Bowling a Double – Canopy Growth Corporation Strikes Again

It's been a milestone week for Canopy Growth Corporation (TSX:WEED), after the company announced that it had received a new licence from Health Canada permitting it to grow cannabis at an outdoor site in northern Saskatchewan. Hours after receiving the licence, the first cannabis cuttings were already being planted at a 7 million sq. ft. (160 acres) secure cultivation field in the province.

The new licence expands Canopy Growth's diversified Canadian footprint and complements its existing indoor and greenhouse facilities to provide a leading balance of facilities to produce low cost input materials for value-add products, while ensuring more sophisticated growing operations for in-demand flower products. The outdoor cannabis grow operation in Saskatchewan is in addition to Canopy Growth's major hemp production platform, which scaled up from the 4,000 acres mentioned above to over 5,000 acres in 2019.

Once the entire outdoor cannabis cultivation, production and extraction system is fully licenced and incorporated into Canopy Growth's current operational platform, it will produce cannabinoids at scale to support value-add products like beverages, chocolates, and vape devices at higher margins than are achievable using inputs from indoor and greenhouse facilities, which are optimized to produce high quality flower products.

"At this stage in the summer planting season we view this as a pilot and ramp up project for outdoor cannabis cultivation, though the team will do everything it can to deliver low cost yields this year."

– President and co-CEO of Canopy Growth, Mark Zekulin

In the same week, Canopy Growth also announced that it had completed a transaction to acquire Saskatoon-based bio-product extractor KeyLeaf Life Sciences, and its related entities and intellectual property.

Canopy Growth has been working closely with KeyLeaf—formerly known as POS Bio-Sciences—as a trusted partner building out extraction processes and technology for the past year as it refines its scale extraction model for Canadian and global markets. As previously disclosed, Canopy Growth assumed control of KeyLeaf for accounting purposes in November 2018.

As such, KeyLeaf's financial results were consolidated in the Company's fiscal 2019 financial statements. Through the transaction the Company is acquiring a large-scale Canadian extraction facility as well as an extraction-related facility in the United States to support the Company's U.S. CBD expansion.

Canopy Growth CEO, Bruce Linton, outlines the company's $3.4 billion acquisition of Acreage Holdings.

 

 

Charlotte's Web Holdings (TSX:CWEB)—the market leader in hemp CBD extract products—reported its final hemp planting for its 2019 growing season.

In order to meet growing demand from consumer and retail channel partners, total acres planted for 2019 has been increased to 862, an 187% increase from 300 acres planted in 2018.

In 2016, 2017 and 2018, the Company produced 41,000 lbs., 63,000 lbs. and 675,000 lbs of dried hemp biomass respectively. Charlotte's Web uses an inventory model whereby it grows more hemp than it needs for the subsequent year to minimize the impact of farming risks and product shortfalls against forecasted rapid market growth. Dried hemp can be stored for years, with even more longevity in its extracted form.

"Our leading CBD hemp varieties under cultivation today are the foundation of our 2020 production plan. Tens of thousands of Americans have come to rely on Charlotte's Web products daily making it essential that our products are always available, efficacious and consistent day-to-day, bottle-to-bottle, year-to-year."

– CEO of Charlotte's Web, Deanie Elsner

 

 

Tilray Inc (NASDAQ:TLRY), a global pioneer in cannabis research, cultivation, production and distribution, announced it has imported medical cannabis oral solutions in bulk into the United Kingdom from its Good Manufacturing Practices (GMP)-certified facility in Canada. This export allows Tilray to provide authorized U.K. patients in need with a locally maintained supply of medical cannabis oral solutions.

In September 2018, Tilray announced the successful import of Tilray 2:100 medical cannabis oil for a pediatric patient in need in the United Kingdom. The company's 2:100 cannabis oil was supplied via a government-approved special access program following the U.K. Home Secretary's historic announcement that declared prescriptions of cannabis-derived medicines legal for patients with an exceptional clinical need.

Tilray has six medical cannabis products approved for medical use in the U.K. that can be made available to patients with medical cannabis prescriptions obtained through private practice or the National Health Service. The company anticipates supplying a variety of cannabidiol (CBD)-dominant, tetrahydrocannabinol (THC)-dominant and balanced oral solutions for patients looking to use medicines derived from cannabis.

Tilray CEO, Brendan Kennedy, discusses the company's acquisition of Manitoba and where the hemp and CBD markets are headed.

 

 

MGC Pharmaceuticals (ASX:MXC) signed a new distribution agreement with a German-based company for the distribution of its phytocannabinoid products in Europe.

The agreement is with a fully owned subsidiary of MedVec known as Mexacare, to distribute MGC Pharma's epilepsy product CannEpil, and dementia and Alzheimer's product CogniCann in Germany, Austria and Switzerland.

Knut Butzinger, founder of Mexacare, said that they'd been looking for a strategic partner with a pharmaceutical strategy around phytocannabinoid products. The two year agreement will see MGC's products sold under its own brand and as white labels.

"I am confident that this agreement with Mexacare will enable us to capitalise on this extraordinary market opportunity as we effectively commercialise MGC Pharma's products in the region via Mexacare's established network of pharmacies and medical professionals alongside its diagnostic technology that is expected to result in faster, cost effective prescriptions."

– Cofounder and managing director MGC Pharma, Roby Zomer

 

 

Fire & Flower Holdings Corp (TSXV: FAF), announced its financial and operational results for the thirteen weeks ended May 4, 2019. The company recorded system sales of $10,895,626 and recognized revenue of $9,538,348 at a gross margin of 38.5%, compared to $Nil for the thirteen weeks ended May 5, 2018. Fire & Flower also received $34,544,793 of net proceeds from its private placement, which closed on November 1, 2018.

In May 2019, the company acquired 4 retail cannabis store licenses in Saskatchewan, 2 licenced retail cannabis stores in Vancouver, British Columbia—which it intends to open at its earliest opportunity—along with a proposed cannabis retail store in the town of Banff, Alberta.

On June 6, 2019 Fire & Flower also announced a bought deal private placement for total gross proceeds of $25,000,000 with an agents' option for additional gross proceeds up to $5,000,000.

"We look forward to welcoming the local communities into our store and establishing the Fire & Flower brand across all markets where private cannabis retail is permitted."

– Fire & Flower's Chief Executive Officer, Trevor Fencott

The company also hit another milestone this week, following the opening of the 21st Fire & Flower branded, licensed cannabis retail store across the provinces of Alberta, Saskatchewan and Ontario.

The new Fire & Flower stores will be located at 800 Pine Road, Strathmore, Alberta and at 5241 50 Avenue, Vegreville, Alberta. This announcement follows Fire & Flower's previous news release on May 31, 2019 announcing the Company's near-term store rollout schedule.

The CEO of Fire & Flower, Trevor Fencott, discusses the $50,000 generated by first day sales from its Ottawa cannabis store.

 

 

National Access Cannabis Corp (TSXV: META)—Canada's largest cannabis retailer according to provincial licensing statistics—provided the market with a corporate and retail sales update.

The company is successfully executing on its growth strategy and has achieved over $40 million in retail sales since legalization, with cumulative gross margin in excess of 31%. NAC is targeting to have 40 operating stores by the end of calendar 2019.

With operating stores in 3 provinces, NAC is the national leader in retail cannabis. Its near-term growth initiatives include, opening an additional 5 META store locations in Manitoba by the end of Q4 2019, along with 7 fully-built stores in Alberta. Meanwhile, the company has also continued its efforts to obtain licenses in British Columbia and Ontario.

"With the recent filing of our preliminary base shelf prospectus to provide us with flexible access to capital, we are confident in our ability to execute on our strategic growth initiatives, and that our revenue momentum will continue for the foreseeable future."

– Mark Goliger, CEO of NAC

 

 

CannTrust Holdings Inc (TSX: TRST) revealed that it is establishing operations in the United States, starting in the State of California. CannTrust has signed a non-binding letter of intent that will provide access to over 3,000 acres of farmland for hemp production with Elk Grove Farming Company LLC, to secure low-cost hemp with high cannabidiol content. CannTrust and Elk Grove will each have 50% ownership of a new entity.

The opportunity in the U.S. for CannTrust is to become a trusted supplier of consistent, standardized and high-quality hemp-derived CBD formulations at scale. The company believes there will be increasing demand for hemp-derived CBD formulations from international retailers and product manufacturers, and those organizations require expertise in genetics and value-add processing to ensure products are desirable and meet the highest safety standards.

CannTrust will guarantee the off-take of biomass produced by the Joint Venture, and will use its expertise to process, formulate and sell hemp-derived CBD products in U.S. markets where such sales are lawful. As an experienced operator meeting rigorous regulatory standards, CannTrust is well positioned to execute on this cultivation, processing and formulation strategy with the goal of becoming a leading supplier of hemp-derived CBD products in the U.S.

CannTrust Holdings CEO, Peter Aceto, discusses Q3 revenue and addresses concerns about the company's expansion plans in Pelham, Ontario.

 

 

Mile High Labs LLC, announced the purchase of a 400,000-square-foot pharmaceutical production facility in Broomfield, Colo. The transaction was closed on June 19 and includes the land, labs, building and ready-to-use finished products manufacturing equipment.

The Broomfield facility is fully operational, which will allow Mile High Labs to begin production in the near term of private label products including tinctures, capsules, tablets, topicals and gummies. The facility includes equipment and infrastructure for research and development, quality assurance, bottling, filling, packing, warehousing, labeling, shipping and compliance monitoring.

Colorado is the center of the hemp industry and, within it, the Mile High Labs campus will be its epicenter. The company plans to create an environment for advanced training, research and collaboration within the industry.

"This transaction is the largest infrastructure purchase in the history of the CBD market and it's only the beginning for Mile High Labs. Over the coming quarters, we plan to leverage this tremendous infrastructure to build the global center for CBD products manufacturing."

– Chief Technology Officer and Founder of Mile High Labs, Stephen Mueller

 

 

In the wake of THC Global (ASX: THC) reporting it has secured its medicinal cannabis manufacturing license, partner Eve Investments (ASX: EVE) noted the license now paves the way for the duo to advance existing site lease, tea-tree and cannabis offtake agreements. Last week, THC reported its wholly-owned subsidiary Canndeo had been granted a medicinal cannabis manufacturing licence from the Australian Office of Drug Control.

The license completes THC's 'farm to pharma' vertical integration strategy with the company already holding research and cultivation permits. Via its wholly-owned subsidiaries Jenbrook and Meluka Honey, Eve has agreed to allow THC to grow cannabis at its tea tree plantation site in New South Wales, which is more than 2,000 acres.

In return for allowing THC to grow medicinal cannabis at its plantation, Eve will have access to THC's medicinal cannabis for incorporation in its products including Meluka Honey. Additionally, THC's operations in Australia and Canada, along with its planned expansion into Asia and other regions could offer Eve a platform to distribute its Meluka Honey cannabis and tea tree honey products.

The CEO of THC Global, Ken Charteris, updates investors on the manufacturing license granted to the company by the Australian Office of Drug Control.

 

 

Organigram Holdings Inc (TSXV: OGI) was given approval from Health Canada for the licensing of 17 additional cultivation rooms within the Phase 4A/4Bperimeter of its building.

The approval of the new cultivation rooms represents 14,000 kg per year of increased target production capacity for total licensed production capacity of 61,000 kg per year (down from 62,000 kg as a result of the room moved from Phase 4A to 4B). This change was made to optimize licensing and construction scheduling and continuity.

As a result of this approval, cannabis plants will be moved into these new cultivation rooms on a rolling basis commencing immediately. The Company anticipates being able to begin to harvest product from these newly onboarded rooms by the end of September, based on its historical cultivation timelines with the ability to ship dried flower as early as mid-fall of 2019.

"The expansion of our facility and production capacity will help ensure we have additional product for extraction for the launch of the edibles and derivatives market before the end of 2019."

– The CEO of Organigram, Greg Engel

 

 

Curaleaf Holdings Inc (CSE: CURA) announced that it had made two separate acquisitions in Arizona for combined consideration of $25.5 million. Curaleaf entered into an agreement to acquire Glendale Greenhouse—a vertically integrated cannabis business operating a cultivation and processing facility—as well as a prime retail location, with plans to rebrand as Curaleaf after the transaction closes.

The Glendale Greenhouse production facility is a 20,000 square-foot, multi-level cultivation center which is capable of producing 3,600 pounds of flower annually. Its 1,500 square-foot dispensary, located directly off the Agua Fria Freeway with 90,000 cars passing daily, can be expanded to nearly 5,000 square-feet. The facility also operates a state-of-the-art CO2 extraction lab and a kitchen, which is already producing various edible lines such as mints, gummies, brownies and ice cream, with additional products expected to launch later this year.

Additionally, Curaleaf agreed to acquire Phytotherapeutics Management Services, LLC, which operates under the license of Phytotherapeutics of Tucson, LLC. Upon close of the transaction, the license associated with the dispensary will be applied to a newly developed, Curaleaf flagship dispensary.

The transactions had a combined consideration of $25.5 million, of which $3.5 million is in stock and $22 million in cash.

Curaleaf CEO, Joseph Lusardi, outlines the company's major milestones and continued revenue growth.

 

 

Next Green Wave Holdings Inc (CSE: NGW) closed a non-brokered $2.75 million financing deal at a price of $0.25 per common share, and in exchange will issue a total of 11 million shares of NGW to the Cannabis Growth Opportunity Corporation.

In addition, the company will subscribe to a private placement to acquire $1.25 million common shares of CGOC at a price of $1.72 per share.  The Financing will incur no finder's fees and replaces its most recent offering announced on June 19, 2019. Both companies respectively, have entered into a voting and resale agreement to hold their shares until February 1, 2020, as well as vote in favour of management on any issues requiring a shareholder vote.

The proceeds will be used to advance the Company's strategic partner alliances in California and provide working capital to accelerate its operations.

"Due to comparative weakness in the cannabis sector while markets adjust and earnings expectations naturally become heightened, we have chosen to collaborate with a strong industry partner who shares our vision and will assist us to move towards revenue at the earliest possible opportunity – our near-term focus is on production, product roll-outs and sales – we believe that the Company can achieve this milestone without further financing. "

– CEO and Executive Director of Next Green Wave, Leigh Hughes

 

 

Harvest Health & Recreation Inc (CSE: HARV), announced the results of its June 26, 2019 annual general and special meeting of Harvest shareholders held to approve, among other things, certain matters relating to Harvest's previously announced definitive agreement for its acquisition of Verano Holdings, LLC.

In addition, the members of Verano approved the transaction overwhelmingly with 100% of the votes cast at a special meeting of its members on June 26, 2019.

The transaction remains subject to, among other conditions, court approval, Canadian Securities Exchange approval, approval of the Verano members, certain additional regulatory approvals customary for a transaction of this nature, and the satisfaction or waiver of all closing conditions.

The transaction is expected to close later this year.

Harvest Health & Recreation CEO, Steve White, discusses the impact of consolidation on MSO valuations.

 

 

Finally, MediPharm Labs Corp (TSXV: LABS) announced that its wholly owned subsidiary, MediPharm Labs Inc, had entered into purchase agreements to secure a substantial 9,000 KG of dried cannabis supply from multiple cultivators in the last three weeks of June.

In addition to MediPharm Labs' ongoing procurement of cannabis biomass for existing contracts, this bulk purchase is expected to contribute to increased production for future sales and position the Company to meet the mandatory minimum monthly volume requirements to win new large white-label contracts.

At the half year mark in 2019, and only seven months since receiving its sales license, MediPharm Labs has expanded its cultivation relationships to secure and scale up its own supply of dried cannabis that has also increased the total market supply of cannabis concentrates for white label, value-add products including bottled oil, gel caps and upcoming vape pen devices to be legalized later this year.

"As the industry continues to mature, with additional cultivation supply sources coming online, we continue to focus on building on our specialized extraction skill set to provide a stable source of high quality, cannabis concentrates for the growing demand of value-add concentrate based products for medical and recreational consumers."

– The CEO of MediPharm Labs, Patrick McCutcheon

 

 

Watch this space for future weekly updates.

Hugo Gray
Hugo Gray

Hugo Gray is a Melbourne-based journalist with a body of work that covers a diverse range of topics, including immigration law, sex technology, and now the rapidly expanding cannabis industry.

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