NetworkNewsWire
Coverage: Canada’s impending legalization of recreational
marijuana has triggered a surge in investment activity as investors
lean toward Canadian companies as a less-risky entry point into the
broader cannabis industry. With unprecedented product demand on the
horizon, consumers trends are shifting toward the pursuit of the
“cannabis lifestyle,” rich in a wide range of high-quality retail
products, accessories and experiences. This emerging
marijuana-centered subculture has the potential to drive incredible
opportunity for companies like premium cannabis lifestyle brand
DOJA Cannabis Ltd. (CSE: DOJA) (OTC: DJACF)
(DOJA
Profile), as well as cannabis
producers and service providers such as Nutritional High
International Inc. (CSE: EAT) (OTCQB: SPLIF) (FRANKFURT:
2NU), Golden Leaf Holdings Ltd. (CSE: GLH) (OTCQB:
GLDFF), New Age Farm Inc. (CSE: NF) (OTC: NWGFF)
(FSE: ONF) and MedReleaf Corp. (TSX:
LEAF).
It was fitting that 2017 was known as the year of
Greenery, since the ongoing progress of cannabis legalization
across North America has generated record breaking growth within
the industry. Emergent mainstream trends such as celebrity strains,
cannabis-inspired haute-couture, and artisan edibles have all
signaled the popularity of a newly revolutionized, sophisticated,
and lucrative “cannabis lifestyle.” These initiatives suggest that
the next generation of cannabis consumers fantasizes of a world
where the cannabis experience extends beyond the bud — to assorted
oils, finely crafted smoking accessories, fashionable apparel, and
cafes that infuse comfort and sociability into the lifestyle.
From grow rooms and medicinal products to edibles and payment
solutions, cannabis presents investors with an exploding market of
diversity and growth. According to a recent Bloomberg report
(http://nnw.fm/Xo0Ts) that quotes cannabis
market research firm the Brightfield Group, global legal cannabis
sales are expected to climb to $31 billion by 2021, with the
majority of those sales expected to stem from the United States and
Canada.
With Canadian legalization of recreational cannabis looming, the
opportunity for a brand to become the “Starbucks” of Canadian
cannabis is bigger than ever. Positioning itself squarely in the
“cannabis lifestyle” space is British Columbia-based DOJA
Cannabis Company Ltd. (CSE: DOJA) (OTC: DJACF), which
operates as a premium cannabis lifestyle brand and is a licensed
marijuana producer under Canada’s Access to Cannabis for Medical
Purposes Regulations (ACMPR). With an eye on emerging opportunities
within the cannabis market, standing out as Canada’s premier
cannabis lifestyle brand is a primary aim for DOJA. The company has
the brand-building experience to make a big impact on the cannabis
space — DOJA’s CEO and founder is none other than Trent Kitsch, a
proven brand maven who developed SAXX Underwear into one of the
fastest growing premium men's underwear brands in North
America.
Lifestyle branding through strategic
M&A
Recently, DOJA announced its binding Letter of Intent to acquire
Tokyo Smoke (http://nnw.fm/MbMW9) - a merger that will create a
uniquely positioned cannabis company that combines a class-leading
craft cannabis producer with an award-winning lifestyle brand and
retail-focused cannabis company. The emerging company, Hiku Brands
Company Ltd., is in reference to the brand house that will contain
DOJA, Tokyo Smoke, and Van der Pop—all increasingly recognizable
premium cannabis brands.
Huge players are taking notice and investing in this endeavor.
Recently, DOJA announced the closing of a $12.5 million
non-brokered private placement led by industry leader Aphria Inc.
(TSX: APH) (OTC: APHQF) (http://nnw.fm/i0zqY).
This strategic investment combined with a related supply
agreement will help secure cannabis concentrate supply for Hiku’s
premium brand portfolio, the strategic partnership with Aphria
brings unmatched cannabis production experience and ensures secured
supply for what is anticipated to be a supply-constrained market
when Canada’s recreational legalization goes into effect.
The merger will also reportedly foster the creation of Canada’s
first retail-focused craft cannabis producer boasting a portfolio
of highly recognizable brands. Hiku will be strategically
positioned to become the foremost craft cannabis brand house within
the Canadian adult-use cannabis market and the only craft cannabis
producer to have a significant national retail presence and a
growing portfolio of premium cannabis lifestyle brands.
Hiku has multiple highly recognizable brands and strategies in
place to operate retail cannabis stores across various Canadian
provinces, ranging from Eastern Canada to Western Canada with
further expansion plans in view. This will represent an
unprecedented platform through which the company can build brand
awareness and reach consumers. Vertically integrated operations are
positioning Hiku to offer exclusive retail products in Hiku-owned
stores and to achieve superior margins in comparison to its peers.
Hiku will prioritize its retail expansion in provinces that allow
private cannabis retail, while DOJA and Tokyo Smoke will respond to
the Government of Manitoba’s Request for Proposals to establish
retail cannabis stores throughout that province.
Following the merger, Hiku will have a projected cash balance of
approximately $31 million, expectations are that the company will
be well-positioned to expand within the Canadian cannabis market
and stretch its reach into emerging global cannabis markets.
Leveraging the profit of positive customer
experience
The industry-leading management entities that will be at the
helm of Hiku boast broad expertise with a proven track record of
building and scaling businesses, including SAXX Underwear and a
$100 million+ business at Google. Hiku’s supporting team brings
extensive knowledge in retail, cannabis, finance, design, marketing
and creative fields.
"We have created the leading brand house in cannabis, where high
quality and design will shape the cannabis future,” DOJA CEO Trent
Kitsch stated in a recent press release (http://nnw.fm/jV8Ae). “I am confident Hiku will be
trusted by consumers to design better customer experiences and
products, resulting in greater market share. Tokyo Smoke's
experienced management team has proven its ability to build and
acquire respected cannabis brands and create brand awareness in a
difficult-to-navigate regulatory environment. We see leveraging
those skills and their strong retail operating abilities as highly
complementary to our current operations and beneficial to the
long-term trajectory of our company. The combination of cannabis
production, retail footprint, and a portfolio of cannabis brands
gives us the opportunity to realize the significant value of
complete vertical integration."
Cannabis cultivation remains key
As a licensed cannabis producer under the ACMPR through its
wholly-owned subsidiary Northern Lights Marijuana Company, DOJA
currently operates a 7,100-square-foot production facility that is
licensed by Health Canada. The company recently acquired second
facility is a 22,580-square-foot warehouse where its FUTURE LAB
will be housed. The FUTURE LAB will be a state-of-the-art
extraction facility for which the company plans to acquire an oil
production license. With the completion of the FUTURE LAB, DOJA
anticipates its corporate cannabis production capacity will surpass
5,000 kg per year. Phase 1 completion of the FUTURE LAB is
anticipated by Q2 of 2018. The facility will utilize an
industry-leading multi-tier system powered by LED lighting from
Fluence BioEngineering.
Supplementing its medical cannabis production license, DOJA,
through its subsidiary, has also applied for a cannabis sales
license through the ACMPR, which it expects to receive soon.
Focused on branding premium cannabis flower and extracts, DOJA
is bringing a handcrafted approach to the cannabis space. The
company’s marijuana is grown indoors, and all flower is
hand-trimmed and hang-dried to enhance flavor, quality and crystal
content.
As part of its focused efforts to foster the “cannabis
lifestyle” and help build a cannabis subculture, DOJA recently debuted
its first Culture Café, located in Kelowna. This high-end café
and cannabis access center hosts events such as cannabis
information nights and doctor discussions for medical cannabis
patients, and individuals can also schedule private events at the
facility. Following national recreational cannabis legalization,
DOJA plans to move toward incorporating a cannabis dispensary
within the venue and to open additional culture cafés.
Potential Industry Comparables
Other cannabis players poised to support and capitalize on
Canada’s burgeoning cannabis lifestyle include Nutritional
High International Inc. (SPLIF), a company focused on
developing, manufacturing and distributing premium and consistently
dosed cannabis-infused products, including edibles and oil extracts
for nutritional, medical and adult recreational use. Nutritional
High recently entered into a definitive agreement in connection
with a joint venture (http://nnw.fm/H5byH) with Abba Medix Corp., a wholly
owned subsidiary of Canada House Wellness Group Inc. (CSE: CHV), to
manufacture cannabis oil extracts and cannabis-infused products in
Canada under the ACMPR. As part of this joint venture, Nutritional
High and Abba will build-out a production facility at Abba’s
Pickering location to house a cannabis oil extraction operation
that is focused on the production of oils and extracts. Nutritional
High is also working closely with Abba to secure a supplemental
license from Health Canada to produce medical cannabis oils, with
sights set on serving Canada’s recreational market as soon as the
proper regulatory frameworks are in place.
One of the biggest providers of cannabis oils and solutions in
North America, Golden Leaf Holdings Ltd. (GLDFF)
is another standout cannabis company on the Canadian landscape that
is taking part in the growth of the cannabis lifestyle in that
country. Through its branded Chalice Farm retail dispensaries as
well as through third-party dispensaries, Golden Leaf Holdings
cultivates, extracts, manufactures and distributes its cannabis
products. The company recently acquired Medical Marijuana Group
Consulting Ltd., which is a medical marijuana consulting company
adept at finding and securing insurance coverage for medical
cannabis patients and also a leader in cannabis treatment for
veterans. The acquisition secures long-term, loyal and profitable
customers and will strengthen Golden Leaf Holdings’ Canadian market
strategy. In November 2017, Golden Leaf also secured, through its
subsidiary, a cultivation license from Health Canada for a
state-of-the-art grow facility in Ontario, with an intention to
submit expansion plans for additional growing space, oil extraction
labs and edible production space.
Contributing to Canada’s cannabis lifestyle in a more unique
way, New Age Farm Inc. (NWGFF) is an agricultural
services company that offers turnkey growing infrastructure and
innovative solutions and services for licensed growers and
processors of luxury marijuana crops. Through its subsidiary
company, NHS Industries Ltd., New Age Farm owns 5.5 acres of prime
agricultural land in Langley, B.C., that encompasses more than
48,000 square feet of greenhouse capacity and 80,000 cubic yards of
saleable peat soil. The Langley property was spun out as a separate
business in 2016, allowing New Age Farm to separate its Canadian
and U.S. operations and to pursue further business in Langley as
Canada moves toward recreational cannabis legalization. When Canada
legalizes recreational marijuana, NHS plans to be ready to accept
licensed tenant-growers at its Langley Property. When the Langley
Property is completed, it will house a cutting-edge production,
processing and warehouse facility where small-scale marijuana
grower-producers can produce value-added products derived from
their crops. This will increase potential revenue for the growers
and will also maintain an ongoing seed-to-sale revenue stream for
NHS. Clients will be able to utilize the NHS facility for purposes
of growing, processing, storing and distributing their products all
from one location, enabling them to lower their overhead.
Another company striving to foster the cannabis lifestyle not
just in Canada but on a worldwide scale is MedReleaf Corp.
(LEAF.T). A licensed Health Canada producer, MedReleaf is
the first, and currently the only, ICH-GMP and ISO 9001 certified
cannabis producer in North America. The company’s mission is to
improve quality of life for its patients and to expand global
understanding of cannabis and its therapeutic benefits through a
broad range of research initiatives. MedReleaf is R&D-driven
and offers a variety of premium-quality medical cannabis products
that are sourced globally and are carefully cultivated in two
state-of-the-art facilities located in Ontario.
As public opinion regarding cannabis continues to evolve and
legalization measures advance around the world, the emergence of a
legal cannabis lifestyle and subculture is clear. The named
Canadian players are endeavoring to foster this developing cannabis
lifestyle in Canada and worldwide as Canada prepares for blanket
legalization of recreational marijuana use and positions itself to
be a global marijuana leader.
For more information on DOJA Cannabis Company, visit DOJA Cannabis
Company Ltd. (CSE: DOJA) (OTC: DJACF).
For a more in-depth look into DOJA Cannabis (CSE: DOJA)
(OTC: DJACF), view the full report on Microsmallcap.com.
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