Canada Legalizes Cannabis Edibles, Beverages, Extracts and Other Derivative Products
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Oct 17, 2019, 08:30 ET
This seems like a paid article. I could be wrong.
NEW YORK, Oct. 17, 2019 /PRNewswire/ -- On the first anniversary of Canadian cannabis legalization, "Legalization 2.0" or "Cannabis 2.0" will allow popular cannabis derivatives like edibles, infused beverages, and vapes to legally be bought and sold nationwide. Demand for these products is incredibly high, and most analysts believe that cannabis derivatives will allow companies to deliver on ambitious revenue projections for the still-growing pot industry. Because this market is so important, companies that are prepared to capitalize on cannabis-derived consumables—like BevCanna Enterprises Inc. (CSE:BEV) (OTCPK:BVNNF), MediPharm Labs Corp. (TSX:LABS) (OTCQX:MEDIF), Cronos Group (TSX:CRON) (NASDAQ:CRON), Valens GroWorks (TSXV:VGW) (OTCQX:VGWCF), and IAnthus Capital Holdings, Inc. (CSE:IAN) (OTCQX:ITHUF)—are likely to ride the new wave of legalization and become the major industry players of tomorrow.
According to a comprehensive report from Deloitte called Nurturing New Growth: Canada Gets Ready for Cannabis 2.0, the Canadian market for edibles and alternative cannabis products will be worth $2.7 billion annually. $1.6 billion of that will be from edibles alone, and $529 million will be from beverages.
BevCanna is Best Positioned to Deliver Cannabis Beverages
BevCanna Enterprises Inc. (CSE:BEV) (OTCPK:BVNNF) understands better than perhaps any other company what kind of opportunity "legalization 2.0" provides for the cannabis industry. With its goal to become the global leader in cannabis-infused drinks, BevCanna has done an exceptionally good job of preparing itself for the new consumables market.
The last few months have seen a bevvy of activity for BevCanna. The company recently completed independent lab testing on its proprietary powder ingredient, Deeper Green, which allows for a full range of cannabinoid inputs, including THC, CBD, full-spectrum extracts and hemp-based CBD. The company also has an exclusive supply agreement with Nextleaf Solutions to employ its water-soluble cannabinoids for development and manufacturing, as well as a research license allowing BevCanna to look into the stability and homogeneity of water-soluble cannabinoid infusions in water-based beverages.
All this means that BevCanna has the technology and the permits in place to deliver cannabis drinks that are both high-quality and reliable. Accomplishing just one of these tasks is a monumental achievement, but having both in place in time for "legalization 2.0" puts the company in an industry-leading position.
BevCanna Enterprises Inc. (BEV-BVNNF)'s two announced products lines, Anarchist Mountain Beverages and Grüv Beverages provide the company with brands that are broadly appealing for consumers interested in cannabis drinks. Anarchist Mountain is a line of THC-dominant sparkling spring water beverages with botanical flavor profiles inspired by the Pacific Northwest. Grüv is a wide range of easy-drinking cannabis-infused iced tea drinks with a balanced CBD and THC profile. Additionally, BevCanna is in "the final development stage for a third product line that will be the catalyst for the launch of the company's water-soluble powder beverage line in California," according to its corporate update.
At the beginning of October, the company entered into a definitive agreement with Higharchy Ventures to manufacture and launch a portfolio of cannabis-infused beverage brands for the Canadian market. The brands will be distributed throughout Canada via Higharchy's retail cannabis network, and as part of the rollout, BevCanna plans to establish a retail education and training program. This program will focus on educating store staff on the infused beverage category and responsible consumption.
Also, in its recent corporate update, BevCanna Enterprises Inc. (CSE:BEV) (OTC:BVNNF) laid out its objects for the next six months, which mostly center on forming relationships with LPs looking to enter the infused products market in Canada, as well as forming strategic relationships with companies and brands that offer complimentary products.
Already, 11% of Canadians consume cannabis products like edibles and infused beverages, and according to the Deloitte report, another 13% are expected to start buying them when they become legal. With nearly one in four citizens in Canada currently or likely to consume cannabis edibles and alternative products, Deloitte says that "legalizing these products should clearly create valuable new growth opportunities for Canada's cannabis sector."
Other Companies That Can Deliver Products to a Hungry Market
BevCanna Enterprises Inc. (BEV-BVNNF) won't be the only company to benefit from "Legalization 2.0." Many of its contemporaries are working hard to establish themselves in the newly legal markets.
In preparing for the new legislation governing cannabis derivatives, MediPharm Labs Corp. (TSX:LABS) (OTCQX:MEDIF) VP of investor relations & communications Laura Lepore says that her company is building "the largest vape pen platform in all of Canada." A big part of that is the company's white label agreement with Ace Valley, which in signed in June, to launch a premium line of approximately 2 million Ace Valley-branded cannabis extract-based vape pens to Canadian consumers.
MediPharms has also signed a manufacturing agreement with Cronos Group (TSX:CRON) (NASDAQ:CRON), which will see the company produce high-quality cannabis concentrate filled vapes for Cronos Group's COVE brand. Vape pens have been called the key to Cronos Group's success, and its Cronos Device Labs in Israel—which is focused on developing vape products for cannabis applications—could just be the driving force to make Cronos a leader in the vape pen category.
Not to be outdone, Valens GroWorks (TSXV:VGW) (OTCQX:VGWCF) is making sure it remains the go-to cannabis extraction company as legalization 2.0 impacts the industry. Valens already lists major market players such as Canopy Growth, HEXO, and The Green Organic Dutchman among its clientele, and to make sure that it can meet the demand for cannabis extracts once edibles can be produced and sold, it has increased its annual extraction capacity to 425,000 kgs of dried cannabis and hemp biomass.
Like MediPharm and BevCanna Enterprises Inc. (BEV-BVNNF), Valens also entered a white-label contract that will see it produce a minimum of 2.5 million THC and CBD infused beverages over five years for Iconic Brewing.
While those companies prepare to capture the burgeoning cannabis consumables market in Canada, IAnthus Capital Holdings, Inc. (CSE:IAN) (OTCQX:ITHUF) hopes to take a similar approach in the US market wherever it can. According to its Q2 financial earningsreport, the company can sell extracts such as vape cartridges, edibles, waxes, and tinctures in the state of Arizona. IAnthus also increased its production by 30 percent in Q2 over the previous quarter and is planning to use this added capacity to fuel rollouts in New York, New Jersey, and Massachusetts.
The Growing Market for Cannabis Consumables and Extracts
A survey conducted by Ernst & Young found that once cannabis products like gummies and face creams become available, they will attract as many as 3 million new Canadian consumers to the market.
Outside of Canada, the market for cannabis consumables is growing exponentially. According to Zion Research, the global market for cannabis beverages is going to grow in value from 1.6 billion to $4.5 billion in 2025, at a CAGR of approximately 15%. Meanwhile, Arcview projects that the edibles market could be worth over $4.1 billion in just Canada and the United States by 2022.
BevCanna Enterprises Inc. (BEV-BVNNF) has made sure it can capitalize on the markets created by "Legalization 2.0." It will do this through its multiple agreements to test, manufacture, and supply pot beverages, both for its own brands and for clients.
It will be joined in the new markets by MediPharm Labs Corp. and its partner Cronos Group, as well as Valens GroWorks - all of which, like BevCanna, have made white label agreements.
Finally, IAnthus Capital Holdings, Inc. solidifies its foothold outside of Canada. It will soon be joined in the US, and ultimately on the world stage, by companies like BevCanna that are prepared to meet the demand for cannabis-derived products.
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