NetworkNewsWire
Editorial Coverage: Recreational cannabis will soon be legal in
Canada for adults, but selling and buying the pungent herb won’t be
as simple as some presume it will be. Regulations governing the
cultivation, production, packaging and sale of cannabis are still
being refined as Canadian lawmakers at different levels of
government tackle unique differences between provinces and local
jurisdictions. One thing is certain, however: a cannabis retail
explosion is coming, and cannabis companies ready for the surge
will reap the benefits when Canada’s recreational marketplace
officially opens for business. Cannabis retail brand Choom™
Holdings, Inc. (CSE: CHOO) (OTCQB: CHOOF) (CHOOF
Profile) is preparing to meet the
demands of this market with a strategic blend of product and
consumer experience, while Hiku Brands Company. Ltd. (CSE:
HIKU) (OTC: DJACF) (DJACF
Profile) steadies itself as a
lifestyle cannabis brand. Canada’s top cultivators, Canopy
Growth Corporation (TSX: WEED) (OTC: TWMJF);
Aurora Cannabis, Inc. (TSX: ACB) (OTCQX: ACBFF);
and ABcann Global (TSX-V: ABCN) (OTCQB: ABCCF)
(ABCCF
Profile) are also exploring getting
in the game.
Economic Boost
Close to 5 million Canadians aged 15 to 64 spent an estimated
$5.7 billion on cannabis in 2017, according to a Cannabis Economic
Account issued by Statistics Canada (http://nnw.fm/m1AnR). That’s nearly $1,200 per
cannabis consumer, although the report does caution that the data
is an estimate. Canada’s foray into legalized recreation cannabis
will bring more concrete numbers, especially once the nation’s
projected $450 million in annual cannabis tax revenue begins to
roll in, and the nation’s provinces get a 75 percent share of the
loot (http://nnw.fm/EhMe6).
Retail Me Now
Estimates vary as to how much revenue is out there when it comes
to legalized cannabis. A 2016 report (http://nnw.fm/R5Csq) from the Canadian Parliamentary
Budget Officer estimated a $5.5 billion to $5.8 billion annual
retail market while a far more enthusiastic Deloitte study
predicted an industry generating more than $22 billion a year
(http://nnw.fm/dR0OF). Either way, that
translates into an undeniable demand for cannabis. For Choom
Holdings (CSE: CHOO) (OTCQB: CHOOF) and its
experienced team of cannabis curators, Canada’s upcoming “green
rush” presents an incredible opportunity to build premium brand
loyalty through the company’s unique retail strategy.
Cannabis Connoisseur
A heady amount of the laid-back spirit of Hawaii is channeled
into Choom™ and its unofficial history. Choom was inspired by the
Choom Gang, a group of buddies living in Honolulu during the 1970s
who loved to relax with “choom,” the local’s term for marijuana.
That Choom “vibe” flows throughout the corporate structure today
with the company’s commitment to the principle of keeping and
maintaining “good times and good friends.”
One of the best ways to do that may be by cultivating naturally
grown, premium cannabis that provides an elevated experience for
the consumer, then sharing that business model with entrepreneurs
in a unique Choom Partner Program (http://nnw.fm/gYs2q). This chain of branded retail
cannabis dispensaries will find homes in Canadian jurisdictions
where recreational cannabis is legalized for retail sale.
License to Sell
The government in British Columbia, where Choom is
headquartered, has issued several guidelines for individuals and
businesses seeking a recreational cannabis retail license.
Importantly, while the government said the B.C. Liquor Distribution
Branch would be the wholesale distributor of nonmedical cannabis,
it would not impose a quota on the number of licenses issued for
private retail outlets (http://nnw.fm/4PKfP). That’s good news for individuals
and companies seeking an entry into the booming cannabis
sector.
Fittingly, Choom recently announced it has signed the first
agreement in its retail investor program with a consortium known as
the Thompson Okanagan Choom Group. Comprised of local investors and
business partners, the consortium has secured the exclusive
territory rights to open multiple Choom-branded retail dispensaries
in the gorgeous Thompson-Okanagan region of British Columbia
(http://nnw.fm/4kJMd).
Each Choom retail store is designed with a clean and modern
mindset geared to help customers feel at home and enjoy the “aloha”
experience. The company’s partner program includes support and
access to the expertise and partnerships of the Choom brand and its
nimble, adaptive business model. As experienced curators of
cannabis, Choom will use its products and services to grow and
adapt to the changing cannabis landscape, which is likely a
necessary component in Canada’s current regulatory climate.
But Wait, There’s More
While it appears the distribution of wholesale cannabis and
online sales will be largely government controlled, provinces and
territories have opted for one of three retail models for
over-the-counter sales: private, public or a hybrid of the two
(http://nnw.fm/Nij0p). The Saskatchewan
government, for instance, announced in January that the
Saskatchewan Liquor and Gaming Authority would be tasked with
issuing about 60 retail permits to private stores located in
roughly 40 municipalities and First Nations across the province
(http://nnw.fm/w4fCh). Ontario, on the other
hand, will only allow cannabis to be sold by the Ontario Cannabis
Retail Corporation, a subsidiary of the Liquor Control Board of
Ontario (http://nnw.fm/qyg7E).
Cultivating an Experience
Choom has acquired International Tungsten, Inc. (ITI), a
late-stage applicant for an ACMPR (Access to Cannabis for Medical
Purposes Regulations) cultivation license through its subsidiary,
Specialty Medijuana Products Inc. (SMP) (http://nnw.fm/p2Tax). SMP, whose cultivation facility
is located in British Columbia, expects to receive its Health
Canada cultivation license within the next few weeks, followed by a
sales license by the third quarter of 2018. Benefits of this
acquisition are significant, moving Choom closer to scaling up
cultivation capacity and reaping its first cannabis harvest under
this new resource (http://nnw.fm/5A3qi).
Choom already has security clearance with one ACMPR through its
subsidiary Medi-CanHealth Solutions Ltd., which is currently in the
detailed review stage. Growth plans include a Phase 1 cannabis
production facility capable of producing approximately 660 kg of
dried cannabis per year, along with expansion plans to increase
production to 1,500 kg/year. A second ACMPR application, also in
the readiness stage, is located on Vancouver Island with the
potential to eventually produce 900 kg/year.
Earlier this week (http://nnw.fm/35Iml), Choom expanded its portfolio
with a Letter of Intent to acquire advanced-stage cannabis
production license applicant Flower Power and its wholly owned
subsidiary, High Way 10 Cannabis Pharms Inc. Located in Southern
Saskatchewan, High Way 10 has a 16,000-square-foot facility that
will be capable of producing roughly 1,500 kg of dried cannabis
annually. In addition to room for additional expansion, Flower
Power is advancing its retail store strategy across the country to
create a consumer experience that elevates and evolves the
traditional dispensary vibe. It intends to have a hybrid of
corporately owned and franchised dispensaries, subject to the
formal legalization of recreational cannabis by Health Canada and
provincial and municipal guidelines.
Complementary to Choom’s corporate vision, this acquisition
marks Choom’s fourth advanced-stage applicant and demonstrates the
company’s commitment to scale up its operations to meet the demands
of the Canadian recreational market.
Other Players
Hiku
Brands (CSE: HIKU) (OTC: DJACF) just received one of
four master retail licenses in Manitoba’s highly competitive
Request for Proposal process, giving Hiku the right to operate
retail cannabis stores in the province (http://nnw.fm/jnd7T). The license, awarded to Hiku’s
wholly owned subsidiary, Tokyo Smoke, represents what company CEO
Alan Gertner called “a validation of our business model and vision
of creating an unsurpassed retail experience for cannabis
consumers."
Through its subsidiaries, Canopy Growth (TSX: WEED)
(OTC: TWMJF) is a Canadian licensed producer of medical
marijuana operating Tweed Main Street Shops in communities
throughout southern Ontario (http://nnw.fm/Er6RT). Tweed Main Street has deep roots
in the cannabis community, offering Canada’s most “relied upon
brands” under one roof. The company’s medical cannabis orders are
sent directly to the client after being processed the same day 99
percent of the time, with an average wait call time of less than
two minutes.
Aurora Cannabis (TSX: ACB) (OTCQX: ACBFF) is
taking a different retail approach by proposing to create medical
cannabis retail outlets by converting existing liquor store retail
locations in the province of Alberta (http://nnw.fm/XLeK6). Aurora Cannabis, which
cultivates, produces and sells medical cannabis, plans to establish
“a new customer experience for adult consumers.” The company
recently entered into an agreement to become an online medical
cannabis supplier for Shoppers Drug Mart, subject to Health
Canada’s approval of an application by Shoppers to be a licensed
producer (http://nnw.fm/1o8lW).
ABcann
Global (TSX-V: ABCN) (OTCQB: ABCCF) has signed an
agreement with Choom to market ABcann’s cannabis products through
Choom’s branded retail platform. As part of the deal, ABcann Global
is making a strategic $4 million investment into Choom, signaling a
strong commitment and belief in the company’s unique, customized
approach to the recreational cannabis market (http://nnw.fm/PZto7). As one of the earliest licensed
medical marijuana producers in Canada, ABcann has five years of
operating experience in the medical marijuana space. The company
currently owns and operates a fully functioning 14,500-square-foot
facility in Napanee, Ontario, as well as 65 acres of real estate
with proper zoning and existing infrastructure in place to support
the construction of another production facility of up to one
million square feet.
Preparation Counts
Scrambling or playing catch-up is never the best business
advice, as any successful entrepreneur will tell you. But being
able to use that kind of nimble, quick-thinking, planning-ahead
ability should bode well for Canada’s cannabis producers and
retailers as summer 2018 looms large on the horizon. Companies are
lining up financing, expanding production facilities, designing
retail spaces and shoring up supplies to meet the expected demand
as Canada begins legalizing recreational cannabis for adults 19
years old and over. As Alexander Graham Bell so famously said,
“Before anything else, preparation is the key to success.”
For more information on Choom Holdings, please
visit Choom
Holdings (CSE: CHOO) (OTCQB: CHOOF).
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