Increasing Sales of Cannabis Products Projected to Have Positive Economic Effects

Thursday, May 3, 2018 Drug News
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NEW YORK, May 3, 2018 /PRNewswire/ --

According to Grand View Research,

Inc. the global medical cannabis market is expected to reach a value of USD 55.8 billion by 2025. The rising number of states and countries getting approval for using it in therapeutic applications is one of the crucial
factors driving the demand over the coming few years. Medical cannabis is reportedly effective in providing relief to the patient suffering from HIV/AIDS, glaucoma, cancer, and multiple sclerosis. The research also specifies that the regulatory framework requires every individual or the companies connected with such as growers, retail operators, and makers of processed pot products to obtain permission and an annual state license from 2018. An increasing number of issued licenses is also among factors that is expected to drive the market especially after 2018. WeedMD Inc. (OTC: WDDMF), Cronos Group Inc. (NASDAQ: CRON), GW Pharmaceuticals plc (NASDAQ: GWPH), Innovative Industrial Properties, Inc. (NASDAQ: IIPR), Aurora Cannabis Inc. (OTC: ACBFF)

While sales are increase, there are concerns that supply will fall short of demand. According to a report by the Chicago Tribune, Charles Boldwyn, chief compliance officer of ShowGrow in Santa Ana, explained, "We're looking at … hundreds of licensed cultivators and manufacturers coming out of an environment where we literally had thousands of people who were cultivating and manufacturing… So the red tape is a bit of a bottleneck in the supply chain." Despite the concerns, the market is projected to witness robust growth and have economic effects. Arcview Market Research indicates that estimates show more than $1 billion dollars in wholesale, excise, and cannabis-specific sales taxes were taken into state treasuries during 2016. That number is forecast to grow to just over $1.4 billion in 2017 and then to nearly $2.8 billion by 2021.

WeedMD Inc. (OTC: WDDMF) is also listed on the TSX Venture Exchange under the ticker symbol (TSX-V: WMD). Earlier this week the company announced its, "financial results for the fourth quarter and fiscal year ending December 31, 2017.

WeedMD is pleased to report revenue of $1.4 million in its first year of operations. Revenues were driven by a combination of cannabis sales to medical patients in addition to the sale of wholesale cannabis and genetics to licensed producers. Adjusted operating loss increased to $5.2 million from $2.1 million in the prior year due to an increase in headcount, marketing and development costs associated with product launches and ongoing sales as well as public company expenses. The company currently has a strong cash balance of $48 million from recent financings and the exercise of warrants.

"We are incredibly proud of what we were able to accomplish in 2017, and looking forward, are even more excited about the years to come, especially with the recent announcement of our merger with Hiku," said Keith Merker, CFO of WeedMD (see Hiku Brands Company Ltd. (CSE:HIKU) and WeedMD merger press release here). "Our large-scale, state-of-the-art greenhouse expansion is coming online shortly and we remain focused on executing at our new facility. We remain committed to our growing medical cannabis business and are also now looking forward to leveraging Hiku's brands and retail footprint to sell our product coast-to-coast in the coming adult-use market."

  • Fiscal Year 2017 Highlights: Public listing on the TSX Venture Exchange under the symbol "WMD" after a successful completion of the reverse take-over of Aumento Capital V Corporation CPC
  • Secured sales licence for dried flower products (April 2017), and production license (June 2017) and sales license (December 2017) for cannabis oil products at the Company's indoor facility in Aylmer, Ontario
  • Closed a $15.0 million bought deal private placement of convertible debentures in November 2017
  • Announced an oversubscribed $34.5 million bought deal equity financing in December 2017 that closed in January 2018
  • Signed preferred supply agreements with four long-term care and retirement home providers totalling 29 homes with more than 3,000 beds across Canada, successfully executing on the Company's core medical initiative of targeting seniors including long-term care residents
  • Announced a large-scale, fully-funded greenhouse expansion comprising 610,000 sq. ft., with 220,000 sq. ft. coming online in 2018. The expansion remains on-track and within budget, with first harvests expected in summer 2018"

Cronos Group Inc. (NASDAQ: CRON) is a globally diversified and vertically integrated cannabis company with a presence across four continents. The Company operates two wholly-owned Canadian licensed producers regulated under Health Canada's Access to Cannabis for Medical Purposes Regulations: Peace Naturals Project Inc., which was the first non-incumbent medical cannabis license granted by Health Canada and Original BC Ltd. (British Columbia), which is based in the Okanagan Valley. Recently, the company announced financial results for the fourth quarter and fiscal year ended December 31, 2017. Sales increased by $3.5 million, or 636%, to $4.1 million in FY 2017.The Company completed significant improvements to the three pre-existing indoor production facilities at Peace Naturals Project Inc. ("Peace Naturals"), to increase production capacity and efficiency. These facilities are now fully operational.  Construction of building 4, a 286,000 sq. ft. production facility, remains on schedule and production is expected to commence in the second half of 2018.

GW Pharmaceuticals plc (NASDAQ: GWPH) is a biopharmaceutical company focused on discovering, developing and commercializing novel therapeutics from its proprietary cannabinoid product platform in a broad range of disease areas. On April 19, 2018, the company announced that the Peripheral and Central Nervous System Drugs Advisory Committee of the U.S. Food and Drug Administration (FDA) unanimously recommended supporting the approval of the New Drug Application (NDA) for the investigational cannabidiol oral solution (CBD), also known as Epidiolex®, for the adjunctive treatment of seizures associated with Lennox-Gastaut syndrome (LGS) and Dravet syndrome in patients two years of age and older. If approved, Epidiolex would be the first pharmaceutical formulation of purified, plant-based CBD, a cannabinoid lacking the high associated with marijuana, and the first in a new category of anti-epileptic drugs (AEDs).

Innovative Industrial Properties, Inc. (NASDAQ: IIPR) is a self-advised Maryland corporation focused on the acquisition, ownership and management of specialized industrial properties leased to experienced, state-licensed operators for their regulated medical-use cannabis facilities.  In April, the company announced that it closed on the acquisition of a property located at 2000 Rosanna Avenue in Scranton, Pennsylvania, which comprises approximately 89,000 square feet of industrial space. The purchase price for the property was approximately $5.8 million. A subsidiary of Vireo Health, Inc., the tenant at the property, is also expected to complete additional tenant improvements for the building, for which the Company has agreed to provide reimbursement of up to approximately $2.8 million. Assuming full reimbursement for the tenant improvements, the Company's total investment in the property will be $8.6 million. In addition to its cultivation and processing of medical-use cannabis in Pennsylvania at the property, Vireo Health operates one cultivation and processing facility and four registered medical-use cannabis dispensaries in Minnesota, and one cultivation and processing facility and four registered medical-use cannabis dispensaries in New York.

Aurora Cannabis Inc. (OTC: ACBFF) recently announced that the Company and Mitacs, a national, not-for-profit research and training organization, have partnered to fund a University of Alberta research program studying the health outcomes associated with cannabis use. Despite a rapidly growing body of scientific and anecdotal evidence supporting the therapeutic benefits of cannabis, comprehensive patient cohort studies into health outcomes related to cannabis use are lacking. Consequently, many physicians who are attempting to accommodate requests from patients have limited information to support decision making in regard to prescribing cannabis-based therapies. The research project will study the health outcomes of a significant data repository that combines patient-reported outcome measures and physician-based medical assessments, collected from 29,000 Canadian patients who have been prescribed medical cannabis.

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