The companies to watch out for: CLS Holdings USA Inc., Canopy Growth Corporation, Aphria Inc., KushCo Holdings, Inc., Terra Tech Corp.
Consumer Spending on Legal Marijuana is Expected to Grow in the U.S.
Written By: Jen Neville
October 26, 2018
The cannabis market has been growing in recent months and Canada began legal sales of recreational marijuana earlier this month. It is a promising time for cannabis companies in North America. The legalization of adult-use cannabis in Canada and California this year may set an example for other nations as the booming cannabis market has potential to generate even more job opportunities and economic benefits. According to a report, consumer spending on legal cannabis is expected to reach USD 11 Billion in 2018 and more than USD 23 Billion by 2022. The U.S. cannabis industry is also projected to generate more than 467,000 full-time equivalent jobs in 2022, up from 170,000 full-time equivalent jobs in 2017. The U.S. has the largest legal cannabis market in 2017, accounting for 90% of the world market. However, its market shares are projected to shrink to 73% in 2022.
The European cannabis market is also expected to witness rapid growth. According to recent data the European cannabis market will be worth EUR 115.7 Billion by 2028.
Stephen Murphy, Managing Director, Prohibition Partners, stated: "Public, political and professional opinions are swinging largely in favor of the legalization and regulation of cannabis. Europe, which is known for its considered and conservative approach to change, is suddenly becoming a hotbed of activity for the global cannabis industry. In just six months, the European cannabis industry has grown more than it has done in the past six years. Currently, patient numbers are below 100,000 across the region but this number is set to grow to over 30 million in the next ten years."
CLS Holdings USA Inc. earlier this month announced that, "it had entered into an agreement with a Canadian agent, whereby the Agent will assist the Company in selling on a commercially reasonable efforts private placement basis, up to US$40 million aggregate principal amount of senior unsecured debentures with an issue price of US$1,000 per Debenture, convertible into units of the Company at the option of the holder at a conversion price of US$0.80 per Unit at any time prior to the close of business on the earlier of: (i) the last business day immediately preceding the maturity date of the Debentures, being the date that is three (3) years from the closing date of the Offering, and (ii) the date fixed for redemption. Each Unit shall be comprised of one common share of the Company and one-half of one common share purchase warrant. Each Warrant shall be exercisable into one Common Share at a price of US$1.10 per Warrant for a period of 36 months from the Closing Date. The Company intends to use the net proceeds of the Offering to fund the upfront loan payment to In Good Health Inc., to fund construction activities at the Leicester facility, to complete improvements to the North Las Vegas cultivation facility and for general working capital purposes."
CLS also announced that, "it had executed two Letters of Intent to enter the rapidly growing Massachusetts market. CLS looks forward to the opportunity to enter the Massachusetts market, which has been operating as a legalized medical jurisdiction since 2015 and has approved legalized recreational use. Massachusetts has a population of 6.9 million people as compared to 5.6 million people in Colorado. Massachusetts is also centrally located to the dense population of New England with a less than 100-mile drive from Rhode Island, Connecticut, New York, New Hampshire and Vermont. In 2017, Colorado generated $1.5 billion in legalized marijuana sales and had over 500 licensed dispensaries and over 700 licensed cultivation facilities. Massachusetts currently has issued only 39 licensees.
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Jeff Binder, Chief Executive Officer of CLS Holdings USA, commented, "We are extremely excited to have the opportunity to enter the Massachusetts market. It's something we have been eyeing for a long time given the attractive characteristics and recent approval of adult-use cannabis. This opportunity fits into our stated objective of entering markets that are on the cusp of implementing a robust adult use market."
Canopy Growth Corporation recently announced that it had entered into an agreement to acquire the assets of ebbu, Inc., an Evergreen, Colorado-based hemp researcher. The transaction will complement and accelerate multiple core verticals operating under Canopy Growth's group of companies. Intellectual Property and R&D advancements achieved by ebbu's team apply directly to Canopy Growth's hemp and THC-rich cannabis genetic breeding program and its cannabis infused beverage capabilities. Additionally, ebbu's IP portfolio will contribute to the clinical formulations program being executed by Canopy Health Innovations, a wholly owned subsidiary of the Company.
Canopy Growth operates a rapidly emerging, field-scale hemp operation based in Saskatchewan and by applying ebbu's IP, the Company has the potential to vastly reduce the cost of CBD production, a sought-after cannabinoid in both the wellness and medical spaces. "Beyond the technological edge this transaction provides, we are pursuing this acquisition because Canopy shares ebbu's core ethos of building consumer trust," stated Mark Zekulin, Co-Chief Executive Officer & President, Canopy Growth. "We collectively believe consumer trust is achieved by driving the scientific agenda needed to build predictable, repeatable outcomes and layering on brand power."
Aphria Inc. recently announced that it had completed its first shipment of cannabis oil to its Argentina-based subsidiary ABP, S.A., a pharmaceutical import and distribution company. Aphria acquired ABP last month when the Company closed its acquisition of LATAM Holdings Inc., expanding the Company's global footprint to include a leading presence in Latin America and the Caribbean. "Argentina will play a foundational role as Aphria cements its leadership in medical cannabis throughout the region," noted Vic Neufeld, Chief Executive Officer of Aphria. "Aphria and ABP, in close partnership with the Argentinean government, continue to advance opportunities for medical cannabis in the country, including the potential for in-country cultivation. "
KushCo Holdings, Inc. recently announced it had signed an exclusive sales and innovation agreement with ExtractionTek Sales, LLC, dba. ExtractionTek Solutions , a provider of closed loop hydrocarbon extraction equipment, based in Colorado. The reciprocal agreement is designed to drive additional client expansion for both companies through their complementary operations. "Our agreement with ETS will allow us to capitalize on the growing demand for closed loop hydrocarbon extraction by businesses that ultimately need solvents and hydrocarbon gases, generating additional opportunities for our aggressive customer expansion," commented Jason Vegotsky, the President of Kush Supply Co.
Terra Tech Corp. recently announced that it had purchased a retail property in downtown Las Vegas. The Company plans to convert the building into a Blüm retail dispensary, focused on providing the highest quality medical and adult use cannabis to the Nevada market.
Derek Peterson, Chief Executive Officer of Terra Tech, stated, "We remain committed to growing our footprint in Nevada, which remains a lucrative market for the cannabis sector.
The building is located in the heart of the booming Downtown Las Vegas trade area, an area in which we did not previously have a presence but which benefits from high foot traffic. Last year, 32 percent of the visitors to Las Vegas visited the downtown area. Of those, 59 percent said the main reason was to visit the Fremont Street Experience. We are pleased to have secured this building, which has great street-front visibility, and expect that, once it has been rebranded and fully-licensed under our recognizable Blüm brand, it will contribute meaningfully to the Company's revenue growth."
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