22 Aug 5 Cultivators using technology to make an Impact in the Cannabis Industry
The Global legal marijuana market is likely to reach over USD 66.3 billion by the end of 2025, as per a report by Grand View Research, Inc, growing at a CAGR of 23.9%. There is a growing acceptance of the curative effects of cannabis, with some countries such as Canada and certain states of U.S legalizing the use of Marijuana for medical and recreational use. Research has time and again shown that cannabinoids (CBD), extracted from the cannabis plant, have varied medical uses with minimal side effects, making it a sought after alternative to traditional pharmaceutical options.
The U.S, where the use of cannabis has only been legalized in 33 states for medical use and 11 states for recreational use, is one of the largest untapped markets for Marijuana, with an estimated value of over USD 11.9 billion in 2018, which is likely to grow at a CAGR of 24.1% from 2019 to 2025. There have been series of mergers and acquisitions in the Cannabis space, which have seen consolidation of major players such as Aurora Cannabis, Canopy Growth, Curaleaf etc, in the anticipation of legalization of marijuana in the U.S by the end of 2019.
However the cultivation of cannabis, and a reliable supply and distribution chain, is still a major challenge that the industry at large is grappling with. The need of the hour is a consistently high quality product that is economical and cost-efficient to grow. An increasing number of players in the industry are realizing the importance of tailor made services that address the issues faced by cannabis cultivators, ranging from how to grow the best quality weed with limited resources such as water and land at their disposal to how to address the challenges in transportation and distribution to areas beyond their immediate markets.
The Cannabis industry is on a consolidation spree. Major players in the market are joining ranks, to gain strategic advantage, in case of legalization of Marijuana in newer markets such as U.S and Europe. They are acquiring partners with substantial cultivation capabilities, for instance Hexo Corp (NYSE: HEXO), which recently acquired Newstrike, now has a cultivation space of over 1.8 million square feet and a production capacity of 150,000 kg of cannabis annually. In addition it also has a 1 million square-foot greenhouse in Gatineau, Quebec that currently yields over 14 tonnes of cannabis annually.
We take a look at some companies that are using the best of technology to make redefine the way cannabis is cultivated and processed.
Terra Tech Corp. (OTCQX: TRTC)
Market Cap: $44.073M; Current Share Price: 0.4272 USD
Data by YCharts
A vertically–integrated company, it is focused on creating the highest quality cannabis for medical uses. Terra Tech is bringing together cutting-edge technology and nature, to develop sustainable solutions for cannabis production, extraction and distribution including novel closed environment cultivation. It also has interests in urban agriculture and invests heavily in plant science, research and development. Terra Tech uses its world-class technology to produce cannabis in state-of-the-art, environmentally controlled greenhouses, making it a veritable leader in the Cannabis space. The company’s bouquet of brands includes IVXX, Edible Garden, Blum and MediFarm.
The company has various subsidiaries through which it cultivates cross-breed strains of medical cannabis to treat a plethora of medical conditions. Its dispensaries aim to provide the highest quality produce in a safe, secure environment, while striving to maintain consistency and a positive customer experience. Its GrowOp technology creates advanced horticultural equipment and software for the automation and intelligent control of cultivation systems.
Terra Tech’s greenhouse growing systems offer energy efficiency savings up to 75%, along with a recycled water system, which is a very crucial and sustainable practice for future agriculture. Its unique moving table hydroponic growing system results in a 30% more yield , along with 50 percent savings in operational costs and 50 percent increase in gross margins.
Edible Garden, the company’s subsidiary, offers a co-operative model for local growers, with special focus on fresh, hydroponic, non-GMO produce, herbs and leafy greens, which are certified by USDA Organic, NON-GMO project and GFSI (Global Food Safety Initiative).
Acreage Holdings, (OTCQX: ACRGF)
Market Cap: $767.75M; Current Share Price: 9.60 USD
Data by YCharts
Acreage cultivates premium quality medical cannabis, through its Prime brand, which is pesticide free and locally grown. The company’s growing techniques are an amalgamation of industry best practises with advanced scientific methods. It follows the seed-to-store principle, ensuring that the produce is grown in a carefully controlled environment so that only the best quality product reaches the customer, without any scope for contamination. The flowers which are used by the company are derived from specific genetics and include offerings such as Hybrid, Indica and Sativa. It also offers a range of dry cannabis concentrates and live concentrates.
Acreage is a leading multi-state license aggregator and operator in the cannabis sector which holds 20 licenses across U.S. It has 12 operational licenses, out of which it is currently processing in 7 states. Though it holds licenses to operate 68 retail dispensaries in 12 states, 23 are operational in 11 states. These stores run under the brand name “The Botanist”.
The company has stores in Ohio, North Dakota, New Jersey, Massachusetts, California, Connecticut, Iowa, Maine, Maryland, New Hampshire, Pennsylvania, Oregon and Oklahoma in addition to four stores in New York, where it operates under the brand name NYCANNA along with a store in Queens.
It has an impressive wholesale and retail presence. It company’s broad has influential members such as former US House Speaker John Boehner, Bill Weld (former Governor of Massachusetts (R), Republican candidate for President) and Brian Mulroney (former Prime Minister of Canada). It has made a few strategic acquisitions in recent times, including that of Form Factory, Inc. a multi-state manufacturer and distributor of cannabis-based edibles and beverages, in an all-stock transaction valued at US$160 million, enabling Acreage to become the first national cannabis Consumer Packaged Goods (CPG) company.
Its subsidiary High Street Capital Partners, LLC acquired 100% of Deep Roots Medical LLC, a vertically integrated cannabis operator in Nevada, for $120 million in stock and cash in April 2019. It will allow the company to start its operations in Nevada, taking its footprint to 20. The company sells four brands Deep Roots, Chillers, Bluebirds and Helix Twist with presence in 80% of the retail dispensaries in Nevada.
Canopy Growth Inc, a global leader in diversified cannabis and hemp related products, entered into a definitive agreement with Acreage Holdings, Inc that bestows it with the right to acquire 100 percent of the company’s shares at such time as cannabis production and sale becomes federally legal in the United States, subject to shareholder approval. Acreage will receive an upfront US$300 million or approximately US$2.55 per Acreage Subordinate Voting Share, with the entire transaction being valued at US$3.4 billion, a 41.7% premium over the 30-day volume-weighted average price of Acreage Holdings shares.
Acreage will get access to Canopy’s substantial capital and intellectual property rights, which will help it gain access to newer markets, both at home and abroad and aid its expansion plans. The formidable management team, licenses and assets of Acreage when combined with Canopy’s intellectual property and brand value will create a remarkable shareholder value.
The company sees immense potential in the deal, with options ranging from building scalable proprietary brands and offering contractual manufacturing services to other established brands such as Nestle (OTCPK: NSRGY), Mars or Procter & Gamble (NYSE: PG).
Grow Op Farms LLC
The company’s claim to fame is being the # 1 producer of top-shelf cannabis in the northwest region. Grow Op is a WA i502 producer (Washington Initiative 502), providing top quality produce and services to over 502 retailers. It manufactures over 40 strains of premium quality marijuana, in state-of-the-art growing facilities, using cutting-edge growing techniques.
The company’s cultivation is handled by Phat Panda, which brings together the most advanced growing techniques, with innovative technology, to create top quality cannabis, primarily panda flowers, a high quality strain of indoor grown cannabis. The produce is subjected to independent testing by Trace Analytics and Confidence Analytics to rule out chances of any contamination. It also sells apparels, accessories and merchandise based on its Phat Panda Line.
GrowOp also has a line of edibles named hot sugars, which are produced in-house from phat panda material, using ethanol-extracted THC distillate oil and premium ingredients, resulting in accurately dosed and fast acting edibles. Furthermore it also owns the StickyFrog dabs, a range of oils and concentrates processed by Dabstract labs. The company deals with high terpene premium extracts without any additives or fillers.
The company’s offerings include a range of quirky and unique marijuana blends derived from Sativa, Indica and Hybrid strains such as Alaskan snow, Apehanger, Candyland, Cenex, Ghost DG, Golden Pineapple and Strawberry Frost to name a few.
Growlife Inc (OTCPK: PHOT)
Market Cap: $20.722M; Current Share Price: 0.0056 USD
Data by YCharts
GrowLife is a nationally recognized brand that offers diverse products and services such as hydroponic equipment, lighting, nutrients, and media services to both urban and commercial operations. It adopts a comprehensive approach to Cultivation, beginning with cloning; harvesting, logistics and distribution that helps cultivators to regulate their supply costs and manage their resources more efficiently.
The company has four divisions namely Hydroponics that offers grow systems, hydroponic systems, and water aeration, pumps, purification and irrigation supplies to name a few. It also operates a Commercial division which provides professional consultancy services by experts for commercial grow operations from build to design. Its Innovations department handles the R&D, product innovation and intellectual property rights aspects of the business. In addition, its Retail division uses the “Store-within-a-store” concept in a traditional brick and mortar set up in the North American Market.
The company aims to be a one stop solution for all cultivation needs, with a special focus on the growing challenges faced by the players in the hemp and cannabis industries.
GrowLife, announced an agreement with Emerald Metrics, LLC, an award-winning cannabis technology provider, to add spectral imagery technology to the Company’s EZ-CLONE Pro commercial propagation system. It provides timely updates about the health of the clone to cultivators, allowing them to take corrective action even before the problems manifest and become apparent to the naked eye.
This technology has the potential to revolutionize the way cannabis and hemp is currently cultivated and cloned. To meet the growing demand for cannabis related products, it is essential to keep the supply consistent with a high quality produce, while also ensuring that costs do not escalate and cultivation remains profitable. The combination of these two technologies will offer a cultivator, an unmatched advantage, by allowing them to grow a greater number of viable plants.
The company acquired a majority share of EZ-Clone Enterprises, Inc., an award-winning commercial cloning and propagation Company in October 2018.
It has launched a new online e-commerce platform in Canada to meet the demands of both commercial and retail customers.
Furthermore it has filed a provisional patent on a revolutionary commercial vertical grow concept, designed to reduce the costs of cannabis cultivation, which is currently undergoing proof-of-concept studies.
GrowGeneration Corp (OTCQX: GRWG)
Market Cap: $161.465M; Current Share Price: 4.5450 USD
Data by YCharts
The company intends to be a market leader in best-in-class growing products such as organic nutrients, soils, advanced lighting technology and hydroponic equipment for commercial and home use. The company is the largest hydroponic equipment supplier in the U.S, with 23 organic garden centers, across 9 states. GrowGeneration has a team of well-qualified industry professionals who offer design and consultation facilities. They even facilitate improvement in yield, lower production costs and create efficient commercial cultivation services.
The team has experience of working on over 2.7 million square feet of cannabis space. It has developed a strong nationwide supply chain of essentials that can reach the cultivators “just in time”, making it an indispensable part of a cannabis cultivators supply chain.
GrowGeneration’s service offerings include business consulting, CAD Services, Greenhouse, harvesting, financing and shipping solutions to name a few. In addition, it also offers products like nutrients and additives, cloning and propagation systems, plant care, soil and medium assessment and harvesting assistance. The company offers a comprehensive plan which includes assessment, consultation, design / layout, product supply and support.
The company has built a robust network of distribution and brand partners such as Advanced Nutrients, Aurora Innovations, Botanicare, Can-Fan, Dyno-Gro and Emerald Harvest to name a few.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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