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GrowLife – Bringing Innovation to the Cannabis Cultivation Space!

29 Jun GrowLife – Bringing Innovation to the Cannabis Cultivation Space!

GrowLife, Inc (OTCPK: PHOT), a pioneer in the cultivation equipment provider space, 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.

Emerald Metrics has a provisional patent on the Clone Imaging system encompassing the hardware, software and mechanical solution for the use of spectral imagery to analyze clone health.

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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.

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Joseph Barnes , GrowLife Executive Vice-President of Sales and Marketing opines

“We are constantly developing ways to add value to our renowned EZ-CLONE propagation systems and partnering with such an advanced and well-versed company such as Emerald Metrics seemed to be the perfect fit,”

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The company acquired a majority share of EZ-Clone Enterprises, Inc., an award-winning commercial cloning and propagation company in October 2018.

Marco Hegyi, GrowLife CEO states that

“EZ-CLONE has become synonymous with the highest quality cloning products in the industry and has become the standard in cloning and propagation among industry leaders and experts. GrowLife’s mission is to support the entire process of cannabis cultivation and help our customers to grow in the most efficient and cost-effective manner. EZ-CLONE’s product line perfectly fits with our vertical commercial grow system and will provide our customers with the ultimate cultivation infrastructure from clone to harvest.”

In March 2019, the company reported an 86% Year-Over-Year revenue growth as compared to year-end 2017, not surprising, as the company has been capitalizing every single opportunity arising in the cannabis production market, including the expansion of its operations to Canada, consequent to the legalization of cannabis. It has launched a new online e-commerce platform in Canada to meet the demands of both commercial and retail customers.

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. These developments point to the fact that the company is leaving no stone unturned in its quest to become the market leader in the cultivation space, especially focused on cannabis and hemp.

The 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 (NYSE: ACB), Canopy Growth (NYSE: CGC), Curaleaf (OTCPK: CURLF) etc, in the anticipation of legalization of marijuana in the U.S by the end of 2019.

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Canada, which legalized Cannabis in 2018, has become a Mecca for those seeking to hit the Cannabis Jack (Pot)!

An estimate by Deloitte, places the Canadian cannabis market at a base retail value of $4.9 billion to $8.7 billion rivaling that of the $5 billion Canadian spirits market. If the values of services provided by companies such as GrowLife, which take care of the cultivation, supply and distribution side of the chain, are taken into consideration, then the overall value of the Canadian cannabis market will be worth over $12.7 billion and $22.6 billion.

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 Company
GrowLife aims to be a primary provider of ancillary products and services to service growers, testing labs, lighting, and security systems throughout North America and Canada.

It 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;

Hydrophonics – Offers grow systems, hydrophonic systems, Water aeration, pumps, purification and irrigation supplies to name a few.

Commercial – Offers professional consultancy services by experts for commercial grow operations from build to design.

Innovations – This division handles the R&D, product innovation and intellectual property rights aspects of the business.

Retail – Uses the “Store-within-a-store” concept in a traditional brick and mortar set up in the North American Market.

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The company aims to be the 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.

We believe that GrowLife Inc, is poised to make great strides in the cultivation industry and its recent strategic moves are a testimony to the fact. However, there are certain obstacles beyond its control which may prove challenging such as;

  • 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. It has a ready market for its offerings, but incase it does not expand its operations and make inroads into the newer set ups or markets, it will be overtaken by competition.
  • The preferred method of cannabis cultivation is by using hydroponics, which will drive the demand for its products. Canada allows households to grow cannabis, subject to regulations, which will also serve as an opportunity to increase its base.
  • There is increasing customer awareness about organic cultivation and hence a growing demand for hydroponic fruits and vegetables, which will hold the company in good stead. It is exploring innovative ideas such as vertical cultivation to propel its growth in the future.
  • Its business, especially in the Cannabis cultivation space, is governed by stringent and complicated laws that do not allow import or export of the product, at least in the U.S. The changing laws and regulations may prove challenging to negotiate and navigate for the company. Most companies are now looking at their Canadian counterparts for guidance on how to go about expanding, incase legalization does take place in the U.S, making it imperative that they make inroads into the Canadian market pronto.
  • It is constantly innovating and pushing the envelope, be it the company’s “Commercial Vertical Grow System” which is currently undergoing proof-of-concept studies or its integration of EZ-clone. There is a burgeoning need for novel cultivation methods that can address the issues faced by cultivators due to unpredictable weather conditions, water scarcity or depletion of soil.

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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