TD Forecasts Marijuana Will Hike GDP by $8 Billion
The Chinese Are Coming
Synthetic CBDs and THC: Better Living Through Chemistry
TD Forecasts Marijuana Will Hike GDP by $8 Billion
Momentum Public Relations
Blog: September 26 2018
Just when you thought the Canadian marijuana industry was a slam dunk for becoming a dominant global force the Chinese are beginning to set up and take notice. According to a September story in The GrowthOp, the Postmedia marijuana industry news website, here come the Chinese.
Arcview Market Research and BDS Analytics have predicted that by 2027 the global marijuana market will be worth $US57 billion and you can be sure that Chinese business will see that as an attractive market. The Chinese will have to play catch-up, but catch-up is a game the Chinese play very well. Things will kick off when CannaTech: Hong Kong’s first cannabis investor symposium takes place on November 1st.
While Chinese investors will probably start to pour into the Canadian cannabis industry, they will as legislation changes, consider starting their own industry. Chinese herbal medicine has longed used marijuana as an ingredient.
URI Capital Management, one of the symposium sponsors was quoted in the story as saying: “Asia, more specifically China, is poised to leverage its unique advantages in Hemp and agriculture to become a dominant global leader. URI is proud to become the first Chinese financial conglomerate to focus on the Asian cannabis industry and will leverage the firm’s world-class research and investment resources to lead the way.”
If there is any doubt about the marijuana market drying up Canopy Growth (TSX:WEED) spun off its investment arm last Thursday and by Friday, Canopy Rivers Corp. (TSXV:RIV) market evaluation had more than doubled, according to a story in the Financial Post, to $1.6 billion. Before its IPO Canopy Rivers was valued at $600 million.
RIV has already made ten investments in Canada and one in Italy. According to the company website the investments include licensed producers, pharmaceutical formulators and retail.
As noted by Bloomberg it was the first time a bank, CIBC, had helped a marijuana company list on a Canadian stock exchange. CIBC led the deal with GMP Securities and Eight Capital.
The Bloomberg story contained the following quote: “We’re really trying to make this smart money that goes global,” Bruce Linton, chief executive officer of Canopy Growth and acting CEO of Canopy Rivers, said, “The scouting has been pretty active.”
Tilray (NASDAQ:TLRY) showed just how volatile marijuana stocks could be by rising 98% before plunging and then climbing back up to gain 44% on September 19, 2018. Tilray stock started climbing when the US FDA granted it permission to export medical marijuana for a trial in California as a treatment for essential tremors. The stock then came down to earth when a Florida Republican came down on the deal and said that the trial should be using American produced medical marijuana.
According to Bloomberg, Tilray shares rose to US$176 a share and then dropped like a stone to US$123 a share, finally ending the week up by 12%. Since it IPO in July, Tilray has risen by 800%.
Just as Aphria sold its interest in Liberty Health Sciences last week Aurora Cannabis (TSX:ACB) has spun off its American interests by spinning off Australis Capital (CSE:AUSA). Last Fall The TMX Group ruled that American federal overruled American state law and that consequently Canadian marijuana companies with American operations faced delisting if they did not exit the American market.
Like Canopy Rivers, Australis is an investment vehicle designed to aid American marijuana companies that have problems accessing capital and expertise. In an oversubscribed non-brokered pre-IPO private placement financing Australis raised $17 million at $0.20 a share. On Friday September 21st, Australis opened at $3.90 before closing at $3.16.
The next story should be filed under the 60s rubric of Better Living Through Chemistry. Cronos Group (TSX:CRON), one of the top Canadian vertically integrated marijuana producers, has announced a partnership with Boston-based Ginkgo Bioworks, a biotech startup. Under the partnership Cronos will fund research designed to produce synthetic CBDs and THC. Cronos is targeting a production price point of a thousand dollars a kilogram. The process will involve using fermentation to produce the cannabinoids.
Ginkgo Bioworks has had success producing expensive ingredients, perfume and flavours using synthetic DNA. The end product could be used in a variety of ways: including medical therapies, vaporizer cartridges and edibles. Cronos will invest up to $22 million in Ginkgo to fund research and development and in return for milestones give Ginkgo up to 14.7 million shares. In exchange Cronos will have the right to use and commercialize the resulting intellectual property.
Cronos is not the only marijuana LP looking into the future. On September 19th The Gazette reported that LP Organigram’s parent company, Organigram Holdings (TSXV:OGI), has invested $10 million in and formed an alliance with Hyasynth Biologicals, to develop synthetic phytocannabinoids, using the same techniques as Ginkgo, biofermentation. Hysaynth will be using its proprietary technique to produce the synthetic cannabinoids. As with Ginkgo, the process uses genetically engineered strains of yeast.
Finally, on September 19th the Financial Post reported that the Toronto-Dominion Bank had predicted that after legalization the marijuana industry will add up to $8 billion to the country’s real GDP. Canada’s measure of real gross domestic product will get a boost after the legalization of marijuana adds as much as $8 billion to the country’s economy, according to the bank. After legalization. Statistics Canada will face the daunting task of including both legal and illegal marijuana industry economic statistics in its forecasts.
Just how Statscan will assemble the black market statistics remains to be seen. Given that the illegal marijuana trade isn’t big on keeping records a lot of by guess and by golly will probably be used.
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Coca-Cola Planning to Have Drinks With Aurora Cannabis?
Momentum Public Relations
Blog: September 18 2018
Coca-Cola Planning to Have Drinks With Aurora Cannabis
Global Soft Drink Market Pegged at US$605.6 Billion by 2025
Marijuana Industry Acquisitions Continue
Acquisitions, partnerships, branding and product development have all been on the increase in the legal marijuana industry this year as recreational marijuana legalization comes closer to becoming reality.
You can now begin to see a consumer product rollout that is remarkable in many ways. A new industry that cuts a broad swath in consumer goods is being developed and that Canadian industry is doing its best to reach out and conquer world markets. As well as medical and recreational marijuana CBD infused cosmetic and wellness products are being developed, as well as hemp clothing and THC infused beer.
On Monday September 17, 2018 the news broke that Coca-Cola (KO-NYSE) and Aurora Cannabis (ACB-TSX) were in talks about developing a non-psychoactive cannabis infused soft drink. CNBC reported that pot stocks jumped on the news with Aurora gaining more than 15% as of mid-day. Speculation exists that Coke wants to develop a CBD infused beverage in Canada so that it can launch it in America when marijuana laws there are relaxed.
Earlier in the summer Molson-Coors announced a deal with Hydropothecary (HEXO-TSX) to develop a THC infused beer. Marijuana is going mainstream faster than imagined and industry players are scrambling to gain a piece of what may be one of the last and biggest market rollouts.
Coca-Cola is the largest beverage company in the world and if the Molson-Coors (TAP-NYSE) Hydropothecary beer agreement didn’t give the industry legitimate credibility then the forthcoming agreement with Coca-Cola should. Based on information from an anonymous source the story said that if consummated the partnership would develop health-focused beverages or recovery drinks designed to alleviate inflammation, pain and cramping.
In a statement Aurora issued to CNBC the company described the infused-beverage space as having “incredible potential.” In a statement that Coca-Cola sent to CNBC Coke said: “Along with others in the beverage industry, we are closely watching the growth of non-psychoactive CBD as an ingredient in functional wellness beverages around the world. The space is evolving quickly. No decisions have been made at this time.” The anonymous source described the discussions as “serious.”
Grand View Research has predicted that the global soft drink market will hit US$605.6 billion by 2025.
Crop Infrastructure (CROP-CSE) announced on September 13, 2018 in a press release that it too was entering the soft drink market with a cannabis-infused beverage, Canna Drink, that would have zero calories, be non-GMO, ketogenic-friendly and be available in both tea and coffee versions. Crop Infrastucture Director and CEO Michael Yorke said in the release that: “We see it as a tremendous opportunity for Crop Infrastructure’s branding & IP portfolio and as an auxiliary opportunity for each of our cultivation tenants globally.”
“Functional beverages are a new class of products that offer beyond basic nutritional ingredients, including vitamins, minerals, herbs, amino acids and probiotics. We believe that cannabis’s medically known benefits will enhance our own formulations, so we are bang on target with our CANNA DRINK line.”
Crop Infrastructures is a sophisticated company that has modelled its business plan on REITs, creating a real estate type marijuana investment trust. It owns properties in jurisdictions where recreational marijuana is legal and offers tenants infrastructure, branding and expertise. The company has recently expanded to Jamaica . Crop has also announced that by the end of the year it will open two retail locations in Northern Italy to sell the Urban Juve product line of hemp oil infused wellness, cosmetic and therapeutic products.
While the secondary market, products infused with CBDs, is roaring into life, acquisitions and agreements are still being made as legalization approaches.
Aurora Cannabis’ $290-million all share deal to buy ICC Labs is the latest acquisition to fuel rising share prices. Aurora has already bought up to 10 companies in the last two years. The deal is a reminder that Canada is not the only marijuana playing field and that industry leaders are busily paving the way for international expansion when more countries legalize recreational consumption.
In a telephone interview with The GrowthOp, Postmedia’s marijuana news website, Aurora’s chief corporate officer Cam Battley said: “We feel a significant sense of urgency to rapidly establish a powerful global footprint. We see ICC as the jewel of the South American market. This is going to be our anchor in South America and we have very big plans for that continent.”
The jewel that prompted Aurora’s purchase was the fact that ICC has 70% or more of the Uruguayan market. Uruguay legalized marijuana in 2013, becoming the first country in the world to do so. As well as having majority market share in Uruguay, ICC Labs also comes with Columbian licenses to grow medical marijuana and an agreement to sell CBD products to Mexico.
In the meantime, Aphria (APH-TSX) has more or less cleared the decks by selling its interest in Liberty Health Sciences for almost $60 million. According to a Canadian Press article published on September 6, 2018 in the Financial Post Aphria has sold the shares to several investors and the deal contains an option to repurchase the shares within five years.
Aphria now has money in its war chest to finance further acquisitions and opportunities. TSX regulations forced the company to sell its shares in Liberty because marijuana is illegal under federal American legislation and Aurora was threatened with delisting if it did not comply. The company intends to return to the American market when regulations change, hence the buyback option.
Canada’s largest marijuana producer, Canopy Growth(WEED-TSX), appears to just keep getting bigger. On September 5, 2018 it announced that it had acquired Hiku Brands in exchange for Canopy Growth shares. The deal improves Canopy’s retail and branding position.
Hiku is an attractive acquisition for Canopy. It has a subsidiary, DOJA Cannabis, a licensed ACMPR producer with two British Colombia based production facilities in the Okanogan Valley. Another subsidiary, TS Brandco Holdings has one of four master retail licenses in Manitoba. The company also has a chain of retail outlets branded as Tokyo Smoke in British Columbia, Alberta and Ontario.
All of this only goes to show that the Canadian marijuana industry is a global leader and that as countries begin to decriminalize possession, Canadian companies will be able to significantly grow their operations because of their existing footprint. All the major Canadian marijuana producers have foreign operations.
This blog was written for information purposes only and should not be mistaken for investment advice. In the interests of transparency Crop Infrastructure is a Momentum client.
Marijuana Stocks Still Have Legs
Momentum Public Relations
Blog: June 1 2018
Marijuana Stocks Still Have Legs
Bryan, Garnier & Co: Global Marijuana Market to Hit US$140 Billion by 2027
Canadian Licensed Producers Expanding Abroad
The exact date when recreational marijuana will be legalized is still uncertain. The Trudeau government has repeatedly said that it will be legalized this summer. When that great day comes to pass it may be the only time in Canadian history that the government has created an economic stimulus package that actually works: the legal marijuana industry.
Not content with only being valued in the billions of dollars in Canada, our domestic marijuana industry is also hell-bent on international expansion.
On January 28, 2018 the CBC ran a story quoting Bloomberg that said there were 87 publicly listed marijuana companies on the TSXV and that collectively they were worth US$37 billion. In January Statistics Canada estimated that almost 5 million Canadians spent $5.7 billion dollars buying marijuana, with only 10% of that going to legal medical cannabis.
On May 28, 2018 Aurora Cannabis announced that it had signed a distribution agreement with German plant based pharmaceutical distributor Heinrich Klenk. Klenk distributes its products in more than 25,000 drug stores across Germany and Europe. Klenk is a trusted name and Aurora has launched a new brand that will be produced in Canada named Cannabis Klenk which the company will distribute. Medical cannabis is legal in Germany.
Aurora has been making international plans and putting them into action for some time. It owns Berlin-based Pedanios, the leading marijuana importer, exporter and distributor of medical marijuana in the European Union as well as 51% of Aurora Nordic which plans on constructing a one million square foot greenhouse in Denmark. To round out its diversified activities the company also owns two companies that specialize in building greenhouse lighting systems, BC Northern Lights and Urban Cultivator.
Aurora is not alone on the international stage, Canopy Growth, which has Snoop Dogg as a spokesman, has operations in seven countries on four continents. Aphria Inc. has operations in more than 10 countries on five continents. It recently created a joint venture, Canninvest Africa with the South African Verve Group of Companies that will see it gain an interest in Verve Dynamics, a licensed producer of medical cannabis extracts, which it believes will become one of if not the lowest cost producer in the extract field.
Driven by economies of scale and the desire to have all the pieces to the puzzle in one place the industry has been consolidating for some time. The most recent example is the merger of Aurora and MedReleaf, which has created the largest marijuana company in the world.
If you think the market is now too high to buy in, you may want to think again. A story published in Forbes on March 1, 2018 predicts a robust and growing legal international marijuana poised for exponential growth.
The story is based on a report by Arcview Market Research which predicts that by 2027 spending on legal recreational and medical marijuana will hit US$57 billion with a 67% market share for recreational marijuana and a 33% share for medical cannabis.
The lion’s share of the revenues will be generated in North America where the largest recreational market is expected to develop with sales going from US$9.2 billion in 2017 to US$47 billion in 2027.
All of which means that serious investors should start doing their due diligence on the marijuana industry now, if they haven’t already. That due diligence should also include bio-pharmas that are developing cannabis- based drugs for regulatory approval and for the over the counter market.
If you still think that marijuana stocks are overpriced you may wish to consider this, investment bank Bryan, Garnier & Co have just predicted that the global marijuana market is poised to grow by a 1,000 percent to hit US$140 billion by 2027.
One of the more interesting set of statistics put out by Statista is that in America, medical marijuana will take a larger slice of the pie than recreational marijuana. The company predicts that by 2025 cannabinoid-based pharmaceuticals will be valued at US$13.2 billion and the legal recreational market at US$10.9 billion.
Whether or not cannabinoid-based pharmaceuticals will surpass the legal recreational market is as yet unknown but predictions like the one above are a sure indication that bio-pharmas launching successful drugs will be lucrative.
A rising tide raises all ships. When Canadian recreational marijuana legalization takes place marijuana stocks are expected to jump and by association so will those pharmaceutical companies developing successful cannabinoid-based drugs.
Tetra Bio-Pharma, (TSXV: TBP) is one such company with a pipeline of cancer chronic pain, and other products under development. Its lead product, PPP 001, trademarked as RX Princeps has started Phase 3 clinical trials and stands to be the first cannabinoid therapy that will have its efficacy and safety proved.
Once that happens, PPP 001 will very likely become the first drug to be given Health Canada and American FDA approval. This achievement will be marked by a Drug Identification Number, DIN, which means that it can legally be prescribed by doctors and eligible for insurance plan coverage. TBP already has distribution agreements in place in Israel and in Europe.
The above does not and should not be taken as investment advice. Investors have the responsibility of performing their own due diligence. In the interests of transparency, Momentum PR represents Tetra Bio-Pharma.
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