As the Canadian cannabis market continues to mature, the consumer market is expected to witness a proliferation of edibles and other alternative cannabis-based products. Alternative products have become increasingly popular over recent years as consumers continue to stray away from traditional flower. Now shoppers are opting towards products such as concentrates and extracts, which are considered much more potent and cleaner when compared to smoking flower. Emerging products are expected to deliver annual revenue of more than CAD 2.5 Billion and generate higher profits for retailers than cannabis products that are already legal, according to Deloitte’s annual cannabis industry report. In addition to new products, Deloitte mentions other growth drivers such as the introduction of the alcohol and tobacco industry, mergers and acquisitions, and the entry of pharmaceutical companies. However, Deloitte is also forecasting that edibles are expected to be the primary growth driver for the overall Canadian market, as edible and alternative cannabis-based products are expected to account for CAD 1.6 Billion of the total CAD 2.5 Billion marketplace. Infused beverages (CAD 529 Million), topicals (CAD 174 Million), concentrates (CAD 140 Million, tinctures (CAD 116 Million), and capsules (114 Million) also make it on the list. In combination, the global market for alternative products is expected to double over the next five years, reaching USD 194 Billion. And while the U.S. marketplace accounts for a majority of the global market share, Deloitte highlights that Canada is better positioned than the U.S. The firm notes that Canadian-based cannabis companies receive significant advantages over its global counterparts, such as government support, access to capital markets and the banking system, as well as a unified market. As a result, the U.S. is expected to see its market share dwindle as more global players enter into the cannabis industry. Nonetheless, the U.S. market is still expected to thrive, especially after the passage of the U.S. Farm Bill last year. Pasha Brands Ltd. (CSE: CRFT, Walgreens Boots Alliance, Inc. , Cronos Group Inc. , The Green Organic Dutchman Holdings Ltd. , Auxly Cannabis Group Inc.
Canada legalized cannabis entirely back in October 2018, however, due to regulations, many aspects of the industry remain in a grey area. Certain Canadian provinces such as Ottawa are on the verge of finalizing their regulations as the market gears up for the legalization of edibles and other cannabis alternatives. While Health Canada has not released any comments on the matter, the federal government did mention that the legalization of edibles, extracts, and topicals is expected to become law “no later than October 17th, 2019.” Once the legislation arrives later this year, Deloitte expects the entry of consumers who have never previously used cannabis products before. Additionally, the firm expects an increase in users among the older age groups as well as females. Each demographic group has its own demands and what they are looking for. For instance, the older generation may be looking for more potent medicinal cannabis, while the younger demographic is more inclined towards its recreational use. The potency and effectiveness of the products directly stem from how the cannabis plant is grown. There are various environmental impacts that can determine the yield and potency of the plant and the most important aspects of growing are lights, temperature, air circulation, and humidity. If the harvest time is shortened or the lights are too bright, it can result in a bad strain that lacks potency and taste. In order to produce the ideal cannabis bud, some cultivators have begun to tend for each individual plant with specialized care, now commonly known as “craft cannabis.” Cultivators focused on the artisan profession of craft cannabis grow without using any artificial byproducts and solely use natural resources. While paying attention to each individual plant may diminish the overall yield, the end result produces premium and high-quality cannabis buds. “I completely agree that passion, care and attention to every detail is required to produce superior-quality cannabis with rich cannabinoid and terpene profiles. There cannot be compromises to nutrient-source quality, environmental control nor labor practices,” said Kenneth Morrow, Founder of Trichome Technologies. “I firmly believe those who produce the best cannabis, regardless of scale, will always have customers, and those who do it ethically and sustainably possess even more strategic advantages. Customers and their specific tastes will decide the success or failure of a company based on its quality, price and behavior.”
Pasha Brands Ltd. (CNSX:CRFT.CN) announced breaking cannabis news that, “it has acquired Medcann Health Products Ltd. (“Medcann”), a fully licensed, Health Canada approved facility to process, cultivate and sell medical cannabis under the Cannabis Act regulations. Prior to its acquisition by Broome Capital Inc., the privately held Pasha Brands Ltd. had previously entered into a letter of intent to acquire Medcann, dated effective April 30, 2019.
This acquisition will allow subsidiary company, BC Craft Supply Co. Ltd. (“BC Craft”) to accelerate its pace of growth in Canada’s new craft cannabis sector. BC Craft acts as a service provider to small farmers under the newly created Health Canada licence category known as Micro Cultivator. In exchange for a cannabis supply agreement with a micro cultivator, BC Craft assists the applicant in receiving its licence with Health Canada and provides a whole host of services ranging from quality assurance to the marketing of its cannabis products in Canada’s provincial and territorial markets.
With approximately 10,000 square feet of space, on an acre of land on Vancouver Island, Medcann was granted its processing, cultivation and sales licence by Health Canada in March 2019. Medcann provides Pasha with an immediate pathway to bring craft cannabis products to market under Health Canada’s new micro-cultivation licence category. The Medcann facility will test, process and package high quality craft flower, and package this flower for distribution throughout Canada. In addition to flower sales, it is expected that Medcann will process cannabis for Canada’s emerging oil market through an extraction lab to be developed at the facility. Pasha currently owns nine prohibition-era cannabis brands which Canadians were purchasing in the pre-legalization era. As regulations permit, Pasha will distribute product under these leading brands throughout Canada.
There is a growing supply gap for cannabis in Canada as licensed producers are unable to meet consumer demand. Through BC Craft, Pasha will focus on bringing micro-cultivators into the market. The micro-cultivation licensing program allows for the processing of approximately 500 kilograms of dried flower per year, per micro cultivator. More than just a viable solution for closing the supply gap, this provides consumers with high-quality craft cannabis products that are differentiated from others in the space. Under the micro-cultivation program, the BC Craft network will look to add and assist hundreds of producers. 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.
In consideration for the acquisition of all of the outstanding share capital of Medcann, Pasha has completed a cash payment of $3,000,000, and has issued 14,444,445 common shares (the “Consideration Shares”) at a deemed price of $0.90 per share, to the existing shareholders of Medcann.
The Consideration Shares are subject to a pooling arrangement which restricts the ability of the holders to transfer or trade the shares. The Consideration Shares will be released from the pooling arrangement over a period of eighteen months, with 25% of the shares released immediately upon completion of the acquisition, and the balance released in six equal tranches every three months thereafter. In the event the volume weighted average closing price of the Pasha common shares is less than $0.72 in the twenty trading days prior to the expiry of the pooling arrangement, the shareholders of Medcann will be entitled to receive additional Consideration Shares to guarantee the value of the consideration they receive.
Following completion of the acquisition, Medcann will also hold the right to acquire the property on which its facility is located in consideration for a further cash payment of $1,200,000. The property is currently subject to a lease arrangement which permits the operation of the facility.
In connection with completion of the acquisition, Pasha intends to issue 1,066,667 common shares as a finders’ fee to certain arms’-length parties who assisted Pasha in facilitating the transaction. All shares issued as a finders’ fee will be subject to a four-month-and-one-day statutory hold period in accordance with applicable securities laws.
About Pasha Brands: Based in Vancouver, British Columbia, Pasha is a vertically integrated prohibition-era brand house 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, is also developing a craft cannabis campus, which is dedicated to bringing craft quality into the newly legal cannabis market in Canada. BC Craft is driven to assist craft growers in obtaining security clearance and licensing to grow as micro-cultivators, specializing in education and compliance to bring growers into the regulated cannabis supply market. Pasha’s common shares trade on the CSE under the symbol “CRFT”. For more information, please visit www.pashabrands.com [http://www.pashabrands.com/]
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Walgreens Boots Alliance, Inc. is the first global pharmacy-led, health and wellbeing enterprise. Approximately 8 million customers interact with Walgreens in stores and online each day, using the most convenient, multichannel access to consumer goods and services and trusted, cost-effective pharmacy, health and wellness services and advice. Recently, after a thorough review and analysis, Walgreens will be offering certain products containing Cannabidiol (CBD) in nearly 1,500 Walgreens stores in select states (OR, CO, NM, KY, TN, VT, SC, IL and IN). The CBD-related items we are planning to carry are non-THC containing topical creams, patches and sprays. This product offering is in line with the Company’s efforts to provide a wider range of accessible health and wellbeing products and services to best meet the needs and preferences of its customers.
Cronos Group Inc. is an innovative global cannabinoid company with international production and distribution across five continents. Cronos Group Inc. recently announced that it is expanding its global infrastructure network and innovation capabilities with the opening of a cannabinoid device R&D facility, based in Israel. The state-of-the-art facility supports Cronos Group’s efforts to develop next-generation vaporizer products that are designed specifically for cannabinoid applications. Cronos Device Labs, which is equipped with an experienced team of product development talent, advanced vaporizer technology and analytical testing infrastructure, serves as the global center of R&D for the Company’s vaporizer devices. The 23-member team at Cronos Device Labs, which brings to Cronos Group over 80 years of combined expertise in vaporizer development, is comprised of product designers, mechanical, electrical and software engineers, and analytical and formulation scientists. Cronos Device Labs significantly enhances Cronos Group’s technology and development capabilities and is expected to enable the Company to deliver expanded product offerings to customers that are specially tailored to cannabinoid use. “The launch of Cronos Device Labs is an exciting next step on our journey to become a leader in cannabinoid innovation,” said Cronos Group’s Mike Gorenstein, Chairman, President and Chief Executive Officer. “Vapor is already one of the most popular forms of cannabis consumption, and we see a clear opportunity for Cronos Group to introduce the next-generation of vaporizer products designed specifically for cannabinoid formulations. With a deep bench of engineering, analytical, scientific and design talent already in place, we are confident that Cronos Device Labs will play an important role in positioning the Company for long-term success by enabling us to build innovative vaporizer products that resonate with our customers and generate shareholder value.”
The Green Organic Dutchman Holdings Ltd. (OTCQX:TGODF) is a research & development company licensed under the Access to Cannabis for Medical Purposes Regulations (“ACMPR”) to cultivate medical cannabis. The Green Organic Dutchman Holdings Ltd. recently announced that it had signed a definitive agreement to acquire 100% of the issued and outstanding shares of privately-held HemPoland in an immediately accretive cash and share transaction. HemPoland is a leading European manufacturer and marketer of premium organic CBD oils led by Founder and Chief Executive Officer, Maciej Kowalski, one of Europe’s most widely recognized CBD experts. This strategic acquisition provides access to HemPoland’s vast distribution network, premium Cannabigold brand, state-of-the-art hemp oil extraction technologies, and provides a strategic pathway into the European market for TGOD’s medical & recreational products and licensing deals. “HemPoland is a key component to a number of strategic acquisitions and planned partnerships focused on expanding our global distribution network. This acquisition will significantly add to the Company’s top and bottom line,” said Brian Athaide, Chief Executive Officer of TGOD. “Gaining market share with CBD products now, in the EU, with over 700 locations allows TGOD to establish immediate brand awareness across all verticals including infused beverages. This is an accretive acquisition and gateway to Europe’s 750 million people accelerating our plan of becoming the world’s largest organic cannabis brand,” continued Athaide.
Auxly Cannabis Group Inc. (OTCQX:CBWTF) is a vertically integrated cannabis company with diverse operations across Canada and Uruguay and a platform spanning the entire cannabis value chain. Auxly Cannabis Group Inc. recently announced that its wholly-owned subsidiary, Robinsons Cannabis Inc., had been granted standard cultivation and processing licenses by Health Canada pursuant to the Cannabis Act and Cannabis Regulations. The licenses give Robinsons the ability to begin cultivation at its fully constructed 27,700 sq. ft. facility in Kentville, Nova Scotia, which was purpose-built to produce high-quality cannabis. Led by experienced head grower Andrew Robinson, Robinsons is uniquely positioned to capture the attention of luxury cannabis consumers, with operations built on a devotion to uncompromising quality and a premium cannabis experience. Robinsons products have consistently ranked the highest in terms of cannabinoid content, terpene content and overall quality when independently tested against 5,000 products supplied by various growers licensed in accordance with Canadian cannabis regulations. Hugo Alves, President of Auxly said: “This is a big milestone for one of our key subsidiaries and member of the Auxly family. We know that Andrew and his team are going to produce some of the best cannabis flower available in Canada and we can’t wait to share it with Canadian consumers. Robinsons is all about an unwavering commitment to quality. We hope to show cannabis connoisseurs, who to date have been generally disappointed with the flower offerings in the market, that passionate artisans operating in the regulated industry can produce an incredible product that reflects their pride and craftsmanship.”
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