This is a copy of the February 17th edition of our weekly Newsletter, which we have been publishing since October 2015.
As Canada’s legal cannabis industry continues to evolve, new business models are emerging. In its early days, the industry required complete vertical integration in its flower-only market, with the licensed producers (LPs) growing the cannabis and selling it directly to its medical patients. As the industry has matured, we have seen the development of a wholesale market and, with the advent of adult-use, the emergence of cannabis retailers. Another change has been that several LPs have move towards specialization, with some not focusing on cultivation at all. There are examples of LPs that are limiting their activities solely to medical cannabis sales, like Shoppers Drug Mart, and, increasingly, some are also focused exclusively on extraction as the derivatives market has become more substantive.
In the past three months, Health Canada has issued 18 new licenses, and 13 have been for only extraction (processing). The first LP to be licensed by Health Canada without receiving a cultivation license was MediPharm Labs, which received its license last March. The company offers both contract processing as well as white label production, and it has announced a substantial number of clients that have signed multi-year agreements, including one with Canopy Growth.
Despite its significant investment in its own extraction capabilities, Canopy Growth has signed agreements with Neptune Wellness Solutions and Valens GroWorks in addition to MediPharm Labs. Aurora Cannabis has forged a strategic relationship with another LP focused on extraction, Radient Technologies, which uses a microwave process.
As Canada liberalizes its products permitted for sale beyond its current extracts, which, despite their limitations have been extremely popular, later this year, the demand for extraction will accelerate. The introduction of edibles and other forms of extracts is likely to benefit this group of extraction-focused companies. We think that substantial value will be created by this part of the supply chain and suggest that readers interested in the Canadian market take the time to understand this sub-sector.
Mile High Labs is an industrial-scale cannabinoid extractor that produces a considerable amount of the CBD ingredients available on the market today. With headquarters in Boulder, Colorado, and offices and distribution centers across the United States and Europe, Mile High is a recognized leader in the advancements of CBD science, safety, and transparency.
To learn more about Mile High Labs, a leading supplier of compliant CBD ingredients and a client of New Cannabis Ventures, visit the company’s page that we maintain on its behalf and click the green Get More Info button.
New Cannabis Ventures publishes curated articles as well as exclusive news. Here is some of the most interesting business content from this week:
- Aphria Special Committee Finds No Issues with LATAM Acquisition
- Aurora Cannabis Net Revenue Grows 363% in 2nd Quarter
- Canadian Cannabis Company TerrAscend to Buy California Retailer Apothecarium for $118.4 Million
- Cannabis Oil Supplier MediPharm Labs Signs $35 Million Minimum Supply Deal with Canadian Licensed Producer
- Canopy Growth Quarterly Revenue Surges to $83 Million as Gross Margin Declines
- Green Growth Brands Partners with Simon Property Group to Launch America’s First Chain of CBD Shops
- HEXO Taps Major Canadian Banks for $65 Million Credit Facility
- Retailer Barney’s New York to Sell Cannabis Accessories and CBD Products
- S&P 600 SmallCap Index to Add Cannabis REIT
- Sunniva Projects 2019 Branded American Cannabis Revenue to Exceed $55 Million
- Supreme Cannabis Q2 Sales Increase 359%
- TILT Holdings Generates $18.3 Million Pro Forma Revenue in January
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