passage, Future Farm Technologies (OTC: FFRMF) (CSE: FFT) is producing millions of hemp seeds ready to be planted by farmers in Maine.

To view an infographic of this editorial, click here.

Bringing Hemp Back

The past decade has seen a rush to embrace legal cannabis in North America. In the United States, 31 of the 50 states now allow its use for medicinal purposes while another 15 allow products derived from cannabis but with restrictions on their active chemicals. Nine states also allow the sale and use of recreational cannabis.

These changes have largely overlooked an important class of cannabis: hemp. This variety of the cannabis sativa plant does not contain tetrahydrocannabinol (THC), the psychoactive ingredient that is the basis of marijuana’s recreational appeal. Historically used in making rope and fabric, hemp became illegal alongside other forms of cannabis because there was no way to distinguish between them. But with new ways to provide that differentiation, industrial hemp appears to be on the cusp of returning to widespread agricultural use in the United States.

The Hemp Revival

Changes in legislation have already allowed a number of companies, including Marijuana Company of America, Inc. (OTC: MCOA), to start growing hemp in the United States and Canada. But as with so much else about cannabis production, this has been somewhat hampered by restrictions at the federal level. Now a change appears to be forthcoming.

In 2014, the Farm Bill allowed farmers to start growing hemp for research purposes. Hemp farming quickly took off, reaching 25,713 acres of harvested land in 2017. And current efforts are afoot to make the crop fully legal.

This isn’t just a publicity-grabbing move from the liberal left. A bill put before Congress by Republican Sen. Mitch McConnell of Kentucky aims to make hemp cultivation legal. It has cross-party support and looks likely to pass despite the partisan divides in Washington. If it does, the bill will allow companies such as MCOA to expand their efforts and may encourage more farmers to grow hemp.

The financial potential of a hemp crop is staggering. The plants can currently be used to produce cannabidiol (CBD) oil, which is used in medicines and wellness products such as those sold by MCOA. Some farmers are expecting revenues of $90,000 per acre for the oil, compared with only $600 per acre for alfalfa, which is currently one of the most popular crops in the United States.

There’s even more profit to be made from a properly developed hemp industry. Given full legalization, a revival of such ancillary industries could allow farmers to profit from both CBD oil and what is currently a waste product once the plant is processed, reviving the hemp fiber industry after nearly a century.

A Better Crop for the Environment

One of the great advantages of hemp is that it’s easier to grow in dry climates than many other crops. Though it needs more water than other crops during the first few weeks of growth, hemp subsequently needs less water and is less vulnerable to drought. This makes it an ideal crop for farmers in arid environments, such as parts of the western United States, as well as those currently facing the impact of climate change.

Reduced water consumption is one of several factors that make hemp an environmentally friendly crop. Growing hemp doesn’t require pesticides and herbicides, meaning that the soil can be left clean and given a chance to recover between other crops. Hemp can also be used instead of trees to produce paper fibers, thus saving trees and reducing the geographical footprint of paper production.

Hemp is a fast-growing plant, capable of growing up to 20 feet in 100 days, allowing farmers to potentially grow a substantial crop in a relatively small area, even in soil conditions where other plants might struggle to survive. With legalization expected with the passing of the Farm Bill, hemp cultivation may grow beyond the small crop levels currently established by companies such as MCOA. An increasing number of farmers are already planting hemp. Once the red tape is eliminated, more will surely jump on board this bandwagon.

Getting Ahead of a Growing Industry

This change is good news for MCOA and its existing hemp cultivation projects. Legal change will give the company credibility as an early adopter in a suddenly expanding field, with the advantages in technique that experience brings.

One of the company’s projects is the continued development of Hemp Agro-Industrial Zone (HAIZ) in New Brunswick, Canada, with its partner Global Hemp Group (CSE: GHG). There, MCOA and GHG have been working with the government to explore different approaches to hemp cultivation and encourage the industry in the region. Supported by a government grant, MCOA and GHG have been conducting experiments that study and evaluate soil conditions and pest problems that could affect hemp crops. Drones allow researchers to accurately assess the success of crops and gain a better understanding of what makes hemp grow best.

More recently, the company has also established a hemp cultivation site in the state of Oregon in another joint venture project with GHG. This 109-acre site features both indoor and outdoor cultivation that allows the company to maintain a steady supply of plants throughout the year.

At the Oregon facility, MCOA and GHG are cultivating hemp varieties with particularly strong yields of CBD. This active ingredient in hemp is being used in a growing variety of medical and wellness products, with applications including increased alertness, the control of epilepsy and pain management. By collecting and analyzing data on hemp strains to augment CBD development, MCOA hopes to establish better profits and wider availability for this important medicine.

Businesses Benefit from Hemp

The ascendance of hemp cultivation and the wider cannabis sector is bringing benefits for companies in supporting services. Scotts Miracle-Gro Company (NYSE: SMG) recently completed the acquisition of Sunlight Supply, Inc., the leading distributor of hydroponics products in the United States. This $450 million deal is the largest transaction Scotts has ever made and will double its sales to cannabis growers, who make extensive use of hydroponic equipment. The lawns and gardens specialist might not be growing cannabis, but as legalization spreads and the sector grows, the company certainly stands to profit from the plant.

Another provider of growing equipment, GrowGeneration Corporation (OTC: GRWG), is also set to benefit from an expanding sector. By selling hydroponic systems, nutrients and materials for hydroponic cultivation, the company has seen a steady increase in its profits. Its sales increased 80 percent in 2017, and it has acquired several smaller companies to ensure its growth. The company expects U.S. hydroponic sales to exceed $4.5 billion by 2020, thanks to exponential growth driven by the cannabis sector.

Micron Waste Technologies, Inc. (OTC: MICWF) (CSE: MWM) also supports cannabis cultivators but in a different way. The company provides onsite waste management systems that turn organic waste into clean water. Micron Waste has targeted marijuana cultivators as one of the markets for its products. To celebrate this growing market, the company recently ran a contest to name its specialist cannabis waste digester.

Another specialist in indoor growing equipment, Future Farm Technologies (OTC: FFRMF) (CSE: FFT) specializes in LED lighting and vertical farming solutions. Not content with providing supplies to the cannabis sector, the company has entered the market itself with a hemp farm in Maine. The farm is soon expected to provide over 15 million hemp seeds to farmers in the region, which will allow the growers to quickly increase hemp cultivation if the current Farm Bill passes into law.

After being banned for decades, industrial hemp is seeing a rapid rise in North America. It offers opportunities for farmers and suppliers of cultivation equipment. And perhaps most importantly, it offers an environmentally friendly crop for difficult growing conditions.

For more information on Marijuana Company of America, visit Marijuana Company of America, Inc. (OTC: MCOA)

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Diversity Leads to Growth in Flourishing Cannabinoid Industries

CannabisNewsWire Editorial Coverage: The cannabis industry is about more than medicine and recreational drugs. Whether selling hemp-derived textile and construction products or providing resources to support cannabis growers, companies are now accessing the market in a variety of ways. Marijuana Company of America Inc. (OTC: MCOA) (MCOA Profile) is developing hemp-based wellness products and cultivating industrial hemp on a large scale in Canada and the United States. Scotts Miracle-Gro Company (NYSE: SMG) is selling hydroponic equipment to legal cannabis growers and has recently made a significant acquisition in this area. Cronos Group, Inc. (TSX: CRON) (NASDAQ: CRON) has used its success to become the first pure play cannabis company traded on Wall Street and in Canada was uplisted to reach the Toronto Stock Exchange. PotNetwork Holding, Inc. (OTC: POTN) has fostered a range of subsidiaries whose diverse products include cannabinoid wellness products. In addition, companies such as AbbVie, Inc. (NYSE: ABBV), which already has a cannabis-based drug on the market, may be ahead of the game as the industry expands and evolves moving forward.

A Diverse Industry

A lot of attention is currently on the medical and recreational potential of the cannabis industry. The huge sums of money already spent on the life-changing promise of medical marijuana have pushed these areas to center stage. But while they are undoubtedly an important part of the sector, they do not illustrate the whole picture involving industrial hemp’s nationwide come back.

Much of the growth in the hemp industry is in subsidiary services and other uses for the plant’s products. Hemp – a variety of cannabis that does not contain its siblings’ intoxicating potential – is being grown for use in food, fibers and even building materials, all without getting anyone high. Landlords, compost manufacturers and engineering companies are finding ways to support and profit from the changing market. Even research into active ingredients involving cannabinoids is shifting away from THC, the chemical that gets marijuana users high, and toward the potential uses of non-intoxicating cannabidiol (CBD), which can be obtained from hemp.

The result is a varied industry in which companies can flourish through variety instead of focusing on one sphere.

Careful Cultivation

Marijuana Company of America (OTC: MCOA) is making the most of this opportunity. Founded by two veterans of the cannabis industry, MCOA is building a portfolio of partnered companies working across the sector.

One of the company’s important assets is hempSMART™, a wholly-owned subsidiary of MCOA. The hempSMART brand is focused on producing and marketing wellness products including CBD derived from hemp. The hempSMART team makes use of the cannabinoid chemicals to provide a range of products that are useful and appealing to consumers.

Hemp products were worth at least $688 million in 2016 and are expected to be worth $1.8 billion by 2020. Ownership of hempSMART gives MCOA a place in this significant part of the sector, meaning that it is not dependent on federally illegal THC-laden cannabis products to grow and sustain its revenue streams.

As a newly emerging industry, cannabis faces a great deal of uncertainty over sales and income potential. This uncertainty creates investor opportunities as companies outperform expectations. But it also creates risks due to fluctuations in income. A cultivation project in Washington State is providing MCOA with a buffer against these risks.

Created as part of a joint venture with Bougainville Ventures Inc., the cannabis cultivation and processing facility at Oroville, Wash., covers 10,000 square feet of state-of-the-art growing space, which will eventually be expanded to 30,000 square feet. Rather than using the site to grow its own products, MCOA is renting out the facility to a growing company, which is expected to begin work there this month. The rent from the facility ensures a stable source of income for MCOA — derived from cannabis cultivation but not prone to its uncertainties. By providing this facility, the company is also supporting the growth of the cannabis sector, creating a market for such properties and for its own related products.

Preparing for the Canadian Market

Making the most of the possibilities offered by cannabis isn’t just about diverse products, it’s also about diverse markets. For any company working in North America, Canada is one of the most important markets currently and MCOA is preparing to enter that market.

Canada is already a significant market for industrial hemp-derived products and medicinal cannabinoids. Legislation due to come into force later this year will legalize the extraction of cannabinoids for all potential uses which will make Canada one of the largest markets for legal cannabinoids in the world.

To make the most of this expected market growth, MCOA recently entered into a joint venture with Global Hemp Group, a Canadian company, to develop high-yield CBD hemp. Working on a 109-acre agricultural property in Scio, Oregon, the companies will use a dual-cultivation strategy with traditional outdoor cultivation alongside the year-round harvesting made possible by greenhouses. Cultivation of plants has already begun, and work has started to construct five new greenhouses to ensure substantial year-round growing capacity.

The project team will be using data collection and analysis to check the performance of growing techniques and to develop hemp rich in CBD. This will help to ensure supplies of high-grade hemp for both companies’ products.

“Our evolving project in Scio, Ore., highlights the quality of the team in place as they continue to lean on their many years of experience cultivating hemp,” said Donald Steinberg, the CEO of Marijuana Company of America. “Activities such as these will help to secure the raw oil that we will need for our hempSMART brand of CBD infused products.”

Meeting Growing Demand

The Oregon facility is coming into play at a perfect time for MCOA. Demand for CBD is high due to the increasing number of manufacturers and products on the market. This is creating a shortage of high-quality CBD.

MCOA’s new farm will provide an ample source of hemp-derived CBD. With its tie-in to the Canadian industry, the company looks to be in a strong position to profit from the shortage in both the American and Canadian markets. MCOA seems to have placed itself as the right business at the right time to make the most of a shifting market.

With its range of facilities and partnerships, MCOA has already developed a broad hemp-related portfolio. By incorporating elements that are protected from market uncertainties alongside ones better positioned to make the most of change, the company may be on track to make the most of changes in the sector.

More Companies Target Cannabis

Plenty of other companies are also building their hopes of tapping into the same markets as MCOA.

A growing interest in growing things means cannabis is creating opportunities for companies already established in the agriculture and gardening sectors. Scotts Miracle-Gro Company (NYSE: SMG) has agreed to acquire Sunlight Supply, the United States’ leading distributor of hydroponics products, for $450 million in cash and stocks. The company’s largest-ever transaction will double its sales to cannabis growers, turning the lawn and gardening company into an important supplier to the medical and recreational drug sectors. Though hydroponics are used for other specialist plant-growing purposes, legalized cannabis is a critical new part of the market.

The increasing importance of the cannabis industry was heralded when Cronos Group, Inc. (TSX: CRON) (NASDAQ: CRON) became the first pure-play cannabis company traded on Wall Street. A major grower and seller of cannabis products, the Canadian company is set to profit from the growth of the industry in its native country. In a further sign of its healthy prospects, its shares in Canada were recently upgraded from the Toronto Venture Exchange to the Toronto Stock Exchange. Like MCOA, it is working across North America thanks to a cross-border venture with Los Angeles-based MedMen.

Others are using a similar model to MCOA, investing in a range of cannabis companies. PotNetwork Holding, Inc. (OTC: POTN) has developed a range of subsidiaries that contribute to an increasingly diverse industry. Its Diamond CBD, Inc. subsidiary is reaching into the $110 billion global pet care industry by creating CBD-based wellness products for pets.

Finally, traditional pharma AbbVie, Inc. (NYSE: ABBV) seems to be positioning itself in the industry so it can take advantage of potential future growth and opportunities. The company already has a cannabis-based drug on the U.S. market. FDA-approved Marinol helps alleviate nausea or vomiting for chemotherapy patients, as well as helping AIDS patients who have lost their desire to eat.

From hydroponics to pet health and beyond, hemp-based cannabinoids are reaching into all corners of the economy and returning corporate profits.

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

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