As the cannabis industry continues to take off, cultivators and producers are beginning to focus more on quality over quantity. Despite the shortage issues occurring across several regions such as Canada, cultivators are aiming to provide their consumers with exceptionally high-quality cannabis. During the prohibition era of cannabis, consumers generally had little to no knowledge of where their cannabis came from because many purchases were through the black market or other nonlegal channels. However, with the recent widespread legalization movements, companies now endeavor to provide a transparent process from when seed to sale. In legal recreational markets, consumers are beginning to witness a new take on cannabis emerge, “craft cannabis.” Craft cannabis is similar to craft beer or craft coffee in terms of how they are produced. For instance, craft coffee producers focus on the art of slow roasting coffee beans in order to obtain the best flavor. Similarly, craft cannabis producers pay close attention to the growing process of the plant to ensure the best quality possible. Craft cannabis is generally considered to be natural, handcrafted, and traditionally produced by independent growers, according to Lieze Boshoff, Founder of LBC3 Marketing. These independent producers are passionate about growing, meaning, they don’t use artificial lights, industrial equipment or pesticides. Instead, each individual plant is personally and carefully monitored by a grower using organic methods and natural sunlight. Compared to larger cultivators, smaller craft companies can produce higher quality cannabis due to the lower number of plants grown. Overall, the consumer landscape is rapidly changing within the cannabis marketplace as the demand for higher quality products continues to grow. According to data compiled by Mordor Intelligence, the global cannabis industry was valued at USD 14.5 Billion in 2018. By 2024, the market is expected to reach USD 89.1 Billion while registering a CAGR of 37% during the forecast period from 2019 to 2024. Pasha Brands Ltd. (CNSX:CRFT.CN), Canopy Growth Corporation (NYSE:CGC) (TSX:WEED.TO), Cronos Group Inc. (NASDAQ:CRON) (TSX:CRON.TO), Aurora Cannabis Inc. (NYSE:ACB) (TSX:ACB.TO), Aphria Inc. (NYSE:APHA) (TSX:APHA.TO)
Large-scale licensed producers typically spend approximately USD 1.00 to USD 2.00 per gram of dried cannabis, according to James Walsh, a consultant at Maple Ridge. On the other hand, Walsh estimates that production costs for a smaller licensed grower can grow up to USD 1.50 per gram. Moreover, distributors and retailers usually markup their prices and tax the products before they even reach consumers. For instance, Statistics Canada reported that on average, Canadian cannabis consumers paid approximately USD 6.83 per gram. Furthermore, some provinces have even recorded prices of upwards to USD 10 per gram. On the other hand, Walsh highlighted that some users spend as much as USD 15 per gram for premium quality cannabis on the black market. Similar to organically grown foods, consumers are more inclined to pay more for naturally processed products as opposed to products containing heaping amounts of artificial chemicals and preservatives. “There is a coolness factor to artisan and craft style products and this trend is also picking up amongst cannabis consumers. For some, the uniqueness and exclusivity of craft cannabis are attractive. For others, the ethics and identity of a craft grower are compatible with their own and they want to be a part of that story. Yet, for others, simply supporting a local business, in the same way, they support their local farmer, is important,” said Boshoff. “But, in the end, we like to have choices. We like variety. We like to feel connected to whatever product it is that we consume. And this, in the end, is why craft growers will continue to thrive alongside their bigger brothers.”
Pasha Brands Ltd. (CNSX:CRFT.CN) earlier last week announced breaking news that, “it has completed its reverse-takeover transaction (the “Transaction”), pursuant to which it has acquired all of the outstanding securities of the privately held, Pasha Brands Ltd. (“Privco”), Canada’s largest craft cannabis brands organization. Pasha expects to commence trading on the Canadian Securities Exchange (“CSE”) under the symbol “CRFT” at the market open on Monday, June 3, 2019.
Privco has raised approximately $25 million in the past two quarters and procured some of Canada’s most renowned pre-legalization craft cannabis brands. Pasha is now positioned to accelerate its growth with its wholly-owned subsidiary, BC Craft Supply Co. Ltd. (“BC Craft”), which expects to manage the production and processing of craft cannabis under Health Canada’s regulatory framework. BC Craft will work with craft cannabis producers in Canada and assist them in obtaining their micro-cultivation licences with Health Canada – a program that began on October 17, 2018, in exchange for a supply contract to purchase the crop a micro-cultivator produces.
Legalization in Canada has left licensed producers scrambling to meet the supply needs of Canadian cannabis consumers. To this day, illicit craft producers are still supplying as much as 90% of the cannabis Canadians are purchasing. Through its subsidiaries, Pasha will be Canada’s first all craft licensed producer and will focus exclusively on bringing micro-cultivators into the market. Under the Health Canada framework, each micro-cultivator can legally process approximately 500 kilograms of dried flower per year. For every 100 micro-cultivators BC Craft secures, up to 50,000 kilograms of world-class craft cannabis could be available to the market via Canada’s regulated supply chain.
New to the public markets, Pasha and its brands are no stranger to Canada’s craft cannabis community. Pasha’s ranks include award-winning brands and farmers that have helped establish British Columbia’s reputation as home of the world’s best cannabis. Trusted by independent growers and supported by an experienced management team and board, the brand is well poised for growth.
Reverse Takeover Transaction
In connection with completion of the Transaction, Pasha delisted from the TSX Venture Exchange, consolidated its outstanding share capital on a two-for-one basis (the “Consolidation”) and changed its name to “Pasha Brands Ltd.”, following which Privco amalgamated with a wholly-owned subsidiary of Pasha. Following the amalgamation, all of the outstanding securities of Privco were exchanged for securities of Pasha, on a one-for-one basis, and the amalgamated entity became a wholly-owned subsidiary of Pasha.
Following completion of the Transaction, the board of directors of Pasha was reconstituted to consist of Patrick Brauckmann, Hugo Alves, Scott Walters and Rosy Mondin. Patrick Brauckmann has been appointed as Chief Executive Officer of Pasha, and Theo van der Linde has been appointed as Chief Financial Officer.
For further information regarding the Transaction, readers are encouraged to review the listing statement prepared by Pasha in connection with its listing on the CSE, a copy of which is available under the profile for Pasha on SEDAR (www.sedar.com).
About Pasha Brands: Based in Vancouver, British Columbia, Pasha is a vertically integrated organization that is firmly rooted in BC’s craft cannabis industry, which boasts an international reputation. With proven capabilities in cannabis cultivation, genetic research and development, product, processing and retail, Pasha is uniquely positioned in the new legal cannabis market through its network of hundreds of craft cannabis suppliers under the Pasha umbrella. Pasha’s subsidiary, BC Craft Supply Co. Ltd., is developing a craft cannabis campus, which is dedicated to bringing craft quality into the newly legal cannabis market in Canada. BC Craft Supply Co. Ltd. is driven to assist craft growers in obtaining security clearance and licensing to grow as micro-cultivators, specializing in education and compliance to bring growers into the regulated cannabis supply market. For more information, please visit www.pashabrands.com.”
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Canopy Growth Corporation (NYSE:CGC) (TSX:WEED.TO) is a world-leading diversified cannabis and hemp company, offering distinct brands and curated cannabis varieties in dried, oil and Softgel capsule forms. Canopy Growth Corporation recently announced that it had acquired German-based, Bionorica SE-founded C3 Cannabinoid Compound Company (“C3”) in a transformative deal that will see established single cannabinoid medicines brought together with the world’s leading full-spectrum medical cannabis offering. The all cash-acquisition for EUR 225.9 Million (CDN 342.9 Million) furthers Canopy Growth’s expansion into European markets with prescription medicines and gives the Company immediate access to a wealth of knowledge and intellectual property that C3 has developed in its nearly 20 years of research and development into synthetic and natural cannabis medical products. “What this boils down to is greater choice,” said Bruce Linton, Chairman & Co-Chief Executive Officer, Canopy Growth. “This acquisition will allow us to offer more options to physicians across Europe, accelerate our commercial sales and increase our economic footprint on the continent, and drive forward new innovations. Our goal is to build on C3’s extraordinary reputation and decades of success as we move to an innovative continuum of medical cannabis therapies that will enable physicians globally to better treat their patients.”
Cronos Group Inc. (NASDAQ:CRON) (TSX:CRON.TO) is an innovative global cannabinoid company with international production and distribution across five continents. Cronos Group Inc. recently announced that it had entered into a multi-year supply agreement with MediPharm Labs Corp. MediPharm Labs will supply Cronos Group with approximately USD 30 Million of high-quality private label cannabis concentrate over 18-months, and, subject to certain renewal and purchase options, potentially up to USD 60 Million over 24-months. In addition, Cronos Group and MediPharm Labs have entered into a multi-year tolling agreement, where Cronos Group will supply bulk cannabis to MediPharm Labs’ state of the art extraction facility in Barrie, Ontario, to fulfill certain additional processing needs of the Company. “As the industry develops and matures, we see opportunity to work with companies like MediPharm Labs that provide specialized, high-quality services and inputs for our products,” said Mike Gorenstein, Chief Executive Officer of Cronos Group. “Along with our internal capabilities, we are pleased to be working with MediPharm Labs to bring great products to consumers in anticipation of the derivative market launching in Canada this fall.”
Aurora Cannabis Inc. (NYSE:ACB) (TSX:ACB.TO), headquartered in Edmonton, Alberta, Canada with funded capacity in excess of 625,000 kg per annum and sales and operations in 24 countries across five continents, is one of the world’s largest and leading cannabis companies. Aurora Cannabis Inc. and UFC®, the world’s premier mixed martial arts organization, recently announced an exclusive, multi-year, multi-million dollar, global partnership that is expected to significantly advance further clinical research on the relationship between 100% hemp derived Cannabidiol (CBD) products and athlete wellness and recovery, with a view to accelerating CBD product development and education. The research will be conducted at the UFC’s Performance Institute in Las Vegas, Nevada, in collaboration with UFC’s sports performance team, as well as with athletes who choose to participate in the studies. Clinical studies will focus on pain management, inflammation, injury/exercise recovery, and mental well-being. Aurora’s research will be led by Dr. Jason Dyck, Professor at the University of Alberta and a Canada Research Chair in Molecular Medicine. He also serves as an independent director on the board of Aurora Cannabis, where he provides valuable oversight for the Company’s scientific efforts. Terry Booth, Chief Executive Officer of Aurora added, “This global partnership places focus squarely on the health and well-being of UFC’s talented and highly trained athletes. The Aurora-UFC research partnership creates a global platform to launch targeted educational and awareness campaigns, while creating numerous opportunities to accelerate our global CBD business.”
Aphria Inc. (NYSE:APHA) (TSX:APHA.TO) is a leading global cannabis company driven by an unrelenting commitment to our people, the planet, product quality and innovation. Aphria Inc. recently announced that its German subsidiary Aphria Deutschland GmbH had been awarded a fifth lot for the cultivation of medical cannabis in Germany as part of the Company’s previously awarded license from the German Federal Institute for Drugs and Medical Devices(“BfArM”). The additional lot was provisionally awarded to Aphria Germany in April and was secured following a review by a German court, which affirmed the original decision by the BfArM. With this decision, Aphria Germany won the maximum output from the German tender process – a total of five lots – and stands as the only licensed producer in Germany with the permission to grow all three strains of medical cannabis approved by the BfArM. “We are thrilled about our successful conclusion to the German tender process, which has awarded Aphria with the most comprehensive license in the country,” said Hendrik Knopp, Managing Director of Aphria Germany. “This award affirms Aphria’s leading position in the German medical cannabis market. Construction on our indoor cultivation facility continues to progress rapidly and we look forward to supplying Germany’s first domestically-grown medical cannabis in early calendar 2020.”
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