California’s Bigger, Flashier Cannabis Market Set to Outpace Canadian Market
FN Media Group Presents Potstocknews.com Market Commentary
New York NY – December 4, 2018 – A divide is already happening in these early days of cannabis legalization in major markets such as Canada and California. Suppliers are jockeying for position within the hearts and minds of a growing consumer base, emphasizing the need to establish brand recognition, with pushes coming from companies such as Chemistree Technology Inc. (CSE:CHM) (OTC:CHMJF),MedMen Enterprises Inc. (CSE:MMEN) (OTC:MMNFF),Curaleaf Holdings Inc. (CSE:CURA)(OTC:CURLF), Cronos Group Inc. (NASDAQ: CRON) (TSX: CRON) ,and KushCo Holdings, Inc. (OTC: KSHB).
Regulatory challenges in Canada that don’t exist in California are likely to cause a branding gap, with the advantage going to the west coast state. Unlike in California where customers are greeted with colorful displays, hip brand names, and a plethora of products, Canadian consumers must settle for a much more subdued and humdrum buying experience.
Legally, Canadian cannabis companies and dispensaries can’t lure customers with flashy designs. Health Canada, the government arm overseeing packaging regulations for cannabis, wanted to approach packaging from a health and safety perspective as opposed to a revenue-generating perspective—which practically means branding is officially illegal.
Meanwhile, in the US, companies such as Chemistree Technology Inc. (CSE:CHM) (OTC:CHMJF) can openly sponsor high-profile events such as the recent High Times ‘Biz Bash’ party, featuring celebrity rapper 2 Chainz during the MJBizCon Conference and Expo held in Las Vegas. The company’s involvement with the event was part of an aggressive marketing and sale campaign to publicize the launch of the new website of its flagship brand, Sugarleaf.
Jeremy Deichen of Chemistree Technology Inc. (CSE:CHM) (OTC:CHMJF) commented, “it [was] our pleasure to team with our friends at High Times to pull off this amazing event. In working with them over the years with ‘Growing Exposed’ we have learned that they are truly the masters at getting eyeballs on what is new and fresh in the industry”.
The California Advantage
When Chemistree Technology Inc. (CSE:CHM) (OTC:CHMJF) partnered with the Washington-based Sugarleaf brand back in May, it did so with the expressed intent to more than double the reach of the product line by the end of 2018, and to quadruple it through 2019. Part of that plan included a strategic entry into California, which was further solidified with the company’s land purchase of 9.55 acres in California’s prominent Desert Hot Springs Cannabis Cultivation Zone.
The move into California is significant, given the size of the market, and the blue-sky potential still yet to be realized in the state. Cannabis spending in California already hovered near $3 billion last year, prior to recreational marijuana officially becoming legal on January 1st. By 2022, the market is expected to soar to $7.7 billion.
However, the overall total output of the marijuana industry in the state is projected to be nearly double that, with total economic impact (going beyond direct spending only) estimated to be nearly $15 billion in the next four years.
With its population of nearly 40 million people, California is only slightly more populated than all of Canada at 39 million people. Yet, California alone has a higher peak sales potential than all of Canada, and that’s even with the federal government maintaining its Schedule I classification on the drug.
How is California so advantaged? For starters, selection for Canadian customers is much more limited, and not only because of a lack of packaging. Canadians so far can only legally purchase flower, seeds, plants and oil only, whereas Californians can get all those, plus edibles, concentrates, topicals, beauty products, infused beverages and more.
Add on top an ideal growing climate, that can reduce per-gram production costs, and California is built to be the hub of the US cannabis sector.
According to a newly released report from the Bank of Montreal, the global cannabis market could be worth $194 billion in seven years. Analysts at Bank of Montreal believe that additional countries will fully legalize marijuana, including the United States and many (if not all) European Union countries in the future.
If all 28 countries in the EU were to greenlight cannabis, it could lead to a $30 billion medical marijuana market and a whopping $68 billion adult-use market. Legalization in the US would mean up to $19 billion in annual medical pot sales and a further $49 billion from the recreational side of the equation.
With its already $3 billion in contributions, California is a global leader in the cannabis sector, with plenty of room still to grow.
California As a Launch Pad
The Californian advantage in the cannabis sector is pronounced, which is why Chemistree Technology Inc. (CSE:CHM) (OTC:CHMJF) is using the state as a launch pad for the assets it’s acquiring.
While the legalization of adult-use recreational marijuana didn’t officially begin until January 1, 2018, medical marijuana has been in place for years.
Chemistree Technology Inc. has seized upon its own California advantage. Built upon a team of executives and advisors with experience in the cannabis industry across multiple markets, the company is poised for using California as a hub.
The company has already acquired 9.55 acres in California’s prominent Desert Hot Springs Cannabis Cultivation Zone. The property can support a total of three sites containing cultivation and processing buildings, totalling approximately 205,000 sq ft, based on the municipality’s regulations.
Having an alliance with the successful brand Sugarleaf, which has already been cultivating and processing cannabis products in Sedro Woolley, Washington, Chemistree Technology Inc. (CSE:CHM) (OTC:CHMJF) is paving the way for an expansion.
Branding efforts are already underway with Sugarleaf, which has already established itself as a quality brand with prominent marketing leading the way. Among the team getting the word out will be advisor Jeremy Deichen, who brings over 20 years of cannabis industry experience in cultivation, processing, sales, branding, and marketing. Deichen is the creator of the Growing Exposed series which is distributed by the cannabis industry’s largest media publication, High Times.
Vertically integrated, Chemistree Technology Inc. (CSE:CHM) (OTC:CHMJF) is now primed and ready to begin establishing its California operations, through clever branding of Sugarleaf and other assets, commencing development on the Desert Hot Springs facilities, as well as expanding into Northern California with its joint venture processing facility. The company is currently seeking capital to expand locations in the state and its service offerings.
Further California Offerings
Leading retailers MedMen Enterprises Inc. (CSE:MMEN) (OTCQX:MMNFF) has seen sales in California exceed expectations. The bulk of the company’s sales come from California, with eight stores in the state (including four in Los Angeles), with 92% of its $20.6 million in fiscal Q4 sales. For the most part, growing demand in California is mostly responsible for MedMen’s revenue increasing 44% from the prior quarter.
Going in another direction into Canada, Cronos Group Inc. (NASDAQ: CRON) (TSX: CRON)has a deal with MedMen to offer the MedMen brand into Canada. However, Cronos itself has been working on its own branding, even though its main consumer base is in Canada. Back in September, Cronos Group launched its second cannabis brand for the domestic recreational market, called Spinach™. The branding idea was to allow consumers in Canada to purchase high quality Spinach™ “without the fear of persecution for their love of beautiful green plants.”
Capitalizing on California’s regulatory packaging requirements, KushCo Holdings, Inc. (OTCQB: KSHB)provides companies with a trusted supplier. The specialized packaging provider has benefitted from California’s rising sales. KushCo’s own sales soared 171% year over year to $51 million last fiscal year.
While not currently operating in California, Curaleaf Holdings Inc. (CSE:CURA) (OTCPK:LCURLF) is steadily expanding into new markets. The most recent expansion was the opening of its 5th retail location in California-neighboring Arizona. However, with the launch of its new line of premium hemp-based CBD products called Curaleaf Hemp, Curaleaf products could eventually be sold across state lines in multiple legalize states. Curaleaf is present in 12 US states, including Florida, New York and Oregon, but it also has licensing pending in California and Pennsylvania.
Disclaimer: Potstocknews.com (PSN) is the source of the Article and content set forth above. References to any issuer other than the profiled issuer are intended solely to identify industry participants and do not constitute an endorsement of any issuer and do not constitute a comparison to the profiled issuer. FN Media Group (FNM) is a third-party publisher and news dissemination service provider, which disseminates electronic information through multiple online media channels. FNM is NOT affiliated with PSN or any company mentioned herein. The commentary, views and opinions expressed in this release by PSN are solely those of PSN and are not shared by and do not reflect in any manner the views or opinions of FNM. Readers of this Article and content agree that they cannot and will not seek to hold liable PSN and FNM for any investment decisions by their readers or subscribers. PSN and FNM and their respective affiliated companies are a news dissemination and financial marketing solutions provider and are NOT registered broker-dealers/analysts/investment advisers, hold no investment licenses and may NOT sell, offer to sell or offer to buy any security.
The Article and content related to the profiled company represent the personal and subjective views of the Author (PSN), and are subject to change at any time without notice. The information provided in the Article and the content has been obtained from sources which the Author believes to be reliable. However, the Author (PSN) has not independently verified or otherwise investigated all such information. None of the Author, PSN, FNM, or any of their respective affiliates, guarantee the accuracy or completeness of any such information. This Article and content are not, and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action; readers are strongly urged to speak with their own investment advisor and review all of the profiled issuer’s filings made with the Securities and Exchange Commission before making any investment decisions and should understand the risks associated with an investment in the profiled issuer’s securities, including, but not limited to, the complete loss of your investment. FNM was not compensated by any public company mentioned herein to disseminate this press release but was compensated forty five hundred dollars by PSN, a non-affiliated third party to distribute this release on behalf of Chemistree Technology Inc.
FNM HOLDS NO SHARES OF ANY COMPANY NAMED IN THIS RELEASE.
This release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E the Securities Exchange Act of 1934, as amended and such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. “Forward-looking statements” describe future expectations, plans, results, or strategies and are generally preceded by words such as “may”, “future”, “plan” or “planned”, “will” or “should”, “expected,” “anticipates”, “draft”, “eventually” or “projected”. You are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events, or results to differ materially from those projected in the forward-looking statements, including the risks that actual results may differ materially from those projected in the forward-looking statements as a result of various factors, and other risks identified in a company’s annual report on Form 10-K or 10-KSB and other filings made by such company with the Securities and Exchange Commission. You should consider these factors in evaluating the forward-looking statements included herein, and not place undue reliance on such statements. The forward-looking statements in this release are made as of the date hereof and PSN and FNM undertake no obligation to update such statements.
FN Media Group, LLC