NEW YORK, November 21, 2017 /PRNewswire/ --
For 17 years Canada has provided legal access to medical cannabis to its citizens, and now the country is expected to legalize recreational marijuana by July 2018. With sales of Canadian medical cannabis projected to exceed $8 billion by 2024 (http://nnw.fm/bEi4r) and the recreational market estimated to be worth over $18 billion annually (http://nnw.fm/x49Ay), investment capital has been pouring into Canada's licensed producers (LPs). Though the demand for cannabis is projected to exceed 600,000 kilograms a year (about 1.3 million pounds), Canada's LPs currently only cultivate about 20,000 pounds of dried marijuana annually. This immense impending imbalance is a magnet for serious capital investment. It also presents enormous domestic opportunities for one of Canada's premier producers, ABcann Global (TSX-V: ABCN) (OTC: ABCCF) (ABCCF Profile), which produces only organically grown, pesticide-free, standardized product and produces among the highest yields within the Canadian sector. Other publicly traded cannabis companies vying for position include Cronos Group Inc. (TSX-V: MJN) (OTC: PRMCF), Maricann Group Inc. (CSE: MARI) (OTC: MRRCF), Emblem Corp., (TSX-V: EMC) (OTC: EMMBF), with cannabis finance company, Cannabis Wheaton Income Corp. (TSX-V: CBW) (OTC: CBWTF), looking to profit by injecting capital into select growers.
Canada's initial objective in recreational legalization is to eliminate criminal elements that made a fortune trafficking in marijuana. By getting marijuana out of the black market and into a regulated environment, Canada will generate significant tax revenues and enable it become the first developed country in the world to legalize recreational use. Managing the complexities of integrating the programs will be a delicate balance, but despite the challenges, suppliers are optimistic that legal recreational sales will be a reality by summer. Once fully implemented, Canada could be in the enviable position of being the only regulated producer of marijuana products in the world. In the interim, money keeps streaming into licensed suppliers; $685 million in investment capital was infused into publically traded licensed producers last year and this year looks to be even bigger. In November, Constellation Brands, a major beer and wine distributor in the United States, pumped $245 million into Canadian licensed medical marijuana growers (http://nnw.fm/Dl3Ew).
To become a licensed producer is a marathon exercise in bureaucracy that can take up to three years, with only 3% of applications ultimately approved. Health Canada conducts thorough reviews of applications, ensures compliance, conducts frequent inspections, and enforces stringent standards. A pioneer in Canadian medical cannabis, ABcann Global (TSX.V: ABCN) (OTCQB: ABCCF), has been licensed in good standing since 2014 with no history of product recalls, and proprietary computer-controlled production systems that have bolstered the company's reputation for its consistent pharmaceutical-grade cannabis. Recognizing early on that if the plant was to be effectively utilized as medicine, production had to be standardized from batch to batch, year-over-year, ABcann took an unprecedented scientific approach to medical cannabis production and established a $1.5 million research contract with the University of Guelph, a world leader in controlled environmental growth systems. The scientific collaboration led to ABcann's proprietary cultivation methods that produce the highest consistent quality cannabis with yields that double the industry standards. Precise computer control of every possible variable allows ABcann to reliably homogenize the environmental experience so each plant reacts and produces the exact same medical compounds each and every grow cycle. The success of company's proprietary technique is reflected in its 94.7 percent customer retention rate, 30 percent month-over-month customer growth and its current yield rate which is nearly double the industry average (http://nnw.fm/w1vUW). ABcann's scientific approach to medicine has established the company as an industry leader for quality and consistency and a reputation for pharmaceutical-grade products, a crucial factor to capitalize on international market opportunities. The company's modular approach to systems technology mitigates start up risks while ensuring consistency and product quality anywhere in the world. ABcann is already tactically targeting Western Europe.
ABcann's success didn't go unnoticed. The company went public in May 2017, raising nearly $12 million in a private placement and another $25 million in debentures. Shortly after, PI Financial pegged a one-year share price target of $2.25 (USD). ABcann recently announced the receipt of $11.9 million in proceeds from the exercise of warrants, and with a significant investment from Cannabis Wheaton Income Corp. (TSX.V: CBW) (OTCQB: CBWTF), brings ABcann's current cash position to about $45 million today. Priced significantly above market, ABcann announced on in August (http://nnw.fm/aVAL7) the close of an initial $15 million investment by Cannabis Wheaton, which has raised over $85 million in the last six months, funds licensed or nearly licensed cannabis producers with smart money, brings in experts to evaluate budgets, and injects capital at important development phases.
Once facilities are producing, Cannabis Wheaton gets a royalty on the sale of one-third of the output, which it negotiates to purchase at direct cost. Chuck Rifici, Cannabis Wheaton's CEO, commented on the investment, "This now adds a sixth license to the Cannabis Wheaton portfolio, and our first publicly traded producer with a sales license. Over the past three years, I've watched ABcann's involvement and evolution in the Canadian cannabis industry. They are widely recognized for their proprietary cultivation methods that produce high quality cannabis with industry leading yields."
This initial investment is only part of a larger $30 million phased investment for construction of an additional 50,000 square feet of pure cultivation space next to ABcann's current 14,000-square-foot cannabis cultivation facility in Ontario, Canada. ABcann's second production facility, its 65-acre Kimmett property, has construction plans for a 100,000-square-foot purpose-built facility taking production capacity to 20,000 kilograms per year and positioning ABcann for hyperbolic expansion in the Canadian cannabis industry.
Others vying for market position include Maricann Group (CSE: MARI) (OTCQB: MRRCF), which is expanding its cultivation, extraction and production facilities, has raised in excess of $60 million over the last year, some of which was at a $250 million pre-money valuation. However, the company reported that Q2 sales declined by 27% from previous year levels and down 42% compared to Q1. Underscoring the importance of environmental controls, Maricann attributed the shortfall to a March windstorm that allowed sand to enter its greenhouses and ultimately caused destruction of all impacted plants. Since going public less than a year ago, Emblem (TSX.V: EMC) (OTC: EMMBF) has attracted nearly $27 million in fresh capital and has the same size growing facility as ABcann's current facility. Cronos Group (TSX-V: MJN) (OTC: PRMCF), which operates two wholly-owned licensed producers collectively situated on more than 125 acres of agricultural, licensed land, has garnered over $80 million in debt and equity financing in just the last three months.
Smart money continues to pour into Canadian LPs at an unprecedented rate, and appears to be on the upswing. Obvious initial indications would be for the forthcoming legalization of recreational use. There's certain to be a bonanza of opportunity upon implementation, but smart money capitalizes on not only the impending obvious but also on strategic longer-term considerations. Select Canadian medical cannabis companies will be uniquely positioned to capitalize on gigantic global growth opportunities. Investors seeking substantial capital appreciation should strongly consider following the smart money.
NetworkNewsWire (NNW) is an information service that provides (1) access to our news aggregation and syndication servers, (2) NetworkNewsBreaks that summarize corporate news and information, (3) enhanced press release services, (4) social media distribution and optimization services, and (5) a full array of corporate communication solutions. As a multifaceted financial news and content distribution company with an extensive team of contributing journalists and writers, NNW is uniquely positioned to best serve private and public companies that desire to reach a wide audience of investors, consumers, journalists and the general public. NNW has an ever-growing distribution network of more than 5,000 key syndication outlets across the country. By cutting through the overload of information in today's market, NNW brings its clients unparalleled visibility, recognition and brand awareness. NNW is where news, content and information converge.
DISCLAIMER: NetworkNewsWire (NNW) is the source of the Article and content set forth above. References to any issuer other than the profiled issuer are intended solely to identify industry participants and do not constitute an endorsement of any issuer and do not constitute a comparison to the profiled issuer. FN Media Group (FNM) is a third-party publisher and news dissemination service provider, which disseminates electronic information through multiple online media channels. FNM is NOT affiliated with NNW or any company mentioned herein. The commentary, views and opinions expressed in this release by NNW are solely those of NNW and are not shared by and do not reflect in any manner the views or opinions of FNM. Readers of this Article and content agree that they cannot and will not seek to hold liable NNW and FNM for any investment decisions by their readers or subscribers. NNW and FNM and their respective affiliated companies are a news dissemination and financial marketing solutions provider and are NOT registered broker-dealers/analysts/investment advisers, hold no investment licenses and may NOT sell, offer to sell or offer to buy any security.
The Article and content related to the profiled company represent the personal and subjective views of the Author, and are subject to change at any time without notice. The information provided in the Article and the content has been obtained from sources which the Author believes to be reliable. However, the Author has not independently verified or otherwise investigated all such information. None of the Author, NNW, FNM, or any of their respective affiliates, guarantee the accuracy or completeness of any such information. This Article and content are not, and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action; readers are strongly urged to speak with their own investment advisor and review all of the profiled issuer's filings made with the Securities and Exchange Commission before making any investment decisions and should understand the risks associated with an investment in the profiled issuer's securities, including, but not limited to, the complete loss of your investment.
NNW & FNM HOLDS NO SHARES OF ANY COMPANY NAMED IN THIS RELEASE.
This release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E the Securities Exchange Act of 1934, as amended and such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. "Forward-looking statements" describe future expectations, plans, results, or strategies and are generally preceded by words such as "may", "future", "plan" or "planned", "will" or "should", "expected," "anticipates", "draft", "eventually" or "projected". You are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events, or results to differ materially from those projected in the forward-looking statements, including the risks that actual results may differ materially from those projected in the forward-looking statements as a result of various factors, and other risks identified in a company's annual report on Form 10-K or 10-KSB and other filings made by such company with the Securities and Exchange Commission. You should consider these factors in evaluating the forward-looking statements included herein, and not place undue reliance on such statements. The forward-looking statements in this release are made as of the date hereof and NNW and FNM undertake no obligation to update such statements.
NetworkNewsWire (NNW) is affiliated with the Investor Based Brand Network (IBBN).
Over the past 10+ years we have consistently introduced new network brands, each specifically designed to fulfil the unique needs of our growing client base and services. Today, we continue to expand our branded network of highly influential properties, leveraging the knowledge and energy of specialized teams of experts to serve our increasingly diversified list of clients.
Please feel free to visit the Investor Based Brand Network (IBBN) www.InvestorBasedBrandNetwork.com
Corporate Communications Contact:
New York, New York
FN Media Group, LLC