Legal Cannabis Market Projected to Increase at 16% CAGR

Thursday, February 22, 2018 Drug News
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NEW YORK, February 22, 2018 /PRNewswire/ --

A report compiled by

New Frontier Data estimates that the legal cannabis market was worth $6.6 billion in 2016 and is forecast to grow to $24.1 billion by 2025, registering a compound annual growth rate of 16 percent.
By segment, the medical cannabis market was worth $4.7 billion in 2016 and is expected to grow to $13.3 billion by 2025. Sales of recreational cannabis throughout the same period are expected to grow at a 21 percent CAGR, from $1.9 billion to $10.9 billion. The constant authentication of cannabis products for both medical and recreational use is a key factor contributing to the development made in this industry. On November 8th, 2016, California has passed California Proposition, allowing individuals in California to use and grow cannabis for personal use. Cannabis Wheaton Income Corp. (OTC: CBWTF), Zynerba Pharmaceuticals, Inc. (NASDAQ: ZYNE), AXIM Biotechnologies, Inc. (OTC: AXIM), Canopy Growth Corporation (OTC: TWMJF), Innovative Industrial Properties, Inc. (NYSE: IIPR)

Starting January 1st 2018, the state of California has started legal sales of cannabis products for recreational use. Tom Adams, Editor-in-Chief at Arcview Market Research and Principal Analyst at BDS Analytics, explained, "Our data shows positive indicators across the board for the legal cannabis industry, in North America and around the globe. The passage of the 2016 ballot initiatives and continued maturation of the existing Adult-use markets are the primary drivers of the growth this year. That's nothing compared to what we can expect in 2018 and beyond from Nevada's tourism, and California and Canada planning to launch Adult-use sales in 2018."

Cannabis Wheaton Income Corp. (OTC: CBWTF) is also listed on the TSX Venture Exchange under the ticker symbol 'CBW'. On February 16th, the company announced that it, "Has entered into a joint venture with Peter Quiring, one of Canada's largest greenhouse builders and operators, via a newly formed subsidiary ( "GreenhouseCo"), to develop, construct and operate a state-of-the-art purpose-built greenhouse for cannabis cultivation in Leamington, Ontario with Mr. Quiring acting as Chief Executive Officer of GreenhouseCo (collectively, the "Transaction")." As the founder and owner of 4 vertically-integrated companies, all of which have greatly influenced the North American greenhouse ecosystem, Peter has over 25 years of experience designing, fabricating, building and operating greenhouses across North America. He has developed over 2,000 acres of greenhouses and currently owns and operates 175 acres of computer-controlled, state-of-the-art greenhouses with over 600 employees in Southern Ontario. Operating one of the largest bell pepper and tomato greenhouses in North America, he is currently growing over 15 million kilograms of peppers and 25 million kilograms of tomatoes each year that are shipped across Canada and the United States. In addition, his fabrication company South Essex Fabricating constructed the Double Diamond Farms facility which is currently being converted for cannabis cultivation.

Pursuant to the Transaction, GreenhouseCo initially plans to develop 1.4 million square feet of greenhouse ("Phase I") on 102 acres of fully owned land located in Leamington, Ontario (the "Facility"). The Facility will be constructed by South Essex Fabricating and will be built on a fully serviced site with access to approximately 27 megawatts of electricity. The Facility will be purpose-built with state-of-the-art automation and operate under a 100% closed-loop water recycling system.

The Company estimates that the Phase I build-out will result in approximately 120,000,000 grams of cannabis per annum and believes there is further potential to increase the Facility's output with additional technological improvements that will be adapted from Mr. Quiring's existing greenhouses. GreenhouseCo also has the ability for additional expansion up to a total of 2.8 million square feet of greenhouse cultivation. The Company will assist GreenhouseCo in obtaining its ACMPR license for the cultivation and sale of cannabis (the "License") through its Wheaton Licensing Program by providing GreenhouseCo with all of the resources and expertise necessary to achieve the License. Mr. Quiring and the Company have also agreed to jointly pursue international cannabis-related greenhouse cultivation opportunities for joint development and opportunities to license GreenhouseCo's intellectual property relating to facility design and operation know-how.

Hugo Alves, President and Director of Cannabis Wheaton, stated "This is a huge milestone for the Cannabis Wheaton story and we couldn't be happier to pursue this venture by partnering with Peter. In getting to know Peter during this transaction it has become clear that he possesses exceptional greenhouse and operational knowledge and his track-record as one of North America's most accomplished greenhouse builders and operators speaks for itself. We believe that our leading cannabis industry expertise and platform combined with Peter's proven capabilities will be a recipe for success. This joint venture is another example of the quality of partners and breadth of production diversification that Cannabis Wheaton is building out for its upstream production platform. This is an exciting project both in terms of its scale and technological sophistication and we are honored to be partnering with the best in the business to ensure that this facility becomes one of the largest and best run greenhouse cultivation facilities in the country.

Peter Quiring, Founder and President of NatureFresh and South Essex commented, "Over the past 25 years, I have had the pleasure of building four integrated companies, including NatureFresh™ Farms, and South Essex Fabricating. These four companies have been founded on driving innovation and utilizing new technology, but I have learned that empowering people and building strong relationships is the most valuable part of being a leader. Today, I am pleased to announce my new exciting joint venture with Cannabis Wheaton and have full confidence in the management and teams that we have built together within my existing companies. I know that these teams will continue to perform beyond my expectations and serve our community and customers with the same exceptional quality. I look forward to bringing my experience and values to this new partnership with Chuck, Hugo and their team at Cannabis Wheaton."

Zynerba Pharmaceuticals, Inc. (NASDAQ: ZYNE) is a clinical-stage specialty neuropsychiatric pharmaceutical company dedicated to developing and commercializing innovative pharmaceutically-produced transdermal cannabinoid treatments for rare or near-rare neuropsychiatric diseases with high unmet medical needs. On January 3, 2018, the company announced that it will concentrate its focus on rare (meeting the US FDA designation of an orphan disease, affecting fewer than 200,000 people in the U.S.) and near-rare (affecting fewer than one million people in the U.S.) neurological and psychiatric disorders with high unmet medical needs. In 2018, the Company intends to develop ZYN002 in a pivotal Phase 2/3 program in Fragile X syndrome (FXS) and in Phase 2 programs in refractory epilepsies, including adult refractory focal epilepsy and developmental and epileptic encephalopathies (DEE) in pediatric and adolescent patients. Additionally, the Company plans to initiate Phase 2 development of ZYN001 in Tourette Syndrome by year end 2018. Zynerba is currently developing ZYN002, the first and only patent-protected, pharmaceutically-produced CBD that is formulated as a permeation-enhanced gel for transdermal delivery.

AXIM Biotechnologies, Inc. (OTCQB: AXIM) focuses on the research, development and production of cannabinoid-based pharmaceutical, nutraceutical and cosmetic products. On February 6, 2018, the company announced that it has entered into a binding distribution agreement for its proprietary cannabinoid-based nutraceutical chewing gum product CanChew+® ("product") to be distributed throughout the country of Thailand. The non-exclusive agreement, which was reached on January 24, 2018, and will remain in effect for one year, retains AXIM as the sole owner and manufacturer of the product while assigning trademark and likeness rights to the distributor specifically for the country of Thailand. The agreement sets clear financial obligations for the distributor including a minimum purchase and upfront production costs.

Canopy Growth Corporation (OTC: TWMJF) is a world-leading diversified cannabis and hemp company, offering distinct brands and curated cannabis varieties in dried, oil and Softgel capsule forms. Recently, the company announced that it has received a cultivation licence for the first of its two sites operating under the BC Tweed Joint Venture Inc. banner. The rapid licensing of the Aldergrove site, the largest federally licensed cannabis site anywhere in the world, continues a pattern of professional execution for the Company as it prepares to meet an unprecedented increase in demand in a few short months once legal adult-use markets commence. The initial licensing covers over 400,000 sq. ft. of growing space, allowing vegetative growth so that the mature plants can be spread into the full 1.3 million sq. ft. in the coming months for flowering and ultimate harvest.

Innovative Industrial Properties, Inc. (NYSE: 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. On December 18, 2017, the company announced that it closed on the previously announced acquisition of the property located at 5900 West Greenhouse Drive in Willcox, Arizona, which comprises approximately 358,000 square feet of greenhouse and industrial space. The Pharm is one of the largest wholesalers of medical-use cannabis in the state of Arizona. Concurrent with the closing of the purchase, the Company entered into a long-term, triple-net lease agreement with a subsidiary of The Pharm, which intends to continue to operate the property as a medical-use cannabis cultivation and processing facility in accordance with Arizona medical-use cannabis regulations.

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