CannabisNewsWire
Editorial Coverage: California continues to be the leading
center for the U.S. cannabis industry, with huge growth already
taking place and plenty of potential for more.
Cannabis Strategic Ventures (OTCQB: NUGS) (NUGS
Profile) is among the growing number of California
cannabis companies boasting multiple cultivation, manufacturing and
distribution licenses. Its wholly owned and operated flagship farm,
NUGS FARM, recently completed its first harvest. Like Cannabis
Strategic Ventures, Acreage Holdings Inc. (OTCQX:
ACRGF) is invested up and down the supply chain, with new
brands targeting markets in California and elsewhere. Green
Thumb Industries Inc. (CSE: GTII) (OTCQX: GTBIF) recently
announced expansion in Pennsylvania, catering to the state’s
180,000 registered cannabis users. Halo Labs Inc. (OTCQX:
AGEEF) provides vital support services to the California
market, using cutting-edge technology to extract active ingredients
from cannabis. Cresco Labs Inc. (CSE: CL) (OTCQX:
CRLBF) has financed a fresh wave of expansion through a
sale-and-leaseback agreement on its existing cultivation
properties.
- California’s industry is expected to be worth $3.1 billion this
year and could reach more than three times this size as it takes
over from the illegal market.
- Public companies are expanding thanks to support from the state
and ancillary businesses.
- Federal legislation keeps many of these companies from stock
exchange listings, so they are traded as over-the-counter
shares.
- Cultivation operations provide the bedrock for their
growth.
To view an infographic of this editorial, click here.
California Leads the Way for Cannabis
Industry
As with many other significant economic and social changes,
California is currently leading the way in the legal cannabis
market. The first state to legalize medical cannabis has created a
whole new sector of the legal economy and continues to set the
standard that the rest of the market follows. The words
cannabis and California go hand in hand.
The fall harvest is approaching, highlighting how much cannabis
cultivation in California has thrived. Growing consumer demand in
both the medical and recreational cannabis segments has led to
constant growth for the industry. Consumers want more and better
cannabis, and companies are moving to meet that demand. Cannabis
investment is rising as companies realize the potential rewards of
investing in cannabis.
Maturing Industry Makes More Cannabis Stocks
Available
Investors both inside and outside California have been turning
their attention to the state’s cannabis industry. These investors
are flocking to pick up stocks in cannabis-related enterprises such
as Cannabis
Strategic Ventures (OTCQB: NUGS), a cannabis-related
holding company that has recently made significant investments in
the Californian cultivation market.
The early days of the cannabis industry were uncertain ones for
investors. Though California had taken the bold step of legalizing
the medical cannabis industry, the shape of that industry and the
profitability of companies remained uncertain. Questions about how
the federal government would respond, given that this state-level
legislation was at odds with federal laws shaped by the war on
drugs, contributed to that uncertainty. Further changes such as the
legalization of cannabis in California for recreational purposes,
which happened only three years ago, have meant ongoing uncertainty
and adaptation.
In-state progress has made positioned companies such as Cannabis
Strategic Ventures for success. The state has a fully regulated
market, with licensing arrangements for the production, processing
and sale of cannabis. Sophisticated infrastructure is emerging to
nurture the industry, both in the government machinery that
regulates it and in the businesses that provide materials and
services.
The result is a growing number of public companies, some new and
others well established. Investors have a range of options to
choose from and greater confidence than ever before that their
money is in safe hands.
California’s Billion-Dollar Cannabis
Industry
The central driver for growth is the high demand for cannabis
that exists in California. The state’s legal cannabis industry is
expected to reach $3.1 billion in sales this year, according to a report from research firms Arcview Market
Research and BDS Analytics. This expected demand has fueled
spectacular growth in the number and scale of cultivation
operations, as new ones enter the market every year. Cannabis
Strategic Ventures’ NUGS FARM site made its first
sales this September and is building toward its full
operational capacity for the start of next year. Others are in
similar positions, gearing up from first sales to big cultivation
and sales operations.
These sales are likely to increase as more of the state’s shadow
market in cannabis moves into the light. Illegal operations in
California are estimated to be worth $8.7 billion this year. The
state is working to eradicate these operations and create a safer,
better-regulated market that will protect consumers, workers and
well-run businesses.
Operations such as NUGS FARM are both a result of and a
contribution to the erosion of the illegal market. As police crack
down on illegal operations, customers move toward legal outlets to
obtain their drugs. In addition, the existence of legal outlets is
itself a draw away from the illegal sellers. By providing a safe,
legal way for customers to obtain what they’re looking for, with
more consistent results and value for money, enforcement agencies
are eroding the illegal market’s customer base.
Investing in Cannabis Off the Exchanges
Despite this, many cannabis companies are unable to list their
stocks on American exchanges. Instead, the likes of Cannabis
Strategic Ventures are traded as over-the-counter stocks on
OTC Markets.
The reason behind this is federal legislation. Though many
states have changed their views, the United States government still
treats cannabis as a Schedule One drug, legally regarded to be as
dangerous as heroin or LSD, despite the overwhelming scientific
evidence against this stance. This means that companies that
directly cultivate and sell recreational cannabis are barred from listing on U.S. financial exchanges. Some
ancillary and biotech companies have found a way around this and
onto the exchanges, while others have been listed in Canada
instead. But for many, over-the-counter sales between traders
remain the way forward.
The Practicalities of Cannabis Cultivation
Despite the challenge this situation creates, there is no
shortage of funding for cannabis growers. For the first time,
investors are starting to learn what a cannabis cultivation project
looks like.
Many of these operations are based on indoor growing, which
allows for greater security and consistency of results. NUGS FARM is a 6.5-acre greenhouse operation, using
specialized farming equipment to feed, water and monitor the
plants. The farm has licenses to cultivate, manufacture and
distribute cannabis, giving Cannabis Strategic Ventures the right
to be involved in and provide quality control through the entire
supply chain. NUGS can produce tens of thousands of pounds of
cannabis annually, with the plants coming from the company’s own
unique, high-quality flower strains. NUGS has started booking sales
of this produce as it gears up to full capacity in early 2020.
This is the shape of the Californian cannabis industry —
sophisticated, forward looking and constantly expanding. Challenges
such as the illegal market and federal regulations are being
overcome — or even turned to the industry’s advantage.
All In On Cannabis
Across the 33 states in which medical or recreational cannabis
is now legal, companies are enjoying similar patterns of
expansion.
Starting with its founder’s investment in a cannabis license in
Maine eight years ago, Acreage Holdings Inc. (OTCQX:
ACRGF) has since expanded to create a company operating in
states across the United States. A team of experts with experience
in everything from legislation to healthcare to cultivation, the
company is invested all along the supply chain, from cultivation to
manufacturing to dispensing to branding. Acreage Holdings recently
rolled out a new set of products
under its House of Brands strategy. California is among the
target markets for these products, tapping into that large and
growing customer base.
Green Thumb Industries Inc. (CSE: GTII) (OTCQX:
GTBIF) is another multistate operator with cultivation
centers in a number of states. The company is focused on the
medical rather than the recreational sector of the market, focusing
on the health benefits that cannabis can bring. Green Thumb
Industries recently opened its seventh retail store in
Pennsylvania, a sizeable market with 180,000 in-state registered
medical cannabis patients. Such moves have led to a tripling in Green Thumb’s revenues in the second quarter
of this year.
The industry isn’t just about cultivation and retail; there’s a
large base of support services backing that. Among those companies
is Halo Labs Inc. (OTCQX: AGEEF), which
specializes in the extraction of active ingredients from cannabis.
This extraction allows the chemicals to be used in products ranging
from medicines to vaping liquid to food and drink. Halo’s
leading-edge technology gives it an advantage in the extraction
market, a fast-moving segment based on swiftly changing technology.
Halo Labs was recently awarded two new licenses for
operations in California, where it already has a
9,400-square-foot campus dedicated to the processing of cannabis
products.
A vertically integrated company working across the United
States, Cresco Labs Inc. (CSE: CL) (OTCQX: CRLBF)
is one of the leading multistate cannabis companies. Cresco deals
with the whole supply chain of cannabis, including cultivation,
processing, packaging, shipping and sales in its own dispensaries.
The company recently made a sale-and-leaseback
deal on two of its cultivation properties in Illinois to
provide extra funds for expansion in the state. Like California,
Illinois has plenty of room for expansion, and the industry there
is expected to eventually reach $2 to $4 billion in value. The deal
will position Cresco to make the most of that growth.
The cannabis industry is growing in many states, following the
lead of California, where a powerful market is forging the way
ahead for the rest of the country.
For more information on Cannabis Strategic Ventures, visit
Cannabis
Strategic Ventures Inc. (NUGS)
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