Medical Cannabis Product Sales are on the Rise

Wednesday, April 25, 2018 Drug News
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NEW YORK, April 24, 2018 /PRNewswire/ --

According to report published

by Hexa Research, the U.S. medical cannabis market size was valued at USD $5.44 Billion in 2016 and is expected to hit USD $19.48 billion by 2024. The industry is projected to witness rapid
progress during the forecast period due to the several medical benefits of cannabis products and the quickening pace of legalization in the United States. The report also detailed that the growing demand for medical cannabis is in part explained by the increasing ageing population. In 2016, rising number of patients diagnosed with chronic pain has resulted in growing use of cannabis. The report estimated that the demand for medical cannabis for arthritis will grow at a CAGR of 17.8% over the projected period as it forecasted more adults and children will have arthritis. Cannabis infused edibles are also anticipated to grow at a CAGR of 17.8% over the forecast period. WeedMD Inc. (OTC: WDDMF), Emerald Health Therapeutics Inc. (OTC: EMHTF), MedReleaf Corp. (OTC: MEDFF), MYM Nutraceuticals Inc. (OTC: MYMMF), Namaste Technologies Inc. (OTC: NXTTF)

In states like California for example, where new recreational cannabis laws went into effect on January 1st, 2018, The Arcview Group analysis is projecting an increase in sales of Cannabis. The legalization of adult-use sales in California will lead to the creation of nearly 99,000 cannabis industry jobs in the state by 2021, about a third of all cannabis jobs nationwide, and 146,000 jobs overall when indirect and induced effects are considered. Troy Dayton, CEO of The Arcview Group explained, "The economic excitement around the legal cannabis industry is no longer just theory. Due to the giant impact adult-use legalization is already having in the United States, it's vital for key stakeholders to understand the full impact of legalization, beyond just retail sales numbers."

WeedMD Inc. (OTC: WDDMF) is also listed on the TSX Venture Exchange under the ticker symbol (TSX-V: WMD). Last week the company announced breaking news together with Hiku Brands Company Ltd. (CSE: HIKU) that, "they have entered into a definitive agreement (the "Arrangement Agreement") to merge both companies, creating an industry leader (the "Transaction"). The Transaction combines two highly-complementary businesses and creates a unique and market differentiating vertically integrated company. Upon completion of the Transaction, existing Hiku and WeedMD shareholders will own approximately 51.75% and 48.25% of the combined company, respectively, on a fully-diluted basis. Upon closing of the Transaction, it is anticipated that the common shares of the pro forma resulting entity will be listed on the TSX Venture Exchange ("TSX-V"), subject to regulatory approvals. Joint management will be hosting a conference call on Friday, April 20, 2018 beginning at 10:00AM EST. See end of the press release for details.

The combination of Hiku and WeedMD creates a premium cannabis brand house with fully vertically integrated operations, an expanding network of retail stores, a growing medical business and four scalable cannabis production facilities, two of which are currently licensed. As a result of the Transaction, Hiku will operate a diverse cannabis supply chain that includes a large portfolio of unique genetics for its growing brand portfolio and emerging nationwide retail sales channels. The entity combines Hiku's strength in retail and branding - ensuring a high quality, consistent and educational consumer experience in the adult-use cannabis market - with WeedMD's existing service and quality in the medical market.

"Our vision at Hiku has always been that cannabis is a consumer product - in which brands, retail and customer experience will ultimately win," said Alan Gertner, Chief Executive Officer of Hiku. "The combination of Hiku and WeedMD creates a cannabis company capable of fulfilling the vision of delivering the best in class experiences from in-store to product, from medical to adult-use, but also capturing full retail and wholesale margins. Our combined offerings create a company that is insulated from potential wholesale margin compression and is ready to scale its offering globally."

Bruce Dawson-Scully, Chief Executive Officer of WeedMD, said, "WeedMD was founded on the principles of product and patients first. Our goal since inception has been on procuring world class genetics, cultivating premium medical cannabis, and delivering it with best-in-class service to our valued patient base. We look forward to the next step in WeedMD's journey by merging with Hiku, a complimentary group that furthers our mission by bringing our focus and passion into a more robust platform. Having access to iconic brands and a growing retail footprint to execute on our growth plan together with our cultivation and existing medical expertise is intended to ensure significant benefits to our shareholders and expected to present significant upside as Canada marches towards legalization."

Hiku has built a portfolio of iconic, engaging cannabis brands, immersive retail experiences and handcrafted cannabis production. Hiku is recognized as an early leader in Canada's emerging adult-use market, with the Tokyo Smoke retail banner awarded Brand of the Year at the 2017 Lift Cannabis Awards. In February 2018, Tokyo Smoke, Hiku's wholly owned subsidiary, was awarded one of only four conditional master licenses for cannabis retail in Manitoba, an important milestone in Hiku's Canada-wide cannabis retail expansion plans.

With a retail footprint led by Tokyo Smoke, cannabis production through DOJA's ACMPR licensed facility, and Van der Pop's female-focused educational platforms, Hiku houses an industry-leading portfolio for cannabis in Canada's adult-use market. WeedMD operates a 26,000 square foot indoor facility with over 1,500 kg of current production capacity and is fully funded for a large-scale production expansion of a 14-acre greenhouse on a 98-acre property representing an increase to more than 50,000 kg of capacity. The combined companies create a brand-focused retail business with the ability to provide product quality and selection on par with the retail experience itself.

Highlights of the Transaction:

  • Vertically Integrated Operations Secure Control Over Entire Cannabis Value Chain: The combined entity will leverage Hiku's growing retail operations as sales channels for premium cannabis supply, allowing for the realization of superior wholesale and retail margins. The Transaction ensures Hiku's control over both upstream and downstream components of the cannabis value chain
  • Highly Complementary Strengths: The Transaction combines Hiku's portfolio of iconic brands, visionary marketing and experiential retail stores with WeedMD's scalable cannabis production capabilities, deep genetics library, and innovative research and development initiatives
  • Visionary Leadership with Significant Experience: Experienced management team with leading capabilities in branding, marketing, retail and cannabis production
  • Dynamic Retail Growth Across Canada: The combined company plans to aggressively pursue the expansion of its existing retail store network, including the addition of legal retail cannabis stores and online cannabis sales channels where permitted in British Columbia, Alberta, Saskatchewan and Manitoba where Tokyo Smoke was conditionally awarded one of four master licenses for retail cannabis sales
  • Superior and Diversified Cannabis Cultivation: This combination brings together four indoor and greenhouse growing facilities in Ontario and British Columbia, with the option for future expansion on more than 100 acres of property at the existing sites. Current planned capacity will exceed 56,000 kg by mid-2019
  • Extensive and Unique Genetics: Deep library of unique cannabis genetics is the basis for premium cannabis products in both the adult-use and medical markets
  • Enhanced Capital Markets Profile: Increased scale of the combined company will enhance its capital markets profile and trading liquidity, in addition, the combined entity will be listed on TSX-V, subject to regulatory approvals
  • Expanded Platform for Future Growth: Together, the combined company will have substantial and burgeoning infrastructure to support the acceleration of future product development and expansion
  • Synergies from being Vertically Integrated: Having branded stores, cannabis dispensing stores, and owned production facilities ensures a vertically integrated company that can best drive greater margins in the wholesale and retail markets of the new cannabis sector…"

Emerald Health Therapeutics Inc. (OTCQX: EMHTF) is a Licensed Producer under Canada's Access to Cannabis for Medical Purposes Regulations and produces and sells dried cannabis and cannabis oil for medical purposes. Recently, the company launched a multi-pronged program to market and sell a proprietary, award-winning non-cannabis line of endocannabinoid-supporting nutritional products in Canadian grocery, natural health product, and pharmacy stores. EHT has entered into a 51:49 joint venture, to be called Emerald Health Naturals (EHN), with San Diego-based Emerald Health Bioceuticals, Inc. (EHB). EHN has secured exclusive Canadian marketing and sales rights to EHB's unique nutritional supplements, which use non-cannabis, non-psychoactive plant-based ingredients to provide potentially beneficial support to the body's endocannabinoid system.

MedReleaf Corp. (OTC: MEDFF) is an R&D-driven company dedicated to innovation, operational excellence and the production of top-quality cannabis. Recently, the company announced the introduction of Product Identification Numbers, or "PINs", for 57 of its unique medical cannabis products including dried flower, oils and capsules. With this announcement, MedReleaf continues to demonstrate leadership among Canadian licensed producers to facilitate the coverage of medical cannabis on employer-sponsored benefits plans. Product Identification Numbers (PINs) are similar to traditional Drug Identification Numbers (DINs), designed to make it easier for employers and payers to classify and incorporate pharmaceutical and health care products into benefits coverage plans.

MYM Nutraceuticals Inc. (OTCQB: MYMMF) is an innovative company focused on acquiring Health Canada licenses to produce and sell high-end organic medicinal cannabis supplements and topical products. MYM has two production projects in Quebec that when completed will have over 1.5 million sf of production space. MYM is also a partner in a 1.2 million sf production project (Northern Rivers Project) in New South Wales, Australia. Last month, the company announced the Municipality of Weedon, QC has approved the building permit to begin construction on the 1.5 million sqft greenhouse at the Weedon QC production facility. MYM has received approval and commenced Phase One construction of the Weedon production facility. The projected date of completion for Phase One construction is the end of Q3, 2018. Phase One of the Weedon project will consist of building 300,000 sqft of greenhouse space for growing medical cannabis and 20,000 sqft for processing and manufacturing medical cannabis products. Phase One will be capable of producing 30,000 kgs annually.

Namaste Technologies Inc. (OTCQB: NXTTF) is the largest online retailer for medical cannabis delivery systems globally. Namaste distributes vaporizers and smoking accessories through 24 e-commerce sites in 20 countries and with distribution hubs located around the world. Earlier this month, the company announced that it has signed an amendment to the Letter of Intent dated April 4th, 2018. Under the terms of the LOI Amendment, 2624078 Ontario Inc. will apply for an Access to Cannabis for Medical Purposes Regulations ("ACMPR") license to produce and sell medical cannabis oils. If the ACMPR Licence is awarded, it will allow 2624078 Ontario Inc. to perform testing and strain development for Cannmart, as well as import cannabis materials and genetics for the production of quality cannabis extracts for research purposes under the dealer's licence it is also applying for. Additionally, if the ACMPR Licence is obtained, it would allow 2624078 Ontario Inc. to develop a leading brand of ACMPR compliant cannabis oils for sale to medical patients, other ACMPR licensed producers ("LPs") and provincial distribution channels for the upcoming recreational market.

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