North American Cannabis Consumption Through Legal Channels are Expected to Grow

Monday, October 1, 2018 Drug News
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FinancialBuzz.com News Commentary

NEW YORK, October 1, 2018 /PRNewswire/ --

According to data compiled

by Ameri Research Inc., the global legal cannabis market is expected to grow from USD 14.3 Billion in 2016 to USD 63.5 Billion in by 2024 while registering a compound annual growth rate (CAGR)
of 21.1% during the forecast years. The market is growing rapidly, owing to the increasing legalization of cannabis around the world and the growing demand of cannabis for recreational and medical use. The report also indicated that the legalization of cannabis could grow tax revenues for the states due to product sales and tourism activities, decrease crime rate, and promote several medical applications. CLS Holdings USA Inc. (OTC: CLSH), Canopy Growth Corporation (NYSE: CGC), KushCo Holdings, Inc. (OTC: KSHB), VIVO Cannabis Inc. (OTC: VVCIF), Emerald Health Therapeutics, Inc. (OTC: EMHTF)

North America is projected to be the biggest market for legal cannabis as Canada is set to legalize recreational cannabis nationwide. According to another report from Deloitte, the total cannabis market in Canada is expected to generate up to USD 7.17 Billion in total sales in 2019, with up to USD 4.34 Billion coming from the legal channel. Cannabis consumption through legal channels is expected to increase by up to 35%.

CLS Holdings USA Inc.  (OTCQB: CLSH) announced last week that it, "has executed two Letters of Intent (LOIs) to enter the rapidly growing Massachusetts market. CLS looks forward to the opportunity to enter the Massachusetts market, which has been operating as a legalized medical jurisdiction since 2015 and has approved legalized recreational use.

CLS has agreed in principle to loan $5 million to In Good Health, a licensed medical dispensary in Brockton, Massachusetts with a significant market share. Along with the loan, CLS will have an option to acquire InGood Health. InGood Health is located 25 miles south of downtown Boston and is one of the 38 licensed dispensaries in the state. The Brockton dispensary was the second licensed dispensary in the state and has been operational since September 2015, which has been medical only up until this time. In Good Health is currently servicing 17,000 registered patients and delivering to 1,700 homes with key product offerings of flower, concentrates, vapes, edibles, pre-rolls and tinctures.

CLS has also agreed in principle to form an 80/20 joint venture with CannAssist, which CLS will own 80%. CannAssist plans to build out a recreationally licensed cultivation grow facility in Leicester, Massachusetts. The planned Leicester 86,000 square foot facility is in possession of its host community agreement, is awaiting state acknowledgement of its pending recreational licenses and upon completion will be the third largest cultivation grow in the state. The Leicester facility is anticipated to produce its first harvest in the fourth quarter of 2019 and be able to produce 28,000 lbs of flower along with 858,000 grams of extract once it is operating at capacity. At current pricing of $3,500 per pound of flower and $40 per gram of extract, total capacity is expected to reach $120 million in revenue. CLS anticipates generating substantial positive cash flow from the joint venture.

Massachusetts has a population of 6.9 million people as compared to 5.6 million people in Colorado. Massachusetts is also centrally located to the dense population of New England with a less than 100-mile drive from Rhode Island, Connecticut, New York, New Hampshire and Vermont. In 2017, Colorado generated $1.5 billion in legalized marijuana sales and had over 500 licensed dispensaries and over 700 licensed cultivation facilities. Massachusetts currently has issued only 39 licensees. Jeff Binder, Chief Executive Officer of CLS Holdings USA, commented, 'We are extremely excited to have the opportunity to enter the Massachusetts market. It's something we have been eyeing for a long time given the attractive characteristics and recent approval of adult use cannabis. This opportunity fits into our stated objective of entering markets that are on the cusp of implementing a robust adult use market.' David Noble, President of InGood Health and Partner of CannAssist, commented, 'I am proud of all our team has accomplished to create a leading medical marijuana dispensary. I look forward to continuing our mission and hard work We look forward to the opportunity to be part of one of the top companies in the field. This will ensure that we can provide the highest quality products to patients and customers for many years to come.'

Jon Napoli, Managing Partner, CannAssist, stated, 'We have been working with the city of Leicester for the past 12 months on this project and are pleased to receive all necessary approvals. This will bring a number of employment opportunities to this community and we look forward to being a reliable partner and producing some of the finest quality cannabis in the state.'"

Canopy Growth Corporation (NYSE: CGC) is a world-leading diversified cannabis company, offering distinct brands and curated cannabis varieties across the globe. Canopy Growth Corporation recently responded to Ontario's retail rollout plan. The Company is looking forward to serving customers at retail locations at the site of its production facilities and especially looks forward to initiating the process of obtaining the necessary retail licenses required to operate cannabis retail at its Smiths Falls headquarters where a merchandise store is already in place at a Tweed-branded visitor center. The Company looks forward to pursuing additional retail capabilities, taking advantage of the diversified arms of its business, including the newly acquired Tokyo Smoke platform, its multiple licensed production sites, and additional opportunities available through its affiliated investment arm, Canopy Rivers Inc. The Company believes that third party private retail represents a meaningful business opportunity compared to a provincially run retail system, and Canopy Growth's family of brands will feature prominently under any retail framework. "The future of the Ontario cannabis market is bright," said Mark Zekulin, Co-Chief Executive Officer and President, Canopy Growth. "As a cannabis business with multiple licenses and a variety of diverse subsidiaries, we feel we have a distinct advantage at this stage in the game. The Tweed and Tokyo Smoke retail experiences will offer unique and distinct experiences to appeal to anyone interested in cannabis. And we might even change a few minds."

KushCo Holdings, Inc. (OTCQB: KSHB) is the parent company to a diverse group of business units that are transformative leaders in the cannabis, CBD and other related industries. KushCo Holdings, Inc. recently announced that it has entered into a strategic transaction with Smoke Cartel to sell Roll-Uh-Bowl, an online distribution platform for retail sales of collapsible and unbreakable medical-grade silicone water pipes. "This transaction exemplifies our dedication to continuing the development of our core competencies, ensuring focus is maintained on providing leading packaging, supplies, wholesale vaporizer hardware, gas and solvents for the medical and adult-use cannabis industry," said Chief Executive Officer Nick Kovacevich. "This is a win for both companies. By selling off the Roll-Uh-Bowl assets, KushCo will be able to continue to remain highly focused on our core business units driving our growth globally in areas across packaging, vape hardware, gas and branding services to multi-state cannabis operators. Conversely, Smoke Cartel's team are experts and professionals when it comes to the retail side of products and Roll-Uh-Bowl, will fit into their offerings as a strong complement." Mr. Kovacevich continued, "Smoke Cartel will continue to build upon the successful Roll-Uh-Bowl brand and will remain our preferred partner for customers looking for products such as glass pipes, bongs and grinders."

VIVO Cannabis Inc. (OTCQX: VVCIF) holds production and sales licenses from Health Canada and operates world-class indoor cultivation facilities with proprietary plant-growing technology. VIVO Cannabis Inc. recently announced that its wholly-owned subsidiary, Canna Farms Ltd. has fulfilled and shipped its first recreational cannabis purchase destined for the British Columbia Liquor Distribution Branch's ("BCLDB") warehouse. Dan Laflamme, President of Canna Farms, said, "It was satisfying for Canna Farms to ship this first, historic shipment of recreational cannabis. We fulfilled the BCLDB's purchase order on time and in accordance with our plans and processes. We look forward to making similar shipments in the next few weeks to Yukon, Alberta, Saskatchewan, Manitoba, and Ontario from our production facilities in Hope, British Columbia. The world is watching Canada as we lead the way globally in creating a federally regulated adult-use cannabis market"

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. Emerald Health Therapeutics, Inc. recently announced that it has agreed to purchase from Emerald Health Hemp Inc. CBD-containing hemp biomass for extraction into CBD oil. EHH has established agreements to purchase approximately 500 acres of harvested hemp chaff, plant material consisting mainly of flower and leaf, in Manitoba and Prince Edward Island in 2018, with a plan to expand field operations in 2019. Emerald has signed an agreement with EHH to purchase approximately 500 acres of chaff in 2018 and approximately 1,000 acres in 2019 to 2022, with an option to renew for an additional two-year period. The hemp chaff will be processed via Emerald's exclusive alliance with Factors R&D Technologies Ltd., a division of Factors Group of Nutritional Companies Inc., which has extensive extraction experience and large capacity. "We see non-smoked, non-psychoactive CBD consumption as a major growth opportunity in both the medical and adult-use market in Canada, and our Factors Group alliance uniquely positions us with the largest biomass extraction and softgel encapsulation facility in Canada to produce value-added products to serve this market," said Chris Wagner, Chief Executive Officer of Emerald. "Our intent is to secure significant low-cost cannabinoid supply to serve all our manufacturing and marketing goals and hemp is expected to be our lowest cost source of CBD. We are very pleased with the rapid advancement of our Pure Sunfarms production joint venture with Village Farms and our St. Eustache facility in Quebec. Our collaboration with Emerald Health Hemp now expands our ability to produce CBD products."

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