New Cannabis Markets: Show Us the Money!

A bevy of new territories began selling legal cannabis in 2018, including Canada, Massachusetts, Maryland, Ohio, and Oklahoma. How well these new markets are faring gives us a sense of the strength of the cannabis market and how closely actual results are meeting expectations.

Great Expectations for Canada  

As CNBC reported, when the country’s first recreational cannabis dispensaries opened on October 17, 2018, Canada became “the world’s largest legal marijuana marketplace.”

No official government tally is available for Canada’s first three months of legal cannabis sales, so it is not clear how well Canada has performed so far.

Statistics Canada projected sales would hit $1 billion in the fourth quarter of 2018 for the entire country. However, the only results provided by Statistics Canada so far are for the sales in the first two weeks after legalization, which totaled $43 million.

Vice, meanwhile, reported that Canadians spent $1.6 billion on legal cannabis in 2018, based on a report by Arcview Market Research and BDS Analytics.

Going forward, Arcview projects that Canada’s legal cannabis market will hit $7.8 billion in 2022. Recreational cannabis is expected to make up the lion’s share, with medical cannabis generating $1.4 billion of the total.

Deloitte projects that the total cannabis market in Canada, including medical and illegal as well as legal recreational products, will generate up to $7.17 billion in total sales in 2019. Legal sales are expected to contribute more than half of this total—up to $4.34 billion—in the first year.

According to Statistics Canada, Canadians spent $5.7 billion on cannabis in 2017, the vast majority of which came from the black market. This shows a strong demand for cannabis that will translate into large figures as consumers transition to the legal market.

Massachusetts Strong Out of the Gate

Massachusetts generated $23.8 million in recreational cannabis sales since its first dispensaries opened in November 2018, according to state officials. The number of dispensaries has increased from two to eight since sales began.

With only two dispensaries operating, the outlets totaled $9.3 million in recreational marijuana sales during the first four weeks of operation. The two dispensaries took in more than $440,000 on the first day of sales, and the state averaged $2.3 million in sales per week.

These are strong numbers compared with first month sales in other states that had many more dispensaries operating, such as Oregon ($14 million, 320 dispensaries), Colorado ($14.7 million, 59 dispensaries), and Nevada ($27.1 million, 53 dispensaries).

Maryland Med Market Soars

In its first year of operation, Maryland’s medical marijuana sales mushroomed to $96.3 million, according to state officials.

Medical cannabis sales in Maryland began in December 2017 with the opening of 10 dispensaries, and demand was so strong that supplies ran out within days. Since that time, the number of dispensaries has grown to 71.

Maryland’s first-year medical cannabis sales topped those of Illinois, Massachusetts, and New York combined. With about 52,000 registered patients at year’s end, Maryland also outpaced Illinois and New York, which each had fewer than 13,000 patients after one year of sales.

Oklahoma Posts Strong Med Sales  

Oklahoma, which legalized medical cannabis in June 2018, began selling plants in October and dried flower in December. In the first full month of operation, Oklahoma’s four dispensaries sold nearly $1 million worth of medical cannabis.

The Oklahoma market is projected to generate $400 million in annual sales over time, according to Marijuana Business Daily estimates.

Domino Effect

Legalization of recreational cannabis in Massachusetts seems to be spurring other New England states into action, including New York, New Jersey, and Connecticut. 

“Now that there’s cannabis stores in Massachusetts, we are really starting to see the dominoes fall,” said Matt Schweich, deputy director of the Marijuana Policy Project.

As mjbizdaily notes, recreational marijuana seems poised to sweep across the Northeast, which could mean billions of dollars of new business opportunities in the densely populated region.

Legalization Sweeping Across Europe

As ICBC reports, there are “fresh signs that wide-spread cannabis reform is afoot across the European Union.”  As the new year began, several European countries moved forward with their legal cannabis programs, including Poland, Portugal, and Luxembourg.

In Poland, medical marijuana supplied by Canada’s Aurora Cannabis went on sale in Polish pharmacies on January 17.

Luxembourg last year announced that it planned to legalize recreational cannabis, which would make it the first EU country to do so. Luxembourg currently is moving ahead with its medical cannabis program.

In Portugal, two bills have been introduced in the Parliament to legalize recreational cannabis.  As of January 15, the medical use law in Portugal, as well as the right to export the drug, was formalized by the Republic Journal, the official publication of the government documenting the passage of new laws.

Cultivation Craze

Another sign of the burgeoning cannabis market in new territories is the number of companies applying for cultivation licenses. In Germany, 79 bidders have applied for the 13 cultivation licenses that will be granted.

Only medical cannabis is legal in Germany, and until the first internal harvest occurs, which is expected in the last quarter of 2020, all medical cannabis flower and oil sold in Germany will continue to be imported.

In Canada, more than 800 new applications were in the pipeline, according to Health Canada.  There currently are 145 licensed cultivators, processors, and sellers in Canada. Beacon Securities analyst Russell Stanley says the Canadian market cannot support so many cannabis producers, which means “a reckoning is coming.”

Altacorp Capital predicts that cannabis cultivation companies will experience “margin compression” as the market matures. To combat this threat, cannabis producers must take measures to minimize their cost of operations. One of the best ways to control costs and maximize efficiency is through a highly integrated and automated cannabis management system.

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 Hits a Tipping Point and Crosses the Chasm

The cannabis market has reached a tipping point and is showing all the signs of an unstoppable juggernaut.

The signs are many, including:

  • Legalization is spreading at an accelerating pace.
  • The number of dispensaries is increasing exponentially.
  • Deals and investments are multiplying.
  • Big Alcohol, Big Tobacco, Big Finance, and Big Pharma have entered the market.
  • Big brand names like Coca Cola, Heineken, and Coors are entering the fray.
  • A vast new legal hemp market has sprung open.
  • A new generation of cannabis consumers is emerging.

Deals, Deals, Deals

As mjbizdaily reports, based on the number and size of the deals that were done, the year 2018 will go down as “a massive milestone for cannabis companies.” According to Viridian Capital Advisors, 557 deals raised over $13.5 billion in 2018, compared with 378 deals that raised $2.7 billion in 2017. 

Constellation Brands made waves with its $4 billion investment in Canopy Growth Corp. But Altria topped that deal with a $13 billion investment in vape company Juul, a deal that followed two weeks after Atria’s $1.8 billion investment in Cronos Group.

A key trend in the U.S. is the rapid expansion of large publicly traded cannabis companies through the establishment of multistate operations. This is the modus operandi of Acreage Holdings, Curaleaf, Green Thumb Industries, MedMen, and Trulieve—which are the five largest multistate cannabis operators with the greatest market capitalization.

Domino Effect

The big news in 2018 was the legalization of cannabis in Canada. In the U.S., Maine, Michigan, and Vermont legalized recreational cannabis. Medical cannabis is now legal in 33 states and Washington D.C., and recreational cannabis is legal in 10 states and Washington D.C.

As increasing numbers of territories legalize cannabis, resistance to legalizing cannabis is crumbling. At least seven U.S. states are leaning towards joining the recreational ranks as government leaders in New York, New Jersey, Connecticut, Pennsylvania, Ohio, Virginia, and New Hampshire push for legalization.  

Around the world, bans are being lifted to legalize cannabis and allow trade. Most recently, Bermuda announced that was lifting a regulatory ban on marijuana investment funds, while Israel’s parliament approved a law to permit exports of medical marijuana.

At year’s end, Thailand’s National Legislative Assembly voted to legalize medical marijuana and allow cannabis research. This follows on the heels of South Korea, Argentina, and Australia legalizing medical cannabis.

As Forbes notes, U.S. drug policies influence those of foreign nations, and the legalization of cannabis in the U.S. is having a contagious effect worldwide.  

Doubling Down on Dispensaries

The rapid expansion of the cannabis market is reflected in the exponentially multiplying number of dispensaries. Connecticut officials approved nine new medical cannabis dispensaries, which doubles the state’s existing number. New Jersey also doubled its number of medical cannabis dispensaries from 6 to 12.

Pennsylvania issued 23 new medical cannabis dispensary licenses, raising the state’s total to 79. Nevada issued 61 new recreational marijuana retail licenses, which nearly doubles that state’s number. Missouri plans to have 192 medical cannabis dispensaries open by 2020.

Michigan, which legalized recreational cannabis in 2018, approved 91 new medical cannabis licenses, including 45 dispensaries. Massachusetts opened its first recreational cannabis dispensaries, while the first medical cannabis dispensaries were licensed to open in Arkansas, Ohio, and Virginia.

Hemp Is Back

After an 81-year ban, the legalization of hemp in the U.S. became official when President Trump signed the 2018 Farm Bill on December 20. The ability to grow, process, and sell hemp products will unlock a wealth of new opportunities.

As Vox reported, not only will farmers coast to coast benefit from a new cash crop, but the CBD industry, which sold about $350 million worth of products last year, is projected to hit $1 billion in sales by 2020.  

Hemp becomes legal at a time when the demand for CBD oil is exploding. As Jason Williams of Wealth Daily notes, “CBD sales are growing faster than anyone could have predicted — faster than pretty much any other part of the cannabis market.”

And as Hemp Industry Daily reports, “CBD-rich hempseed is legal now, but it’s also rare, giving plant breeders a huge new market as barriers to national hempseed distribution are removed.”

Research Boom

Cannabis research is flourishing as biotech companies discover new medical uses and legal cannabis-based drugs are made available to patients. A historic landmark was reached in 2018 when Epidiolex was approved by the FDA, a move that caused cannabis to be reclassified by the DEA.

After five decades of barren neglect, the U.S. Congress is moving to fund and facilitate medical cannabis research. Besides a new Medical Cannabis Research Act bill, the U.S. federal government plans to award $1.5 million in grants during the 2019 fiscal year to researchers who study how components of marijuana other than THC affect pain.

Cannabis Crosses the Consumer Chasm

As the surging sales and supply shortages in the U.S. and Canada show, the demand for legal cannabis is strong. Consumers are taking advantage of the diverse medical and recreational cannabis products coming to market, including smokables, edibles, beverages, ointments, lotions, and suppositories.

Not only are veteran cannabis users taking advantage of legalized cannabis products, but a new generation of “canna-curious” people are becoming cannabis consumers.

As headynj.com notes, as legalization takes hold, “the doors have opened up to a whole new tribe of people” who are experimenting with cannabis and making informed decisions.  

This includes senior citizens, a group that tended to be anti-cannabis in the past, but who are now embracing cannabis chiefly for medical reasons.  An example is Rossmoor’s Medical Marijuana Education and Support Club in California, where scores of seniors are experiencing the benefits of medical cannabis. These seniors are not only becoming consumers, but pro-cannabis activists as well.

Helping consumers cross the cannabis chasm is Francis Ford Coppola, who has complemented his wine products by launching a cannabis line called The Grower’s Series. The first product is a kit that sells for $99, which is aimed at “individuals who are wine drinkers who may be intimidated by cannabis by leveraging some of the same language.”

Mainstream commercialization is causing the cannabis market to become more sophisticated, refined, and upscale. As Leafly notes, legalization has brought maturity, innovation, professionalism, and credibility to cannabis.

For cannabis producers, the expanding market represents an immense opportunity, and competitive advantages can be gained by deploying the right cannabis management and analytics solutions. 

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 Sparks a Beverage Revolution

The infusion of cannabis into beverages is transforming the beverage industry and consumers’ drinking habits. Consumers today can find THC and CBD infused into beers, wines, coffees, teas, sodas, waters, elixirs, and energy drinks. Wellness drinks, in particular, is a significant new category that is bringing  the health benefits of CBD to consumers. This first wave of cannabis drinks is only the beginning, as many of the big guns in the cannabis and beverage industries have set their sights on what promises to be a huge cannabis beverage market. Next Big Thing in Cannabis The first phase of legalized recreational cannabis in Canada did not include beverages and edibles. With the next phase set for the fall of 2019, the major Canadian cannabis producers are forging partnerships with beverage, bio-research, and alcohol companies to bring cannabis beverages to market. Among the big players is Canopy Growth, which made headlines as the recipient of a $4 billion investment from liquor giant Constellation Brands. Canopy CEO Bruce Linton believes cannabis beverages “represent the next big opportunity.” Edibles and infused beverages might have a wider appeal than smoking cannabis, Linton said, because consumers might consider eating and drinking the products to be more socially acceptable than smoking them. Likewise, Tilray CEO Brendan Kennedy believes beverages will ultimately dominate the cannabis market, with only 10% of cannabis being smoked and 90% being consumed as cannabis beverages. Cannabis Chemistry Although many players recognize the commercial potential of cannabis beverages, there are significant challenges involved in producing them. Because cannabinoids are fat soluble rather than water soluble, as beveragedaily notes, “beverage producers are left with the age-old problem of trying to mix oil and water when creating cannabis beverages.” Another problem with oil-based cannabis absorption is that the effects are not felt for 90 minutes or more, in contrast to alcoholic beverages that are absorbed quickly. Among the companies that are developing ways to make cannabis water soluble and more easily absorbable are Trait Biosciences, Vitality Biopharma, Lexaria Biosciences, Ascent Industries, Chemesis International, Tilray, Sproutly Canada, and Emerald Health Therapeutics. Ascent Industries CEO Philip Campbell said his company’s Agrima Botanticals subsidiary has developed a compound that can be added to drinks to make cannabinoids water soluble and quickly absorbable, with the effects felt in 15 minutes. Sproutly Canada announced that it has developed a portfolio of cannabis beverages based on its water-soluble MisT and Infuz2O cannabinoid technology. Among Lexaria’s innovations is a new water-soluble hemp powder called ChrD+ that comes in packets and can be added to any hot or cold drink to infuse hemp oil. The Green Organic Dutchman (TGOD), which created a global division to focus on the beverage industry, has forged an exclusive agreement with Stillwater Brands to license its RIPPLE SC (Soluble Cannabinoids) technology to create soluble and fast-acting cannabis beverages. Taste Appeal Besides solubility, the taste of cannabis can be a problem, with many people finding cannabis to have an unappealing skunky flavor. Thus, cannabis producers are partnering with biotech research companies to acquire the know-how to create more palatable cannabis beverages. Terpenes are cannabis components that impart flavors and mood enhancements to cannabis products, and research is being devoted to infusing terpenes into beverages. NaPro Research, Flowr, and Yofumo are among the companies developing techniques to isolate terpenes and breed cannabis strains with particular aromas and tastes. As Mashable reports, a number of brewing companies are adding cannabis terpenes to their beers to produce various flavor profiles. Lexaria Bioscience has developed delivery technology called DehydraTECH that can be used to infuse cannabis in food and beverages. The technology enhances the taste, smell, speed of action, and absorption. Lexia has introduced a line of cannabis-infused tea, coffee and hot chocolate products, as well as an energy drink. Expanding into Cannabis Territory Among the beverage companies expanding into the cannabis market is Lifford Wine & Spirits. Lisa Campbell, CEO of the company’s Lifford Cannabis Solutions subsidiary, said many cannabis companies are in talks with food and beverage manufacturers that want to extend their brands into the cannabis space. Campbell said her company was working with a number of partners—including WeedMD, TerrAscend Canada, and Token Naturals—to bring “premium infused products” to market as soon as Canada officially permits edibles and beverages. Token Naturals focuses on extracting and refining cannabis oils, and CEO Keenan Pascal said his company was working with food and drink manufacturers to design formulas to bring cannabis-infused products to market. Among Token Natural’s products are bitters for infusion into beverages. Cannabis Brews Studies show that cannabis sales are growing at the expense of alcohol in states in which cannabis becomes legal. To hedge against a decline in their revenues, major beer brands are launching non-alcoholic cannabis beer lines. New companies also are sprouting up to bring cannabis craft beers to market. Constellation Brands, the company behind Modelo and Corona beer, has tied its wagon to Canopy Growth Corp. through a $4 billion investment. Molson Coors followed suit by announcing a joint venture with The Hydropothecary Corporation to develop non-alcoholic cannabis-infused beverages for the Canadian market. Heineken created a subsidiary called Lagunitas and teamed up with AbsoluteXtracts to create cannabis-infused sparkling water beverages called Hi-Fi Hops that are being sold in California. Most recently, Budweiser maker AB InBev forged a $100 million deal with Tilray to research cannabis-infused beverages. Keith Villa, who invented Blue Moon beer for MillerCoors, has launched a new company called Ceria Beverages that will focus on producing a line of non-alcoholic cannabis-infused craft beers.  Villa has partnered with Ebbu, a cannabis company that will provide the extract for beers with or without the skunky cannabis taste. As Villa notes, “It’s tough to make good tasting non-alcoholic beer.” Also pioneering new beer brewing methods is Province Brands, which has developed a unique method of brewing beer from cannabis rather than barley or grain. The process involves milling and “mashing” to extract fermentable sugars from the cannabis plant, an operation that requires specialized equipment and technology that would not be found in a normal brewery. In November 2018, Province Brands announced agreements with Lost Craft Beer and Brock Street Brewing Company to brew beers from cannabis and hemp. Cannabis Goes Pop Coca Cola originally contained cocaine, which was replaced by caffeine, so it’s no large stretch to infuse soda pop with cannabis. Rumors are rampant that Coca Cola and Pepsi are planning to introduce cannabis beverages. Bloomberg reported that Coca Cola was “in serious talks” with Aurora Cannabis. Meanwhile, a new wave of companies is already fielding a variety of cannabis sodas, including Keef Brands, California Dreamin’, Cannabis Creations, Canna Cola, Dixie Brands, and Sprig. Erik Knutson, founder and CEO of cannabis-infused drink manufacturer Keef Brands, believes that “cannabis beverages are the new soda.” Keef produces a line of cannabis beverages, edibles, and additives that includes Keef Cola, Keef Sparkling Blood Orange, and Keef Sparkling Lemon. Cannabis Elixirs The cannabis boom has unleashed a wave of research aimed at discovering the medical benefits of cannabis. As Raphael Mechoulam, the father of cannabis research notes, cannabis is a “medicinal treasure trove waiting to be discovered.” Among those leading the charge is Mindful CEO Phillip Hague, who observes that marijuana contains numerous substances—cannabinoids, flavonoids, terpenes—that have never been investigated in depth. Mindful and other cannabis producers are cultivating CBD-rich strains of cannabis to help unlock the medical potential of cannabis. Lauren Rudick, a partner at cannabis-focused law firm Hiller, says CBD could become an even bigger mainstream ingredient than THC for the beverage industry. “It’s the perfect wellness product, and there are going to be many CBD-fortified foods and beverages,” she says. As consumer demand for CBD products rockets, companies like Lexaria, Zoots, High Performance Beverage Co., and Sprig are racing to create CBD formulas and bring CBD-infused health drinks to market. We are witnessing an incredible turnaround in which the once-forbidden cannabis plant is bringing entirely new types of beverages to market—beverages that are revolutionizing not only the beverage industry, but consumer health, drinking habits, and lifestyles. 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. 

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. 

 


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.