As Legalization Looms, Canadian Cannabis Players Make Moves

With recreational cannabis on the brink of becoming legal in Canada, major Canadian cannabis companies are making strategic moves to strengthen their positions.

While the Canadian market for recreational cannabis will be sizable, big Canadian cannabis producers like Aurora Cannabis, Canopy Growth Corp., Tilray, and Aphria are positioning to become leading suppliers of cannabis products worldwide.

Cannabis being illegal on the federal level has hampered the industry’s growth in the U.S., whereas Canadian cannabis ventures have benefited from the support of the Canadian government.

“Our government embraces us, and we are seeing a boom in entrepreneurism in this industry,” said Rob Anderson, the former CEO of The Green Organic Dutchman (TGOD).

The cannabis-friendly environment has led to Canada become an international cannabis hub and a hotbed of cannabis cultivation and investment. “Weed is to Canada what Silicon Valley is to the U.S. We will see a lot more money flowing in,” said Jason Spatafora, co-founder of Marijuanastocks.com.

The New York Times echoed this view, asserting that “a financial boom not seen since the dot-com mania of the late 1990s has overtaken Canada.”

TGOD Wheeling and Dealing

Among the Canadian cannabis ventures making waves, The Green Organic Dutchman (TGOD) has received kudos from analysts for “executing flawlessly.” An organic-only business strategy and series of shrewd deals has helped catapult TGOD to the top tier of cannabis ventures in a short span of time.

In June 2018, TGOD announced that it had created a new global division to focus on the beverage industry. To execute this plan, TGOD is building a 40,000-square-foot state-of-the-art research and development facility and a 287,245-square foot cultivation facility capable of producing 40,000 kilograms of premium organic cannabis for its beverages.

To create cannabis-infused beverages, TGOD entered into an exclusive agreement with Stillwater Brands to license its RIPPLE SC (Soluble Cannabinoids) and other food and beverage technologies. RIPPLE SC makes it easier to infuse CBD oils into beverages and edibles.

TGOD also acquired HemPoland, a leading European manufacturer and marketer of premium organic CBD oils. Technical 420 called this acquisition “a game changer,” noting that HemPoland provides TGOD with a European gateway with distribution channels to over 750 million people and sales in more than 700 locations across 13 countries.

Power Cost Gambit

In a previous post, we discussed the critical importance of minimizing cannabis production costs as cannabis prices continue to decline. TGOD has devised a clever strategy to minimize power costs, which is, as US News relates, a major cost factor in growing cannabis.

To reduce its power costs to a fraction of what its competitors pay, TGOD has entered into partnerships with provincial power suppliers. A partnership with Hamilton Utility Corp. has enabled TGOD to reduce its power cost from 13 cents per kilowatt hour to less than 5 cents at its Hamilton, Ontario, facility. A partnership with Eaton Corp. is enabling TGOD to obtain power at 75% less than its competitors. At its Quebec plant, TGOD is paying less than 4 cents per kilowatt hour.

All of these moves have enabled TGOD to position itself as a platform to launch cannabinoid-infused food and beverage products globally as new markets legalize. As equities.com notes, this puts TGOD in a prime spot as more large-scale beverage and alcohol companies enter the market.

Aurora Roars

Another Canadian player making big moves is Aurora Cannabis, which in January took a 17.6% stake in TGOD with an option to increase its share to 51%. Aurora made news earlier this year by acquiring MedRelief for $2.5 billion in what Reuters called “the biggest deal yet to unify major Canadian cannabis growers.” The MedRelief acquisition followed on the heels of Aurora’s acquisition of CanniMed for $890 million, which made Aurora “the biggest pot producer, by market value, in the world.”

Aurora also expanded its cannabis production capability with the opening of two new state-of-the-art cannabis production facilities–Aurora Sky, capable of producing 8,000 kilograms of cannabis per month, and Aurora Vie in Montreal, capable of producing 4,000 kilograms per year.

To optimize its customer experience, Aurora inked a deal with Shopify to revamp its e-commerce platform, a move that will help Aurora sell its cannabis wares globally as legalization continues to spread. Canopy Growth and Hydropothecary also have employed Shopify e-commerce platforms to sell to medical patients.

Acting Locally and Globally

As Technical 420 notes, while the Canadian recreational market is a big opportunity for the cannabis producers, the global market represents an even more significant opportunity. This is why the major Canadian cannabis producers are taking a two-pronged approach by establishing production plants and retail outlets within Canada while expanding their reach beyond Canada into worldwide markets.

In an August post, we described how Canadian cannabis producers and alcohol distributers were making deals to establish cannabis retail outlets for the recreational market. Cronos Group has taken a similar route by forging an agreement with MedMen to establish retail stores for the recreational market in Canada.

To beef up its retail presence, Canopy Growth Corp. acquired Hiku Brands, which sells a number of leading cannabis brands and operates retail outlets in provinces throughout Canada.  Canopy Growth also extended its footprint in South America beyond Brazil and Chile by forging a deal with Spectrum Cannabis Columbia.

Aphria also made a move to expand into Latin America and the Caribbean by acquiring Scythian Biosciences Corp.’s  Latin American and Caribbean assets. The deal gives Aphria exposure to more than 300 million people in Colombia, Argentina, and Jamaica.

Aurora Cannabis obtained a 51% stake in Aurora Nordic that will help extend its reach into Scandinavian and broader European markets. Aurora Nordic has a license to produce cannabis in Denmark, which Aurora said will give the company a major advantage as one of few companies with a license to cultivate in Europe. Aurora has forged a number of international deals, including agreements to supply medical cannabis to Germany, Italy, and Australia.

Getting Listed

This past February, Cronos Group became the first cannabis company to be listed on Nasdaq in the United States. In May, Canopy Growth became the first cannabis company to list on the New York Stock Exchange. At the same time, liquor giant Constellation Brands invested $4 billion in Canopy Growth.

Tilray became the third cannabis stock to be listed on a U.S. stock exchange when it joined Nasdaq in July. Tilray went even further by being the first pure-play marijuana company to go public on a major U.S. exchange. Tilray grows Cannabis in Canada and Portugal and distributes medical cannabis products in 10 countries, including Australia, Canada, and Germany.

If Tilray CEO Brendan Kennedy is correct, the cannabis companies focusing on creating cannabis-infused beverages are on the right path. Kennedy said he sees a future in which only 10% of cannabis will be smoked, with the 90% lion’s share being consumed as cannabis beverages. “Instead of alcohol, they’ll have cannabis,” said Kennedy. “And they’ll have a low, or no-calorie product with no hangover.”

As the maker of the most modern, integrated, and scalable cannabis manufacturing solution, MaxQ has deep cannabis industry expertise. Contact us to learn more about the latest trends and management solutions in the cannabis manufacturing industry. 


Hemp Makes Legal Comeback as CBD Oil Demand Surges

“Reversal of fortune” is the perfect way to describe the legal and economic comeback of the hemp plant in the United States. Banned and abandoned by farmers for decades in the U.S., the legal resurgence of hemp coincides with an exploding demand for CBD oil, which is fueling what is being called a hemp gold rush.

The ability to grow and sell hemp legally also promises a reversal of fortune for farmers across the United States, including cannabis growers in states in which oversupply is squeezing margins and driving growers out of business.

Hemp also represents new revenue opportunities for marijuana manufacturers, which already have the know-how and infrastructure in place to extract CBD oil from hemp. Marijuana manufacturers could easily add hemp to their product lines, either growing hemp themselves or serving as the processing plants for the many hemp farms sprouting up across the country, or both.

Hemp Rebound

Hemp has a long history as a versatile plant with a great many uses. In the U.S., hemp was a lucrative and widely cultivated plant before it was declared illegal by the Marijuana Tax Act in 1937. Hemp made a brief legal comeback during World War II before being banned again. Even though it has been illegal to grow hemp in the U.S., it has been legal to import it.

Hemp’s current comeback stems from the 2014 Farm Bill, which legalized hemp growing in the U.S. in the form of state supervised research programs. The 2014 Farm Bill gave each state the power to set the parameters for their hemp programs.

Today, 39 states allow industrial hemp cultivation, meaning hemp with less than 0.3% THC content by weight. Some states only allow academic research, while others allow growing, marketing, and selling hemp and hemp-extracted CBD oil.

Hemp’s full legal comeback is on the verge of becoming a reality with the U.S. Senate passing the 2018 Farm Bill, which includes the Hemp Farming Act of 2018. The bill removes hemp from being designated as a controlled substance, legalizes the plant under federal law, and allows CBD to be sold legally in all 50 states.

As Canagreed reports, the legalization of hemp would open the floodgates for investment and market development. With the medical benefits of CBD fueling the demand, a host of industries are launching efforts to bring CBD drugs, beverages, edibles, and lotions to market.

Hemp Image Rehab

Hemp, which has for decades been lumped together with marijuana and stigmatized, is now being hailed as a “supercrop” and a savior for farmers across America. Republican leadership, which has been among the staunchest opponents of legalizing cannabis, has become a major hemp industry booster, including Senate Majority Leader Mitch McConnell.

As High Country News notes, conservative politicians from Oregon to Alaska are increasingly championing hemp “as a potential lifeline for struggling rural communities.”

States Embrace Hemp

The hemp movement is gaining momentum in states from coast to coast. Bob Crumley, president of Founder’s Hemp, expects hemp to be a $1 billion industry in North Carolina, surpassing the state’s $800 million tobacco crop. Nevada, Vermont, and Wisconsin also are hotbeds of hemp growing activity.

The Buffalo News describes how hemp is taking off in New York State, where more than 60 farms and businesses have received hemp research permits as part of a state pilot program. The Des Moines Standard describes how Iowa farmers are itching to grow hemp, a plant that was once widely farmed in the state. Oklahoma farmers also are bullish on growing hemp.

Hemp is seen as the salvation of cannabis farmers who have been suffering from declining cannabis prices. Reports describe how cannabis growers in Oregon are turning to hemp as cannabis prices continue to plummet and the demand for CBD oil explodes.

Hemp CBD Market Trajectory

Many industry observers believe the hemp CBD market will be huge. Among them is the Brightfield Group, which believes “the hemp CBD market is going to skyrocket and is here to stay.”

The Brightfield Group says its forecast of a $22 billion hemp CBD market by 2022 is conservative and is based on interviews with hundreds of people in the industry, surveys of thousands of consumers, and analysis of millions of data points.

According to U.S. News, CBD oil commands thousands of dollars per kilogram, and farmers can make more than $100,000 an acre growing hemp plants to produce CBD oil.

“Word on the street is everybody thinks hemp’s the new gold rush,” said said Jerrad McCord, a farmer who grows marijuana in Oregon.

The promise that people see in hemp is reflected in the many new hemp ventures, commissions, and societies that are sprouting as fast as the plant itself. Among those leading the charge is Shane Davis, an evangelist for hempenomics, the idea that hemp “can create massive streams of revenue, liberate communities, and create economies.”

As the maker of the most modern, integrated, and scalable cannabis manufacturing solution, MaxQ has deep cannabis industry expertise. Contact us to learn more about the latest trends and management solutions in the cannabis manufacturing industry. 

 


Cannabis Price Crash Puts Manufacturers in Peril

The price of legal cannabis has been dropping at a steady rate, and the outlook is for a continuing decline before the market levels off. Small cannabis manufacturers and dispensaries are being driven out of business, and large manufacturers that fail to take measures to minimize production costs are at risk of meeting the same fate.

As marijuanaventure.com warns, “When the market shakes out in five years and people stop selling at a loss, companies capable of producing high-quality cannabis at an industrial scale and with low production costs will be the only players left in the game.”

Revenues Up, Prices Down

Although cannabis revenues have been rising rapidly in states in which cannabis is legal, cannabis prices have been declining because of overproduction. In Colorado, for example, the Department of Revenue reported cannabis sales of $1.49 billion in 2017, an increase of almost 15% from the previous year and more than double the revenues reported in 2014. Over the same time period, however, cannabis prices in Colorado declined from around $200 an ounce in 2014 to less than $100 (including tax) in 2018.

The average wholesale price of cannabis per pound has declined from $2,000 per pound in 2015 to about $1,000 in 2018, with producers in some states having to sell for less than $500 per pound. One grower in Oregon was forced to sell his excess cannabis at a mere $100 per pound at auction.

The Guardian describes a bleak scene in Oregon in which overproduction has pushed consumer prices down to $6 an ounce.  Unable to remain profitable, mom-and-pop farms are selling out to out-of-state investors as the market becomes increasingly owned by a few big players. Many non-growing dispensaries also are losing money and selling out to large cannabis chains.

It appears that the cannabis industry is following the same consolidation path as the grocery industry in which small grocery stores were put out of business by big grocery chains.

Control Production Costs or Perish

As more and more large cannabis ventures enter the market and expand their businesses, only manufacturers that can keep production costs low will be able to survive.

As marijuanaventure.com warns, “by 2025, or maybe even as soon as 2020, this industry will be based around per-pound production costs in the $100 range, or potentially lower, and companies that can’t compete at that level will be swiftly left in the dust.”

As cannabis management consultant Rich Cardinal points out, the only way to create facilities capable of producing low-cost, high-quality cannabis is through the implementation of efficient growing methods and investments in advanced production models that employ state-of-the-art automation.

Accounting Practices Are Key

Critical to controlling costs in the manufacturing and distribution of cannabis are stringent and integrated accounting practices, coupled with the use of advanced analytics to track costs, perform forecasts, and maximize efficiency.

As cannabis accounting specialist Andrew Hunzicker observes, many cannabis companies find themselves plagued with financial struggles stemming from the complexity of cannabis accounting, including cost controls within the growth, manufacturing, and retail phases, as well as compliance and tax issues.

Besides establishing solid accounting practices and procedures, says Hunzicker, cannabis businesses must recognize the importance of deploying cannabis management software tailored to the needs of their industry.

The crucial need to control costs is why cannabis ventures like Liberty Health Sciences, Acreage Holdings, and Medmen are investing in facilities that incorporate the most modern, state-of-the-art growing and production methods, including manufacturing management software capable of streamlining and maximizing accounting operations.

As Hunzicker and other experts point out, these and other forward-looking operators are making the investments in systems that enable them to achieve the low production costs that will be required to survive into the future.

This is exactly what advanced management software like MaxQ Cannabis was designed to do—enable large-scale cannabis manufacturers to minimize production costs, streamline operations, and maximize profitability, including integrated and automated accounting with cost controls and compliance throughout all phases of cannabis growth, manufacturing, and distribution.

As the maker of the most modern, integrated, and scalable cannabis manufacturing solution, MaxQ has deep cannabis industry expertise. Contact us to learn more about the latest trends and management solutions in the cannabis manufacturing industry. 


Cannabis and Alcohol Industries Cozy Up Through Cash

As the saying goes, money talks—and the large amount of money being invested by alcohol and cannabis companies in joint ventures speaks volumes about the direction the cannabis industry is taking.

This trend was underscored by the recent announcement that liquor giant Constellation Brands was investing $4 billion in Canada’s Canopy Growth Corp. This massive cash infusion follows a $190 million investment by Constellation Brands in Canopy Growth Corp. in 2017.

Such a major investment by Constellation Brands is a solid vote of confidence in the cannabis industry, and no doubt is driven by the cannabis market’s expanding legalization and explosive growth worldwide.

We should expect to see the alcohol and cannabis industries become increasingly more integrated to create a large recreational cannabis and alcohol conglomerate.

Neutralizing the Cannabis Threat

As the legal cannabis market continues to expand, consumption of cannabis is taking a large bite out of alcoholic beverages sales. Studies show that alcohol consumption has declined by an average 15% in states in which cannabis has become legal.

As Money reported, recent studies show that U.S. consumers now spend as much on legal marijuana as they do on alcohol. In Aspen Colorado, cannabis sales surpassed those of alcohol in 2017, with licensed cannabis vendors taking in $11.3 million, topping the $10.5 million rung up by liquor sales.

To counter the threat to their revenues, major alcoholic beverage distributors like Constellation Brands are investing in cannabis ventures and developing cannabis beverages. At the same time, cannabis companies are investing in alcohol companies as a ready-made path to acquire retail outlets.

Beer Brands Field Cannabis Beverages

One way in which alcohol companies are combatting the cannabis threat, while at the same time capitalizing on the cannabis opportunity, is to produce non-alcoholic cannabis beverages. Beer maker Heineken introduced a non-alcoholic cannabis beverage called Hi-Fi Hops in California under its Lagunitas brand in July.

Molson Coors Canada, meanwhile, announced a joint venture with The Hydropothecary Corp., a leading Canadian producer of medical cannabis, to develop a line of non-alcoholic cannabis beverages.

Molson Coors is among the beer makers that have cited cannabis consumption as a risk factor to their business in 10-K filings with the U.S. Securities and Exchange Commission.

Blue Moon Brewing founder Keith Villa also has formed a new company called Ceria to produce THC-infused non-alcoholic craft beers. Villa has been working with cannabinoid research firm Ebbu to develop cannabis-infused beverages.

Province Brands in Toronto claims to have developed the first cannabis beer made exclusively using the marijuana plant, a beverage brewed without barley and using the stalks, roots, and stems of marijuana plants. Province also announced it was developing a new beer brewed from barley and infused with premium cannabis oil.

Liquor Stores Become Cannabis Outlets

With recreational cannabis becoming legal in Canada beginning October 17, Canadian cannabis producers are forging deals with alcohol distributors to acquire retail outlets. Aurora Cannabis in Alberta recently increased its previous $103.5 million investment in Alcanna, Canada’s largest liquor retailer, by another $34.5 million, upping its share of Alcanna from 19.9% to 25%, with an option to go to 40%. The agreement calls for Alcanna to open retail cannabis stores under the Aurora brand in provinces in which private retail is permitted.

Alcanna will build, own, and operate the new cannabis stores, which will carry a suite of brands from Licensed Producers, including Aurora’s MedReleaf and CanniMed products. According to Alcanna CEO James Burns, Alcanna will convert a number of its existing 230 liquor stores into cannabis retail outlets, as well as build new outlets, as it gains permission to operate cannabis outlets within Canadian provinces.

In a similar deal, Canadian cannabis producer Aphria signed an agreement with Great North Distributors, a Canadian subsidiary of Southern Glazer’s Wine & Spirits, to serve as the exclusive distributor for Aphria’s adult-use cannabis products throughout Canada. Aphria says the deal will give it 100% coverage of the cannabis retail market across Canada from the first day of legal adult-use marijuana sales.

Big Finance Enters Cannabis Fray

While Constellation Brands’ $4 billion investment in Canopy Growth is a huge event, of equal significance is the involvement of Goldman Sachs and Bank of America Merrill Lynch in the deal, Marijuana Business Daily reports.

As the report notes, the transaction appears to be the first mega cannabis investment to involve major U.S. financial institutions and is a move that represents a “transformational moment” for the cannabis industry.

“Wall Street can no longer ignore the pace, the amount of money being raised and the growth underway in this industry,” said Scott Greiper, vice president at Viridian Capital Advisors in New York.

A dark cloud hovering over the cannabis industry is the illegality of cannabis in the U.S. on the federal level, which is preventing financiers from investing in U.S. cannabis ventures. But there are signs of change, including bills introduced to legalize cannabis nationally.

Constellation Brands CEO Rob Sands told The Wall Street Journal that legalization of marijuana at a national level in the United States was “highly likely, given what’s happened at the state level.”

As the maker of the most modern, integrated, and scalable cannabis manufacturing solution, MaxQ has deep cannabis industry expertise. Contact us to learn more about the latest trends and management solutions in the cannabis manufacturing industry. 


Cannabis Miracle Drug Breaks Through Legal Barriers

In what is being hailed as a landmark decision and historic first, the Federal Drug Administration (FDA) has approved the first drug with an active ingredient derived naturally from the cannabis plant. The FDA approved the drug, called Epidiolex, because it was proven to be effective in treating patients aged two and older who suffer from some rare and severe forms of epilepsy.

Developed by GW Pharmaceuticals, Epidiolex is derived from cannabidiol (CBD), a component of marijuana that does not cause intoxication. The ruling is historic because it removes a longstanding stigma associated with marijuana and opens the door for other cannabis drugs to gain approval.

Cannabis Gaining Respect

Besides spurring further research, the approval of Epidiolex should engender a more relaxed and open-minded attitude towards cannabis drugs. We recently discussed the shifting attitudes towards cannabis by politicians and the general public as seen in the warm welcome being received by new cannabis manufacturing plants being built.

“This approval is historic in that it allows us, as a pharmaceutical company, to talk about this product in the way that pharmaceutical companies normally talk about their drugs,” said GW Pharma CEO Justin Gover.

Despite a wealth of evidence that cannabis has significant medical benefits, the U.S. Drug Enforcement Administration (DEA) still classifies cannabis as a Schedule 1 drug that has “no currently accepted medical use and a high potential for abuse.” Thus, Epidiolex must be approved not only by the FDA, but by the DEA as well before it can be legally dispensed.

GW Pharma CEO Justin Gover sees no problem in the DEA reclassifying cannabis, pointing out that because the FDA’s approval is a determination of an accepted medical use, the DEA must recognize this, and Epidiolex will not remain classified as a Schedule 1 drug.

Hurdles Remain

The recognition that untapped curative powers reside in the cannabis plant is a big step forward in the mainstreaming of cannabis. However, there are still a considerable number of legal hurdles and institutionalized anti-cannabis sentiment that cannabis researchers must deal with.

As researcher Jacci Bainbridge reveals, she and other cannabis researchers are frustrated by the requirements imposed on them, including extra paperwork, committees, planning, and inspections—hurdles, she says, that researchers studying heroin don’t even have to face.

Even as the pendulum swings towards the acceptance of cannabis, the debate about the risks and benefits of cannabis is still being waged. There also are politicians and pundits who continue to demonize cannabis. Although Canada’s Senate voted to legalize cannabis, the bill was passed “over the objections of Conservative senators who remained resolutely opposed,” the Montreal Gazette reported.

Opponents will have an increasingly uphill battle as the medical benefits of cannabis continue to mount. As The Week reported, “The evidence suggests cannabis is a relatively safe drug that provides a host of medical benefits.”

Drug Source Should Not Be an Impediment

As GW Pharma CEO Justin Gover observed, the focus should be on the effectiveness of a drug rather than its origins, pointing out that there are very few medicines prescribed because of their origin as opposed to what they can do for a patient.

Although the FDA’a approval of Epidiolex is a historic milestone, said Gover, when it comes to physicians prescribing the drug, it’s about the efficacy and safety profile. Besides the FDA’s approval of Epidiolex, physicians will recognize the importance of positive studies that were published in The New England Journal of Medicine and The Lancet, he noted.

What’s Next?

While cannabis has been found to provide relief for a good number of ailments, researchers have only scratched the surface in uncovering its potential uses. “It’s actually quite amazing how little we really know about something that has been used for thousands of years,” said Sachin Patel, a cannabis researcher at Vanderbilt University.

The FDA’s approval of Epidiolex has observers speculating as to what will be the next cannabis drug to win approval. GW Pharma says it is developing a number of potential new cannabis-derived drugs for epilepsy, glioblastoma, and schizophrenia.

Interestingly, Epidiolex is not the world’s first plant-derived cannabinoid prescription drug. That honor goes to another GW Pharma drug called Sativex, which has been approved for the treatment of spasticity due to multiple sclerosis in numerous countries outside the United States.

According to outsiderclub.com, a former GW Pharma medical director has left the company and is now chief medical officer at a new cannabis drug company that is developing a drug that kills cancer cells.

As the cannabis barriers continue to fall, it seems as if it will only be a matter of time the full spectrum of medical benefits are able to be discovered. As the Outsider Club reported:

“Marijuana is the real deal. It’s here to stay. Legalization timelines are being compressed and expedited. And it’s created hundreds of billions in new wealth.”

As the maker of the most modern, integrated, and scalable cannabis manufacturing solution, MaxQ has deep cannabis industry expertise. Contact us to learn more about the latest trends and management solutions in the cannabis manufacturing industry. 

 


A Big Shift in Attitude Is Positive for Cannabis Industry

The winds of change are blowing across the country as politicians and the public turn from hostility to a more accepting and welcoming attitude towards cannabis. The removal of political roadblocks is good news for cannabis manufacturers, as the market seems to have reached a tipping point with more and more states legalizing cannabis and the worldwide market expanding.

The expansion of cannabis manufacturing is continuing at a rapid pace throughout the United States. We’ve reported on new factories cropping up in Florida, Nevada, and California, and now another new plant is set to open in Cedar Rapids, Iowa, the second cannabis operation to open in that state.

Getting on the Cannabis Bandwagon

As the number of cannabis manufacturing plants increases, we are seeing a steady stream of stories about changes to state laws, new permits being issued to manufacturers, and comments from state officials and local populations about the positive impact the cannabis industry is having on their region.

This turnaround is significant because even medical cannabis has taken a hit from politicians who have conflated medical and recreational marijuana while demonizing cannabis to the public. The tone is changing as we hear positive statements from politicians like Cedar Rapids city manager Jeff Pomeranz, who had only praise for the new cannabis plant in his district.

“It’s twenty-one new jobs, manufacturing in Cedar Rapids, it will be good for the people of Iowa, and it makes sense for Iowa’s second-largest city to have a plant,” said Pomerantz.

The Cedar Rapids plant is being built by Iowa Relieve, a subsidiary of Acreage Holdings, one of the largest medical cannabis manufacturers, with cultivation, processing, and dispensary operations in 12 states. Like MedMen and other major cannabis manufacturers, Acreage Farms is expanding rapidly and has plans to set up operations in New York, Florida, and Maryland this year. The company also has plans to become a publicly traded company in Canada.

Citing the growing recognition of the benefits of medical cannabis, Acreage Farms observed that, “As cannabis becomes legal across the country, we’re witnessing a pivotal moment in medical research and treatment — the kind of shift that changes lives for millions.”

No Federal Crackdown  in Massachusetts

Another positive sign for the cannabis industry is U.S. Attorney Andrew Lelling issuing a statement that his office essentially will not interfere with the public consumption of recreational cannibis, which became legal in Massachusetts as of July 1. Lelling said his office would limit its enforcement activity to out-of-state sales, sales to minors, and organized crime.

As Jason Williams reported, this is big news and signals a huge win for the cannabis industry. “Even staunch opponents like Lelling are bending to the awesome might of this growing juggernaut,” said Wiliams.

Hope is seen on the federal level as well. As The New York Times reported, President Trump recently said he would likely support a bill introduced by Senators Cory Gardner and Elizabeth Warren to leave it up to individual states to legalize marijuana. This view is in “stark contrast” to the tough stance Trump and his administration have taken towards cannabis previously, said the report.

This new bill comes on the heels of a bill introduced by Senator Charles Schumer in April that would decriminalize cannabis on a federal level.

The cannabis industry has been operating under a cloud because of a conflict between federal and state laws. As Inc. reported, if these statutes pass, there could finally be a resolution to the “odd reality” in which selling a joint could land you in jail under federal law and give you a paycheck under state law.

As the maker of the most modern, integrated, and scalable cannabis manufacturing management solution, MaxQ has deep cannabis industry expertise. Contact us to learn more about the latest trends and business solutions in the cannabis manufacturing industry. 


Cannabis Market Goes Ballistic

We knew the cannabis market was hot, but the latest studies show the cannabis industry skyrocketing beyond analysts’ previous expectations. Surprised that legalization and demand are expanding the cannabis market at such an accelerated pace, analysts are scrambling to revise their projections upward.

“While it seems every year means a new monstrous projection about the size of the cannabis market, this year’s projection is especially large,” cannibisnow.com reports.

The latest “State of Legal Marijuana Markets” report by Arcview Group and BDS Analytics, which cannibisnow.com considers the “gold standard of marijuana industry data research,” shows the global legal cannabis industry tripling over the next five years, reaching $32 billion by 2022.

Cowen & Co. sees even bigger growth, raising its estimate of the legal cannabis market by a whopping $25 billion and projecting the cannabis industry will hit $75 billion in sales by 2030. Cowen says that its previous forecast of a total cannabis market of $50 billion by 2026 is no longer valid because “new forecasts suggest that the market is already that size.”

Grand View Research’s recent study sees the global medical marijuana market reaching a value of $55.8 billion by 2025. Over the past few years, the number of companies operating in the cannabis market has increased exponentially, the study says, and the market is expected to expand significantly because of legalization in several countries and the high demand for medical and recreational cannabis.

Legalization Drives Expansion

Even these bullish forecasts pale in comparison with that of European investment bank Bryan, Garnier & Co., which sees the legal global cannabis market poised for growth of more than 1,000% over the next decade, reaching $140 billion by 2027.

Legalization seems to be creating its own momentum, the report says, citing the legalization of cannabis worldwide as the driver behind a “rapidly expanding industry.”

Similarly, Market News Updates reports that the international cannabis industry “continues to blaze red hot” based on the findings of the Brightfield Group, which sees the market growing at a compound annual growth rate of 60% each year and reaching more than $30 billion by 2021. As with other market analysts, the Brightfield Group sees deregulation and increased consumer interest as the driving factors.

Surprising Global Growth

Arcview VP David Abernathy said the most surprising thing contributing to the cannabis market’s accelerated growth this year was the rise of international markets. Arcview analyst Tom Adams agreed, arguing that Germany’s move to make cannabis flower available for medical use in pharmacies was the big news of 2017 from a worldwide perspective. “The tables have turned in favor of legalization across the world,” said Adams.

Grand View Research sees Europe eclipsing North America as the largest market for legal cannabis by the end of its forecast period, with a 55.6% share in 2025. Arcview voiced a similar view, noting that Europe, which has 739 million people and more than $1.5 trillion in healthcare spending, has the potential to be the largest medical cannabis market in the world. South America and Australia also are seen as large burgeoning markets.

As money.cnn.com reports, the game is about to get a lot bigger as more and more North American territories join the legal cannabis market. In California alone, the opening of recreational dispensaries in January boosted the pool of legal marijuana users from 17 million to 47 million.

Analysts see the North American cannabis market accelerating further in 2018 as legal markets begin taking off in Canada, Massachusetts, Florida, and Nevada, with Maine, Vermont, Arkansas, Montana, North Dakota, West Virginia, and very likely New Jersey, Michigan, Oklahoma, and Arizona following suit.

Pot Tops Soda Pop

In sizing up the surging cannabis market, Bloomberg observes that sales of legal marijuana are projected to eclipse those of soda pop in 2030 based on Cowen & Co.’s projection that the U.S. legal cannabis industry will reach $75 billion in sales by 2030.

Comparing cannabis with other commodity markets, a case can be made for the cannabis market being larger than that of corn, cotton, wheat, and coffee based on UN data that valued the illegal cannabis market at more than $140 billion in 2003. The global market for coffee, which is one of the world’s most valuable commodities, is valued at about $100 billion per year.

Follow the Money

Another sign of the cannabis market’s surging value are the steeply climbing valuations of publicly traded cannabis companies like Canopy Growth Corporation, whose stock price has risen from $1 to $24, an increase of 2,081%, over the last two years. As Wealth Daily notes, marijuana is no longer an underground drug pedaled by criminals, rather “a viable industry that’s making investors an absolute fortune.”

As cannabis legalization becomes more widespread and cannabis production increases, the price of cannabis will continue to drop, which will continue to put pressure on manufacturers’ margins. Since 2015, the wholesale price of marijuana has fallen from around $2,100 per pound to $1,600 per pound.

For cannabis manufacturers, competition will intensify as investment dollars pour in and more producers enter the market, causing margins to shrink even further. Besides successful branding, manufacturers will look to gain competitive advantages by employing advanced cultivation technologies and cannabis management systems that streamline operations, control costs, and maximize efficiency.

As the maker of the most modern, integrated, and scalable cannabis manufacturing solution, MaxQ has deep cannabis industry expertise. Contact us to learn more about the latest trends and management solutions in the cannabis manufacturing industry. 


MedMen Takes Cannabis Manufacturing to the Next Level

We have been following the industrialization of cannabis manufacturing as the cannabis industry expands rapidly into a booming multi-billion-dollar business. An indicator of where things are heading is the large-scale expansion of MedMen, which is multiplying its production capability by creating three ultra-modern cannabis manufacturing operations in Nevada, California, and New York.

MedMen launched the first of its new large-scale cannabis factories in April in Sparks, Nevada.  At the opening ceremony, MedMen CEO Adam Bierman described the plant as the most advanced cannabis facility in the world.

In May, MedMen began construction of a factory in Desert Springs, California, which is scheduled to open in 2019. A third factory will be built in Utica New York starting sometime this year.

The Desert Hot Springs and Utica facilities will duplicate the $15 million Nevada plant, which features a 26,000-square-foot greenhouse with a fully controlled environment and a 19,000-square-foot manufacturing wing. Each factory will be capable of producing 10,000 pounds of high-quality cannabis annually.

Raising the Bar with Agriscience

MedMen’s Nevada plant produces premium-grade cannabis products using the latest agronomic technology and sustainable techniques. The facility features state-of-the-art greenhouses manufactured in Holland, within which the company employs advanced growth methods while adhering to standards of the biotech and pharmaceutical industries.

The cannabis plants are raised in a closed-loop, completely controlled environment in which computers monitor the temperature, humidity, and light to which the plants are exposed. All water used in the growing and processing of cannabis plants is recycled, and no pesticides are used.

Contamination is kept to a minimum by requiring workers to don lab coats, scrubs, shoe slip-ons, and hair nets, and to immerse their hands in special scouring machines before entering the work environment.

Quality Control & Cloning

An advanced cultivation technique employed in the MedMen plant is a tissue culture lab that multiplies the cannabis plants through micro-propagation. Exceptional strains of cannabis plants are divided into multiple pieces to replicate them exactly and ensure consistency across all products.

After a plant is divided, its pieces are regrown in a growth chamber for 20-40 days before being transferred to an acclimatization/vegetation room. The plants are nurtured in a flowering room with a 25,000-plant capacity that makes the facility one of the largest cannabis manufacturing facilities in operation. Lighting is adjusted to suit different phases of the growing process.

Modernized Manufacturing

State-of-the-art machinery pervades the entire MedMen operation. The trim room features a floor-to-ceiling safe that stores up to 1,000 pounds of flower and huge grinding and rolling machines that crush the flower and pump out thousands of pre-rolls.

The extraction room houses a double-barreled extractor nicknamed “Mustang Sally” that compresses CO2 in the cannabis and produces crude terpenes.

The refining room has most of its equipment enclosed in glass so that staff can view all stages of the process of refining terpenes, CBDs, and other extracts.

The facility also includes an in-house laboratory to ensure consistency and plant optimization. Test samples are taken throughout the manufacturing process to determine whether all cannabinoids are being extracted from the plant material, whether the potency is in the target range, and whether all impurities have been removed.

The facility has two kitchens that produce chocolates and baked goods. Over time, MedMen plans to produce tinctures, lotions, edibles, and drinks under its own unique brand, similar to Costco’s Kirkland line.

Setting the Standard

MedMen says it is “writing the book on the modern cannabis industry, from how facilities are designed and constructed to setting the bar on quality and excellence.”

Besides creating world-class manufacturing facilities, the company is raising the bar on dispensaries as well. In April, MedMen opened a new flagship retail outlet on Fifth Avenue in New York City that mimics the look and feel of Apple stores. The elegantly designed shop is staffed by well-trained sales assistants and equipped with iPads for customers to browse and research products.

MedMed currently operates 12 cannabis outlets in California, Nevada, and New York, and plans to expand the number of dispensaries in Nevada from one to three. The company’s Sun Valley facility is used primarily as a research and development site to test different cultivation techniques and technology, such as LED lights.

As The Cannabis Trend Report 2018 notes, driven by a revolution in cannabis research and farming techniques, the marijuana industry in five years will look very different than it does today. MedMen is among the companies leading the way in developing the manufacturing techniques that will make the next generation of cannabis production a reality.

As the maker of the most modern, integrated, and scalable cannabis manufacturing solution, MaxQ has deep cannabis industry expertise. Contact us to learn more about the latest trends and management solutions in the cannabis manufacturing industry. 

 


Cannabis Packaging Gets Sophisticated

As cannabis products and user tastes become more sophisticated,  cannabis package design is following suit. With exotic names and novel products now an integral part of cannabis manufacturers’ retail and marketing strategies, creative packaging has become a way for producers to distinguish their brands.

The packages seen in dispensaries today are a far cry from the plastic sandwich bags that were the common way of distributing marijuana in the days before cannabis became legalized. Legalization also has brought new laws that define what is required and what is disallowed in cannabis packaging.

Childproof Protection

Twenty-four states have introduced laws governing the packaging of cannabis products. While their guidelines may differ, a common factor across all the states’ laws is the requirement that cannabis packaging be tamper-proof and child-resistant. The laws also aim to prevent children from gaining access to cannabis products because of improper labeling and packaging.

The laws prohibit names and imagery on the packaging of cannabis products that would mislead children into thinking the products were intended for children. In Oregon, for example, the state’s Liquor and Control Commission (OLCC) ruled that “kid-friendly” names like “Girl Scout Cookies,” “Candyland,” “Cinderella 99,” and “Charlotte’s Web” were prohibited.

Double Standard

However, as Allie Beckett on marijuana.com points out, these naming prohibitions do not apply to alcohol, a more dangerous substance for which there are numerous childlike brand names on the market, such as “Hello Kitty.” The underlying aim of the cannabis naming laws, she suggests, could be to restrict cannabis producers from using the international trademarks of giant corporations like Disney.

Another requirement among seven states that have legalized cannabis (Alaska, Colorado, Hawaii, Maryland, Massachusetts, New Mexico, and Oregon) is that cannabis packaging must be opaque, with the product unable to be seen until the container is opened. Here too, cannabis is being restricted in ways alcohol is not. Being able to see a cannabis bud’s color and texture is part of its allure, just as a liquor’s color is part of its attraction for consumers.

Creative New Designs

Despite the restrictions, innovative packaging designs are emerging as more top-tier professional package designers get involved. Award-winning designer Edward Kilduff has fielded the Pollen Gear line of cannabis containers that includes glass jars, plastic rectangles, and zipper pouches.

Kilduff said he came up with the idea for his line of marijuana packaging after he learned that many people were using his EVAK coffee container to store their marijuana. What people were looking for were containers that were airtight and childproof. He said he researched the cannabis package design space and found that “there were not any design guys who were creating solutions.”

Elegant and Artistic Designs

Another firm that has developed a distinctive styling for its cannabis brands is Canndescent, which has introduced packaging to match what it calls its “ultra-premium” product line. A guiding principle in the design was to create a clean look that would be less intimidating to new cannabis buyers and attractive enough to entice experienced connoisseurs.

Also taking an artistic approach to cannabis packaging is the 1964 Supply Co., which recruits world-renowned artists to visualize the company’s line of cannabis products that are crafted to provide “a selection of strains to suit every mood.”  The artists supply packaging imagery for products with colorful names like Train Wreck, Super Silver Haze, Blue Dream, and Strawberry Diesel.

Tuna-Style Cans Seal in Freshness

Another cannabis packaging trend that is gaining popularity is the tuna-style can. This type of packaging hermetically seals the cannabis product in nitrogen after removing the oxygen. Oxygen and light are enemies to preserving the freshness of cannabis, and oxidation will degrade the plant material and cause mold, yeast, and other potentially harmful bacteria to form.

Although the tuna-style method has been used in the food industry for many years, only recently have companies like West Coast Cure and N2 Packaging Systems begun to apply it to cannabis packaging. As N2 Packaging Systems CEO Scott Martin points out, preserving the freshness of cannabis in this manner is probably more of an asset to larger-scale producers that want to keep their product consistent as supply ramps up. That way, he noted, the consumer always experiences the product as fresh as the day it was packaged.

Environmentally Friendly Packaging

With marijuana being so closely associated with the social consciousness of the ‘60s, it is no surprise to see the green movement informing the packaging of cannabis. Reusable and biodegradable packaging is becoming more popular not only because of its environmental friendliness, but to save money as well.

Among the packaging companies providing eco-friendly cannabis packaging, Sun Grown Packaging boasts of being the first to file a patent for a recyclable, compostable, child-resistant cannabis package. A cannabis grower that exemplifies the concept of responsible farming is Lowell Herb Co., which has fully embraced the philosophy of organically grown cannabis and all-natural packaging materials.

As we can see, cannabis product packaging has taken a big leap beyond the rudimentary packaging of the counterculture days. As cannabis consumption and manufacturing continue to expand exponentially, we can expect to see a similar rise in the innovation and artistry that is transforming the packaging of cannabis products.

As the maker of the most modern, integrated, and scalable cannabis manufacturing management solution, MaxQ has deep cannabis industry expertise. Contact us to learn more about the latest trends and business solutions in the cannabis manufacturing industry. 

 


Innovation Pushes Cannabis Manufacturing to New Heights

Innovation within the cannabis industry is reaching new heights as more and more biotech and pharmaceutical companies enter the fray and the amount of cannabis research and development being conducted accelerates.

Cannabis R&D efforts are yielding creative new products and extraction techniques, as well as new methods of manufacturing aimed at making cannabis plant production easier, faster, and higher yielding.

Radical New Growth and Extraction Systems

Among the most noteworthy new manufacturing innovations are two systems developed by Iaso, called GrowBlox and PhytoX. These systems enable manufacturers to grow cannabis plants indoors at higher speed and without human assistance, and afterwards to extract the valuable ingredients from cannabis plants with greater efficiency and precision.

Traditional indoor growing methods require meticulous care and can take almost a full year to yield a successful crop. According to Iaso, GrowBlox can produce five cannabis harvests per year, which would make it the fastest marijuana propagation system on the market.

Along with GrowBlox, Iaso developed PhytoX as a way to optimize the cannabis extraction process for medical purposes. Touted by Iaso as the world’s first hydrodynamic extraction system, PhytoX freezes and pulverizes cannabis plants to maximize yields and increase potency, converting the entire plant into nano-emulsions that are then centrifuged and distilled.

Benefits of Wet Extraction

According to Iaso, PhytoX can perform extraction on wet or dry cannabis, making it capable of producing concentrate from freshly harvested plants. Extracting from wet cannabis plants retains ingredients that are lost in the dry extraction process. In addition, PhtoX’s use of water for extraction eliminates the needs for other solvents.

By speeding up and optimizing the cannabis growth and extraction process, GrowBlox and PhytoX have the potential to revolutionize the cannabis manufacturing industry. Iaso also produces cultures to optimize cannabis growth and is developing a new drug delivery system to be ready this year.

Better Drug Delivery Systems

A number of leading biotech firms are working to develop new ways to extract the active cannabis ingredients and deliver their medically beneficial effects in ingestible and topical forms. Lexaria Bioscience Corp. focuses its R&D on making cannabis medical compounds more absorbable and easily digestible. Lexaria’s process reduces the time of onset for edible cannabis to 15-20 minutes versus the usual 60-120 minutes, and increases absorption by five to 10 times, in addition to masking the bitter taste of cannabinoids without the need to add sugar.

Earth Science Tech, Inc. focuses its R&D on producing high-purity, high-quality cannabidiol (CBD) oil and infusing it in digestible products that provide medical benefits while not producing a psychoactive high. Earth Science Tech’s products include vitamins, minerals, herbs, botanicals, personal care products, homeopathies, and CBD oil delivered in capsules, tablets, soft gels, liquids, creams, sprays, and powders.

Cannabis Pain Relief Innovators

Several companies based in Colorado and California have established reputations for delivering high-quality cannabis products, including unique and effective methods of making cannabis ingestible for pain relief purposes.

Viola Extracts has become a leading producer of butane hash oil (BHO) products for the medical industry. Extracting the active ingredients of cannabis using butane produces pure and potent concentrates that are productized in a variety of forms and consistencies that include oil, shatter, wax, and live resins.

Another cannabis innovator is Foria, which has received a lot of media attention for its sensual cannabis products for women. For medical uses, Foria provides cannabis suppositories that offer relief from menstrual pain as well as back and hip discomfort. The suppositories provide rapid and long-lasting pain relief.

Colorado-based Binske infuses cannabis in a host of high-quality edible and topical products that can be used as an alternative to smoking. Its edibles include chocolate bars, fruit spreads, granola bars, olive oil, and tinctures of garlic, lemon, and chipotle. Its honey products are produced from local bees and can offer pain relief by being ingested in tea. Its topicals include bath salts, body lotion, and massage oils.

Another Colorado-based company providing quality medical cannabis products is Altitude Organic. Its line of edibles includes organic treats such as assorted fruit and brownie bars, as well as organic fruit gummy candies. It also sells an extra strength pain spray called Apothecanna.

All these standout ventures show how the legalization of cannabis, along with its many medical benefits, is causing an increasingly more diverse and sophisticated set of products to be developed, as well as inventive manufacturing techniques. Expect to see further innovation as more and more companies devote their attention to cannabis R&D and as legalized cannabis spreads to ever more states and territories.

As the maker of the most modern, integrated, and scalable cannabis manufacturing management solution, MaxQ has deep cannabis industry expertise. Contact us to learn more about the latest trends and business solutions in the cannabis manufacturing industry.