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Marijuana Companies: Momentum on Their Side

Thursday, September 14, 2017 Drug News
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USA News Group News Commentary

LOS ANGELES, September 14, 2017 /PRNewswire/ --
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USA News Group - Canada's first-mover Cannabis companies are taking the lead in moving from cannabis concept to the revenue producers. Companies making gains include: Canopy Growth Inc. (OTC: TWMJF) (TSX: WEED) Aurora Cannabis (OTC: ACBFF) (TSX: ACB) Aphria Inc. (OTC: APHQF) (TSX: APH) and Abattis Bioceuticals Corp. (OTC: ATTBF) (CSE: ATT).
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As most investors already recognize, Canada has taken the early lead in the move towards legalization of marijuana. The calendar is set to lift prohibition in mid-2018 under the current government there.

First mover companies who are anticipating the change are moving at an ever increasing pace to stake their positions and grab market share in what may be the hay day for cannabis stocks.

Markets are embracing the trend and rewarding companies that show the ability to make real advances and grow revenue.

Early participants on the leading edge include Abattis Bioceuticals Corp. (CSE: ATT.CN) (OTCQB: ATTBF), which is set to make some major inroads with its licensed testing and timely extraction capabilities - one of the only public companies with this complete skill set.

On the production side, Canopy Growth Inc. (TSX: WEED.TO) (OTC: TWMJF) is one of the stars, soaring to as high as $13 per share in February of 2017, only to fall more than 40% to under $8 in May of this year.

Other licensed cannabis companies who are right on pace include Aurora Cannabis (TSX-V: ACB.V) (OTCQX: ACBFF), and Aphria Inc. (TSX-V: APH.V) (OTCQB: APHQF) who are each closing in on the $1 billion market cap mark.

These players fall into the mega-producer category with massive facilities to grow and produce cannabis, with the exception of Abattis, who have smartly positioned themselves to become the go-to testing and research provider handling the needs of all cannabis producers.

UNPRECEDENTED GROWTH 

Even at this relatively early stage, it is evident that the cannabis industry is experiencing nearly unprecedented growth. The value being generated as a result is exceptional - heading for CAGR projected as high as 25% through 2025. Beyond the plant's basic use through straight consumption, medicinal or recreational, are several other derivatives that provide major potential for the industry as a whole. North American marijuana sales grew by an unprecedented 30% in 2016 to $6.7 billion as the legal market expands in the U.S. and Canada, according to a new report by Arcview Market Research. North American sales are projected to top $20.2 billion by 2021 assuming a compound annual growth rate of 25%. The report includes Canada for the first time as it moves towards implementing legal adult use marijuana. The market for CBD alone hit $170 million in 2016, and is projected to grow $1 billion by 2020 . To reach these kind of massive numbers, the industry is going to need a lot of independent firms doing research and coming up with new and better extraction methods, formulations and enormous testing capacity.

HEDGING ON RESEARCH AND TESTING  

The global cannabis testing market is expected to grow at a CAGR of 11.5%, culminating towards a $1.42 billion market by 2021. This makes sense, since in order to deliver on big volumes, producers will need an accurate reading of the drug's potency, including the levels of the key medicinal components of cannabis, THC and CBD. Producers all recognize that this will require a skilled and specialized third party to test their product before it goes to market. This is the segment targeted directly by newcomer Abattis Bioceuticals. The company has a full spectrum lab staffed with industry experts to ensure the quality standard required by producers and developers. Its subsidiary, Northern Vine Labs, will not be limited for testing, however. Another major component to the facility will be in extraction and formulation. This means that the company will be involved in innovation of methods to extract medicinal components from cannabis on a massive industrial scale, and to formulate them for consumer products. Research will become a critically important part of this industry as it grows.

ATT'S SWEET SPOT 

All the growth and attention being paid to testing have put leading edge companies like ATT at the forefront. ATT for instance, is establishing multiple assets to become Canada's cannabis testing, formulation and extraction facility of choice. Most of the companies in the cannabis space have entered through the producer's side of the business either cultivation or some aspect of production and distribution. Certainly the Canopy, Aurora, Aphria and others have focused on production. This has created a large and potentially very profitable opening for those companies applying bioscience and technology on the leading edge of the cannabis business. Even some of the mega stars have yet to tap into an even greater potential resource… one that's at the center of up and comer Abattis Bioceutical Corp.'s agenda. Abattis Bioceuticals and its majority-owned subsidiary Northern Vine Labs have merged efforts to create a state-of-the-art testing and research company, supported by its fully licensed labs that provide for legal cannabis testing and formulations. These combined operations will be one of the most sophisticated, Health Canada licensed operations in the country with the potential to handle virtually all forms of Cannabis testing and extraction development. Through its unique position as one of only very few labs granted the licensing needed to test cannabis, ATT is securing its future in the cannabis sector. With the addition Northern Vine Labs for research and products through Vergence, the company is also opening its services to a very broad spectrum. At this point it has the assets in place to vault its way up that of major status among the Auroras, Aphrias, and Canopys that are emerging. Those companies range from $800 million to $1.5 billion in market caps. Abattis Bioceuticals appears undervalued by comparison at a mere $24 million market cap. ATT has diversified its operations into several segments, from research and certification in its testing and lab facilities, to formulations and extracts exclusive to Northern Vine Labs and to products provided by its Vergence subsidiary. Although only recently established as a full spectrum R&D cannabis sector company, ATT has managed to bring together very valuable assets while tripling its price from a year ago. With the early interest and pent up demand for services, Abattis Bioceuticals looks like a serious leader as the cannabis sector seeks to build its infrastructure.

POTENTIAL COMPARABLES 

Aphria (TSXV: APH) (OTCQB: APHQF)

Aphria Inc., boasts itself as one of Canada's lowest cost producers, that produces, supplies and sells medical cannabis. Located in the greenhouse capital of Canada, Leamington, Ontario, Aphria provides pharma-grade medical cannabis, and quality patient care. Aphria was the first public LP to report positive cash flow from operations, and the first to report positive earnings in consecutive quarters.

Aurora Cannabis (TSXV: ACB) (OTCQX: ACBFF)

Through its wholly-owned subsidiary, Aurora Cannabis Enterprises Inc., Aurora Cannabis is a major LP, operating a 55,200 square foot, state-of-the-art production facility in Mountain View County, Alberta. Aurora made waves when it announced the construction of its 800,000 square foot "Aurora Sky" facility second 800,000 square foot production facility at the Edmonton International Airport. Aurora's also involved in Quebec, with its third 40,000 square foot production facility set to be completed in Pointe-Claire, Quebec, on Montreal's West Island. Aurora also holds a minority stake in leading extraction technology company Radient Technologies Inc., based in Edmonton, and a minority stake in Australian company Cann Group Limited, which was the first in Australia to conduct research on and cultivate medical cannabis. Aurora also owns German wholesale importer, exporter, and EU medical cannabis distributor Pedanios. 

Canopy Growth Inc. (TSX: WEED) (OTC: TWMJF)

The granddaddy of the corporate cannabis sector, Canopy Growth is the world's largest diversified cannabis company. Canopy boasts a wide offering of distinct brands and curated cannabis varieties in dried, oil and capsule forms. Most widely recognized is Canopy's subsidiary Tweed which is the world's most recognized marijuana production brand, as well as an industry educator. Accompanying Tweed in Canopy's portfolio is medical-grade cannabis producers Bedrocan Canada. In total, Canopy Growth's numerous state-of-the-art production facilities total over half a million square feet of GMP-certified indoor and greenhouse production capacity.

For a more in-depth look into ATT you can view the in-depth report at USA News Group: http://usanewsgroup.com/2017/09/11/biotech-sector-poised-to-deliver-more-health-and-wealth-2-2-2

Article Source: 

USA News Group

http://usanewsgroup.com

[email protected]

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