Over the last trading week (April 9-13) saw two unexpected players join the marijuana industry in a big way. The U.S. drug regulator wants opinions from the public about the use of cannabis. A letter from two U.S. senators asking the Attorney General to back away from medical cannabis research and market news complete this Cannabis Weekly Round-Up.

On Wednesday (April 11) the cannabis industry went buzzing for an announcement from a U.S. cannabis operator.Acreage Holdings revealed John Boehner, former Speaker of the United States House of Representatives will join the company’s board of advisors, sparking a race for cannabis stocks during the week.

The announcement was viewed as a prominent ex-government figure signing up for the cannabis industry, despite holding reservations in the past, and provided some relief to the idea of Attorney General Jeff Sessions cracking down on the burgeoning legal cannabis market.

 

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Vahan Ajamian, analyst with Beacon Securities, said in a research note it was difficult to overstate the value of this announcement. He called the news a “monumental event.”

“Late Wednesday, I received a commitment from the President that the Department of Justice’s rescission of the Cole memo will not impact Colorado’s legal marijuana industry,” Colorado senator Cory Gardner said in an announcement as he revealed a standoff between him and Donald Trump was over.

As reported in the Washington Post, Trump called Gardner to stop the blocking of all Department of Justice nominations from the senator. It’s unclear how Sessions will react to this protection for the cannabis industry from the president.

In more developments from the U.S., it was revealed the U.S. Food and Drug Administration (FDA) wants opinions from the public regarding cannabis and its compounds. This request for comment comes as a mandate from the World Health Organization (WHO) before a special council meeting evaluating the status of cannabis.

The U.S. Department of Health and Human Services (HHS) said it won’t give any recommendations on the status of the drug control for cannabis. The agency will instead “defer such consideration until WHO has made official recommendations to the Commission on Narcotic Drugs, which are expected to be made in mid-2018.”

Also in the U.S., U.S. senators Orrin Hatch and Kamala Harris from Utah and California issued a letter to Sessions asking for the Drug Enforcement Administration (DEA) to fully stop trying to undermine medical marijuana research.

By allowing expanded research, the Department of Justice will aid legislators in making sound decisions, help law enforcement in developing critical public safety guidance, and ensure that citizens have the benefit of informed, evidence-based policy,” the letter from the Republican and Democrat senators, respectively, said.

The Investing News Network (INN) had the opportunity to attend the launch event for AltaVie, a new consumer brand from MedReleaf (TSX:LEAF). MedReleaf added AltaVie to its catalog, joining San Rafael ’71, a recreational brand meant to appeal experienced consumers according to Linda Burlison, MedReleaf’s director of digital marketing and commercialization. AltaVie, Burlison told INN, will appeal potential new consumers of cannabis with an accessible and approachable product.

Scythian Biosciences (TSXV:SCYB; OTCQB:SCCYF), a company that has received investment backing from Aphria (TSX:APH; OTC:APHQF), also announced a plan of expansion in South America, with two deals in place to enter the Colombian and Argentinian cannabis markets.

The company will acquire MMJ Colombia under the condition this company can complete the acquisition of local producer ColCanna, and for this venture to obtain its Colombian licenses for the cultivation, production, research, and export of medical cannabis CBD and THC extracts.

On the Argentinian side, Scythian’s yet to be completed acquired company, ABP obtained a license to import cannabidiol (CBD) oil into the country. ABP will follow up on this new license with a supply agreement with Aphria.

MedMen Enterprises, a retail cannabis company in the U.S. wants to launch its stock in Canada, this past week the company announced initial details of how it plans to do so. The company will perform a reverse takeover with OutdoorPartner Media Corporation. However, the company in question is not publicly traded, it is a subsidiary of one that is.

“Upon completion of the reverse takeover of OutdoorPartner Media Corporation by the security holders of MedMen Enterprises, MedMen Enterprises will become a subsidiary of a publicly traded company, essentially becoming publicly traded itself,” the company said in an announcement. Cormark Securities and Canaccord Genuity will act as the co-bookruners.

On Thursday (April 12) the National Access Cannabis (TSXV:NAC) unveiled a partnership with specialty coffee company, The Second Cup (TSX:SCU), to create marijuana dispensaries. The announcement boosted Second Cup’s stock on Thursday by giving its shares a 28.73 percent bump.

National Access Cannabis indicated it plans to apply for licenses to dispense cannabis products and — if the company obtains said licenses — will “leverage Second Cup’s extensive Canadian retail footprint to construct retail stores carrying leading cannabis products.”

Don’t forget to follow us @INN_Cannabis for real-time news updates!

Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.

 

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**This article is updated each week. Please scroll to the top for the most recent information**

Cannabis Weekly Round-Up: Operational and Sales Updates Across the Industry

By Bryan Mc Govern – April 6, 2018

This past trading week (April 2-6) saw some substantial updates from a variety of companies in the public cannabis space, all of this and market news completes this Cannabis Weekly Round-Up.

It was a busy week for Namaste Technologies (CSE:N; OTCMKTS:NXTTF), the company first announced it would take a big step in expanding the amount of cannabis research being done in the market. The first study will evaluate patients treating anxiety with cannabis products.

“We plan to undertake additional studies to bring awareness and a better understanding of how medical cannabis can benefit Canadians,” Sean Dollinger, president, and CEO of Namaste said as the company revealed more studies are on the way.

 

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Then on Friday (April 6), Namaste provided investors with a sales report for the month of March. The company reported C$1,249,670 of net revenue, indicating a 74 percent increase from the same time period last year. Namaste MD, the company’s own service platform attracted 535 new medical cannabis patients. Dollinger told the Investing News Network (INN) his goal was to hold a 5,500 patient user base by the end of 2018.

MPX Bioceutical Corporation (CSE:MPX; OTC:MPXEF) also gave its shareholder a sales update for March following the company’s expansion in the Arizona footprint. Beth Stavola, COO, and president of MPX’s U.S. operations said the company is satisfied with the development of their operations in Arizona thanks to the regulations from the Arizona Department of Health Services (AZDHS).

Quarterly updates from cannabis companies

This trading week also saw a few quarterly reports from a variety of cannabis companies in the space. CannaRoyalty (CSE:CRZ; OTCQX:CNNRF) published its operational and financial results for its 2017 fourth quarter on Wednesday (April 4). The company reported a revenue stream of C$1,072,399 was generated during the quarter.

As part of the update, the company hosted a conference call where analysts were able to ask for more details from the CannaRoyalty’s management team.

During the call Lusting said he is focused on five distinctive opportunities for CannaRoyalty in the cannabis space, including the integration of the company’s most recent acquisitions, continue its strategic acquisitions, set the fundamentals for the option to expand the reach of their brands into Canada and other jurisdictions, and a focus and rationalization of their portfolio.

 

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On Tuesday (April 3) Quadron Cannatech Corporation (CSE:QCC) officially unveiled its financial and operating results for the company’s 2018 third quarter, highlighting a steady increase of revenue and a sound cash base for its future operations.

“Quadron is strongly capitalized and remains focused on increasing sales of our progressive extraction systems and services, while expanding on our portfolio of highly-advanced product offerings,” Quadron CEO, Rosy Mondin said in a statement.

The company has continued the development of its sale for the BOSS CO2 Extraction System. In March Quadron announced it had sold two new systems to an “authorized grower” in B.C.

MariMed (OTCQB:MRMD) announced, during its 2017 financial results update, a revenue mark of US$6.1 million, which represents a 70.2 percent year-over-year increase. “With the opening of our Maryland and Massachusetts facilities and businesses and the expansion of our licensing brands to additional states we anticipate continuing our growth momentum in 2018 and beyond,” Robert Fireman, CEO of MariMed said.

As part of the company’s outlook for 2018 Levine added the company expects the new investments in Maryland and Massachusetts will “generate significant revenue from fees for leases, licenses and managed services.”

Don’t forget to follow us @INN_Cannabis for real-time news updates!

Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.

 

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The evolution of the cannabis industry in recent years continues to outperform market projections. While many attribute this unprecedented growth and positive trending to a focus on business-to-consumer models, some cannabis companies are finding significant successes leveraging white labeling partnerships to tap into a rapidly emerging marketplace that thrives on innovative business models and unique products for a growing consumer base

As the popularity of white labeling services amongst cannabis companies grows, especially in the production of fast-growing categories of value-added products like extracts, oils, edibles, and vapes, companies that are becoming an expert in co-manufacturing and have the ability to provide these services are establishing themselves as the leaders in the industry. Used as a means to expand SKU lines as well as revenue, white labeling in the cannabis industry offers companies unparalleled upside and potential for impressive profitability.

How do white labeling services work?

White labeling is a business practice that involves one company manufacturing a product, which is later sold and advertised under another company’s brand. These solutions are typically done in exchange for a flat fee or percentage of product sales depending on the terms of the agreement.

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This business-to-business solution offers a partnering company to attach their unique brand onto a “white label” product for marketing and sale to the final consumer and allows the manufacturing “white labeler” to potentially partner with different companies. Without the need to invest in infrastructure or technology. Cannabis companies can focus on building their brand and selling a wider range of products to a wide net of prospective customers.

Additionally, many also associate these white labeling solutions with toll processing, a practice in which one company provides the raw or partially processed product for another company to manufacture into a value-added product.

Access to extraction and packaging services through white label providers

White labeling services provide an ideal solution for companies who may not have the start-up capital to build a manufacturing facility, secure product licensing or have a difficult time getting a cannabis business off the ground. In these circumstances, partnering with a licensed processor that has established production and focused effort on creating a diversified range of high-quality cannabis products presents outstanding economic opportunities.

One leading example is  Ayurcann Holdings (CSE:AYUR), a B2B post-harvest solution provider focused on providing scalable custom processes and pharma-grade products to the recreational and medical cannabis industry in Canada. The company delivers a profitable business model of services and products. It operates three production divisions specializing in expert cannabis-based extraction and refinement, high-quality bulk oil sales and white label manufacturing.

White labeling options for cannabis companies

In an industry that is shifting its focus away from cultivation, more fully integrated companies delivering multiple verticals in cannabis processing and production offer an unparalleled investment opportunity that stands out from the rest. Major players in the cannabis white-labeling space offer unique exposure and retail footing that allow many companies to compete with established brands and quickly make an impact on consumers.

Ayuracann’s production offers full end-to-end outsourcing services, including proprietary product research & development, cannabis extraction & refinement and final production formulation and fulfillment. As a leading white labeling service provider, the company is focused on becoming the partner of choice for leading Canadian cannabis brands by delivering best-in-class, proprietary services, including ethanol extraction, formulation, product development and custom manufacturing.

Benefits of white labeling for cannabis companies

Data collected by Grand View Research projects the global legal cannabis market to be worth US$66.3 billion by 2025. While much of the cannabis product sold today is still the raw product, value-added consumer packaged goods are rapidly gaining significant traction throughout the cannabis industry.

White labeling services allow cannabis companies to capitalize on the latest and greatest cannabis consumer trends by expanding their portfolios to include high-demand products such as oil cartridges, extracts, topicals, CBD bath products and lotions, edibles and more. Without having to invest in the infrastructure, processing labs and manufacturing facilities required to make these products, companies can focus on releasing more products to an eager customer base. With an ever-evolving cannabis market, white label partnerships can give cannabis companies an edge over the competition.

While vertical integration can be a highly efficient strategy for large cannabis companies with the up-front capital to build the necessary infrastructure, companies without the resources to establish it take a huge risk by investing in operational and up-front costs. This includes time, building and equipment costs, license processing and finding specialized staff to grow and sustain the business.

Alternatively, outsourcing manufacturing allows a cannabis company to expand its product offerings, utilize quality formulations and establish its brand while reducing the financial risk associated with vertically integrating. Finding a compatible white labeling partnership means more time to build a brand and reach retailers and final consumers substantially faster. For cannabis companies who want to hit the ground running, white labeling offers the tools, expertise, and systems in place to make it happen.

Takeaway

Cannabis companies are using white labeling services to expand and diversify their product lines and tap into a market that is increasingly favoring value-added consumer packaged goods. For cannabis companies without fully vertically integrated operations, white-label partnerships with major players like Ayurcann Holdings offer exceptional economic efficiency and investing upside with minimized risks and infrastructural costs.

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