U.S. Cannabis Market Value to Grow as Legalization Efforts Spread

Friday, July 27, 2018 Drug News
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NEW YORK, July 27, 2018 /PRNewswire/ --

According to the data published

by Hexa Research, the U.S. medical cannabis market size was valued at USD 5.44 Billion in 2016 and is anticipated to reach USD 19.48 Billion by 2024. The legal cannabis market is expected to
witness strong growth during the forecast period due to the plant's multiple medical benefits as well as the fast pace of legalization in the United States. In 2016, an increasing number of patients diagnosed with chronic pain had resulted in the growing use of medical cannabis. As an example, the report estimated that the demand for medical cannabis products for the treatment of arthritis will grow at a CAGR of 17.8% over the projected period, as it forecasted more adults and children will have arthritis. CLS Holdings USA Inc. (OTC: CLSH), Aurora Cannabis Inc. (OTC: ACBFF), CV Sciences Inc. (OTC: CVSI), Organigram Holdings Inc. (OTC: OGRMF), Cronos Group Inc. (NASDAQ: CRON)

Canada had passed a nationwide legalization of recreational cannabis usage on June 19th, 2018, following in the footsteps of Uruguay to become just the second nation to do so. The U.S. had previously already begun the process of cannabis legalization for the majority of the West Coast states, while almost all states have medical use legalized to an extent. According to the New York Times, Tony Dean, the Senator who sponsored the bill in the chamber, said that, "We've just witnessed a historic vote for Canada, the end of 90 years of prohibition. Now we can start to tackle some of the harms of cannabis." He continued, "We can start to be proactive in public education. We'll see the end of criminalization and we can start addressing Canada's USD 7 Billion illegal market."

CLS Holdings USA Inc. (OTCQB: CLSH) recently provided "an update to the first complete year of adult use cannabis in Nevada, the first state the Company is operating in. According to the Nevada Department of Taxation, marijuana flower/bud accounted for roughly 50% of all combined medical and adult-use marijuana purchases by consumers in Nevada, followed by concentrates at about 25% and infused edibles at 13%. Oasis Cannabis announced that packaged marijuana flower/bud and pre-rolled joints represented 67% of the total sales, followed by concentrates at 20% and infused edibles at 9%.

The Co-Founder of Oasis Cannabis, Ben Sillitoe, commented on the sales mix, 'Convenience items like disposable vapor pens and pre-rolled joints are very popular with our tourist customers and together they make up about 25% of total sales at Oasis.'

Oasis Cannabis served over 127,000 customers in its 1st year of adult-use sales. About 13% of those orders and 22% of total sales were to medical patients. The average order from a medical customer was USD 73 whereas a typical recreational customer spent USD 41 per order. 'A medical patient will typically consume more cannabis than an average retail customer, so we expect to see larger average purchases from that group,' explained Sillitoe.

Home deliveries made up 5% of the total orders and 11% of total revenue, reflecting a higher average order of USD 98 versus USD 42 from in-store customers. The average delivery order from a medical customer was USD 114 and the average delivery to a recreational customer totaled about USD 87. 'Medical customers make up about 50% of total delivery sales for a couple reasons,' Sillitoe explained. 'We've been delivering to medical patients since we opened in 2015 so we've had time to build a loyal customer base in that segment. Medical patients are also more likely to be inconvenienced by a trip to the store because of various health reasons.'

About Oasis Cannabis (http://oasiscannabis.com) - Oasis Cannabis has operated a cannabis dispensary in the Las Vegas market since dispensaries first opened in Nevada in 2015 and has been recognized as one of the top marijuana retailers in the state. Its location within walking distance to the Las Vegas Strip and Downtown Las Vegas in combination with its delivery service to residents allows it to efficiently serve both locals and tourists in the Las Vegas area. The Company recently commenced wholesale offerings of cannabis in Nevada with the launch of its City Trees brand of cannabis concentrates and cannabis-infused products in August 2017. An expansion of its cultivation and production facility is currently underway and is expected to be completed during the second half of 2018."

Aurora Cannabis Inc. (OTCQB: ACBFF) is one of the world's largest and leading cannabis companies. Aurora is vertically integrated and horizontally diversified across every key segment of the value chain, from facility engineering and design to cannabis breeding and genetics research, cannabis and hemp production, derivatives, high value-add product development, home cultivation, wholesale and retail distribution. Recently, the Company announced the closing of the previously announced arrangement agreement. Under the terms of the Arrangement Agreement, holders of MedReleaf common shares received 3.575 common shares of Aurora for each MedReleaf common share held. Completion of the transaction creates a unified cannabis industry leader with a combined funded capacity of more than 570,000 kg of high-quality cannabis per year, to be delivered via nine facilities in Canada and two in Europe. Combining MedReleaf's industry-leading cultivation yields and Aurora's ultra-low-cost Sky Class production facilities, which management believes will result in production costs well below USD 1 per gram, position the Company to deliver high-margin growth in all domestic and international market segments.

CV Sciences Inc. (OTCQB: CVSI) is preeminent supplier and manufacturer of hemp-based phytocannabinoids including cannabidiol (CBD) oil and developer of specialty pharmaceutical therapeutics. Recently, the Company announced unaudited second quarter 2018 revenue and selected business highlights for the quarter ended June 30th, 2018. Second quarter 2018 revenue is expected to be USD 12.3 Million, up 203% compared to the second quarter of 2017, and a 53% sequential increase over Q1 2018. The Company increased retail store count to 1,968 natural and organic health food stores as of June 30th, 2018, representing an 11.1% sequential increase over the Company's retail store count for the first quarter of 2018.

Organigram Holdings Inc. (OTCQB: OGRMF) is a leading licensed producer of medical marijuana based in Moncton, New Brunswick. Recently, the Company announced that it is in the final stages of planting the remaining three of the sixteen three-tier Phase 3 cultivation rooms which have been licensed by Health Canada. In total, the Company's Phase 3 expansion has increased Organigram's target dried flower equivalent production capacity from an estimated 22,000 kg/annum (Phases 1 and 2) to 36,000 kg/annum (Phases 1, 2 and 3). Staggered harvests from Phase 3 are expected to begin in late August. The licensing of Phase 3 does not require a new sales license as this expansion is part of the existing Moncton facility. The additional capacity will help ensure the product is available for sale when the adult recreational market launches. In addition, Organigram has received licensing on a second harvest room which allows the Company to automate its harvesting process. The Company has also received licensing on new automated potting and waste shredding rooms.

Cronos Group Inc. (NASDAQ: CRON) is a globally diversified and vertically integrated cannabis company with a presence across four continents. Earlier this month, the Company announced that it has entered into a joint venture partnership with a group of investors led by Bert Mucci, one of Canada's most sophisticated greenhouse operators and builders. This partnership will function through a newly formed entity, Cronos Growing Company Inc., which will develop, construct and operate a state-of-the-art purpose-built greenhouse for cannabis production in Kingsville, Ontario. Cronos GrowCo is a 50/50 partnership between the Company and the Greenhouse Partners. It will leverage over three decades of Bert Mucci's experience in designing, building and operating sophisticated large-scale greenhouses. Cronos Group expects that once the Facility is fully operational and licensed, the Facility will produce approximately 70,000 kilograms of cannabis per annum for Cronos GrowCo.

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