New York, New York (NetworkNewsWire) – The medical cannabis
business is booming in Canada, projected to ramp up and exceed $8
billion within seven years. The growth trajectory shows no signs of
slowing yet pales in comparison to the global opportunity. A recent
analysis by Eight Capital, a Toronto-based investment bank, targets
the potential Canadian international medical cannabis market at a
staggering $142 billion over the next 15 years (http://nnw.fm/aFP0h). Licensed producers in good
standing are best positioned to reap immense rewards from this
generational growth opportunity. Of these, ABcann Global
Corp. (TSX.V: ABCN) (OTCQB: ABCCF) (ABcann
Profile), among Canada’s first
licensed producers, is already considered one of
its premiere growers. Others vying for position include
OrganiGram Holdings, Inc. (OGRMF), Supreme
Pharmaceuticals, Inc. (SPRWF), Maricann Group,
Inc. (MRRCF) and iAnthus Capital Holdings, Inc.
(ITHUF).
With strict laws enacted in 2016, Health Canada now oversees the
licensing process, monitoring and compliance of commercial medical
cannabis producers. Licenses are difficult to acquire and frequent
inspections hold producers to stringent standards. Health Canada
now conducts thorough reviews of applications to ensure compliance
with regulations and closely monitors licensed producers to ensure
compliance with such strictures as personnel security measures,
good production practices, packaging, shipping, record keeping, and
importantly, import and export requirements. Global demand,
especially in Germany, is growing at an “insane” rate.
ABcann
Global Corp. (TSX.V: ABCN) (OTCQB: ABCCF) sees Germany
as a gateway to vast European and global opportunities. “We’re
absolutely at the forefront,” recent CEO Aaron Keay told Marijuana
Business Daily. “We look at Europe as a significant part of our
strategic plans for expansion, in addition to what we’re doing
domestically.” Keay, now focused on global operations, confirmed
that ABcann expects to acquire a distribution license and start
exporting to Germany in the third quarter.
Meticulous specifications in the production of its
pharmaceutical grade, plant-based medicines positions ABcann at the
vanguard of Canadian global exporters of medical cannabis products.
ABcann’s modular approach to systems technology eliminates scale-up
risk and enables ABcann to expand anywhere in the world and still
maintain consistency and quality of product. Maintaining standards
designed to exceed Canadian government requirements, ABcann
Medicinals grows plants only in small batches to create
controllable, consistent and predictable yields. The plants are
nurtured in controlled environmental chambers to deliver repeatedly
dependable results with each harvest. Chemical and pesticide free,
ABcann produces medical cannabis that effectuates the same
pharmaceutical response with each use. Such quality and consistency
are prerequisites for importers of medicinal cannabis, especially
in Germany that reimburses medical cannabis under its national
health system.
In a testament to consistency, quality and immense global
opportunity, Cannabis Wheaton, which invests in and supports a wide
range of cannabis cultivation companies, announced in a June 2
press release a $30 million investment into ABcann for current
operations and expansion to a 130,000-square-foot facility
(http://nnw.fm/CHBi5). Cannabis Wheaton further
committed to fully fund, with certain conditions, the construction
of an additional 50,000 square feet of ABcann’s Kimmett Facility.
The 180,000 square feet of funded production capacity places ABcann
among the top of all licensed producers. The $30 million investment
is being made in two tranches each at C$2.25 per share. The pricing
represents a significant premium to the current price of $0.78 US
(about C$1.00) per share.
With a market capitalization around $82 million, ABcann presents
great value for Cannabis Wheaton and should be on the radar of
investors in this space. Other Canadian licensed producers carry
much higher market valuations. Even at a C$2.25 per share valuation
(about $180 million US market cap) ABcann still represents a
compelling value in the industry with many licensed producers
commanding valuations two to four times higher.
One such company carrying such a lofty market valuation is
OrganiGram Holdings (OGRMF). With a market cap in
excess of $233 million, OrganiGram will have over 220,000 square
feet of medical cannabis production space at full build out. Even
though its a federally licensed producer, OrganiGram was caught up
in two Health Canada recalls of almost all its products sold in
2016 after residual levels of two banned pesticides, myclobutanil
and bifenazate, were found and company's organic certification was
suspended until compliance to requirements was demonstrated. Health
Canada released a public recall of all products produced between
February 1, 2016, and December 16, 2016, which included both dried
marijuana and cannabis oil. OrganiGram took remedial measures to
rectify the problems, is now back in business after losing a year’s
revenues and still carries a $230+ million valuation.
Supreme Pharmaceuticals
(SPRWF) has a hefty market cap of around $250
million and is trying to become a leading supplier of affordable
medical cannabis by applying commercial agriculture practices to
medical cannabis production. Supreme Pharmaceuticals expects to
produce 10,000 kilograms of cannabis in 2017, with an estimated
value of $35 million. At the end of 2016, the company raised $55
million through a convertible debenture that pays investors 10%
annually until maturity in January 2019, at which point the lenders
can convert into equity at $1.30 per share which may prove quite
dilutive.
Licensed in 2014 and with first sales in 2015, Maricann
Group (MRRCF) is now expanding its cultivation,
extraction, analytics and production facilities for growth into the
adult-use cannabis market in Canada, and longer term, into mature
and developing cannabis markets worldwide. In August the company
reported Q2 sales declined by 27% from previous year levels and
down 42% compared to Q1. Lacking 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.
With a different approach and no licensed Canadian producers,
iAnthus Capital Holdings (ITHUF), through its
wholly owned subsidiary iAnthus Capital Management, LLC, offers
investors diversified exposure to licensed cannabis cultivators,
processors and dispensaries in the United States. iAnthus currently
owns, operates or has partnered with marijuana license holders in
Massachusetts, Vermont, Colorado and New Mexico. Founded by
entrepreneurs with experience in investment banking, corporate
finance, law and healthcare services, iAnthus provides a
combination of capital and operating and management expertise for
its companies. The diversification, while limiting downside in the
space, severely constricts upside potential and is reflected in the
paltry $36 million market valuation.
Canadian medical cannabis companies are uniquely primed and
positioned to tap a generational global growth opportunity.
Well-capitalized and largely free from competition, Canadian
licensed producers are set to gain a first-mover advantage in new
international markets as more and more countries legalize marijuana
for medical use. Fortunes will be made as international medical
cannabis markets balloon to $142+ billion over the next 15 years.
To maximize profits in this space, investors should have direct
exposure to licensed Canadian medical cannabis producers.
For more information on ABcann Global please visit: ABcann Global
(TSX.V: ABCN) (OTCQB: ABCCF)
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