Coming Wave of Edibles and Vape Sales Has Canadian Cannabis Companies Prepping for Legalization 2.0
FN Media Group Presents Potstocknews.com Market Commentary
New York, NY – June 25, 2019 – The date has been set for the rollout of new cannabis products in Canada, such as vape pens, edibles, beverages, topicals, and extracts. Regulations for this second wave of legalization, dubbed “Cannabis 2.0”, go into effect on October 17th, with products hitting shelves about two months later. Companies are well-positioned for this new growth opportunity are emerging, such as Organigram Holdings Inc. (NASDAQ:OGI) (TSX.V:OGI), Namaste Technologies (TSX.V:N) (OTCQB:NXTTF), The Supreme Cannabis Company (TSX:FIRE) (OTCQX:SPRWF), The Green Organic Dutchman (TSX:TGOD) (OTCQX:TGODF) and HEXO Corp. (NYSE:HEXO) (TSX:HEXO).
Industry analysts are already predicting Canadians will experience a tight supply upon mid-December’s legal market inauguration. However, a select few companies, particularly Organigram Holdings Inc. (NASDAQ:OGI) (TSX.V:OGI), have been announcing their strategy and preparations for Cannabis 2.0’s advent.
Having already partnered with The Green Solution, Canada’s Smartest Kitchen, and Valens GroWorks, Organigram has positioned itself well for the largest product form segments of the Cannabis 2.0 market. Most recently, the company announced they have been selected as one of only four Canadian partners of PAX Era, the premium oil vaporizer created by leading vape heavyweight PAX Labs Inc. Organigram is getting ahead on a vaporizer market that’s widely expected to emerge as the most popular format in the Cannabis 2.0 market based on US sales data.
Vaping Extra Value
Joining Organigram in partnering with PAX (founders of Juul, the most popular vape pen in the U.S.), are three other companies, including The Supreme Cannabis Company. Not to be left out on the vape market’s potential, The Green Organic Dutchman has signed a partnership deal with the parent company of vape pen manufacturers Evolab, likely to set up TGOD supplies for vape consumption.
Ray Gracewood, senior vice-president for marketing at Organigram Holdings Inc. (OGI), told BNN Bloomberg his company is earmarking approximately one-quarter of its cannabis for the concentrate market ahead of the demand it hopes to see for vape products.
“We think the vaporizer market will be the second-biggest market next to dried flower in the short term and the biggest driver to get new consumers in the space,” said Gracewood, adding that his company also plans to produce cartridges and disposable devices for the Canadian market.
Organigram, through its Edison Cannabis Co. brand, was also selected as the exclusive Canadian supplier of Feather Company Ltd.’s industrial design-patented vaporizer hardware and technology. This gives the company two bona fide options to gain traction in the vape segment.
Incoming Edibles Options
Plenty of experts are projecting that once the new cannabis licensing rules launch new products in December, Canada’s cannabis supply shortage could get even worse.
New edible (and drinkable) products are expected to be coming down the line in December. While details on their intentions aren’t fully available, The Green Organic Dutchman is set to deliver potentially several new edible products. The company secured an exclusive license with fast-acting Stillwater Foods’ RIPPLE SC (Soluble Cannabinoids) ingredient technology, to easily infuse cannabinoids into beverage and food products.
HEXO Corp. will be leaning on the beverage expertise of Joint Venture partners, Molson Coors Brewing Co. Together the partnership is expected to have a variety of (non-alcoholic) drinkable products ready in time for a national rollout in December.
For Namaste Technologies the plan is to deliver a line of chocolates through a partnership with Calgary-based chocolatiers, Chokolat. Organigram Holdings Inc. (OGI) is also looking to the chocolate option, through a C$15 million investment commitment in a high-speed, high-capacity, fully-automated production line with the ability to produce an estimate of up to 4 million kilograms of chocolate cannabis edibles per year.
With all of these new products and more on deck, Licensed Producers (LPs) will be charged with the task of meeting significantly higher and more complex supply expectations once Cannabis 2.0 officially hits. This is where dependence on major growers such as New Brunswick-based, Organigram could possibly ramp up. Construction of their Phase 4 expansion is expected to be completed by the end of 2019 for target production capacity of 113,000 kilograms per year, once fully licensed and operational.
Cultivation efficiency is shaping up to be one of Organigram’s biggest strengths. Its per-gram cash cost is the lowest reported by Canadian LPs, at C$0.65/gram, with an equally impressive all-in cost of C$0.85/gram of dried flower harvested.
A true national player in Canada’s legal adult use recreational cannabis marketplace, Organigram is now distributing products for sale in all ten Canadian provinces. The company recently announced the first shipment of its cannabis products to the province of Quebec, following purchase orders placed with the Société québécoise du cannabis (SQDC) and registration with the Autorité des Marchés Publics.
The market may need major cultivation boosts from suppliers like Organigram Holdings Inc. (OGI), a company with a strong track record of meeting supply commitments, to keep up with the additional demand that’s likely set to come.
Plenty of Innovation on the Way
Primarily focused on the e-commerce side of the medical marijuana business, Namaste Technologies (TSX-V:N) (OTCQB:NXTTF), is gearing up for new cannabis edibles customers with a sweet tooth. Earlier in March, the company acquired a 49% stake in Calgary-based chocolate company, Choklat. For a payout of C$1.5 million, Namaste now has access to Choklat’s online distribution platform where it will soon add a line of cannabis-infused edibles, likely later this year when they become officially legal to sell in December.
On the beverage side of the industry, HEXO Corp. (NYSE:HEXO) (TSX:HEXO) partnered with Canadian brewing giant, Molson Coors Brewing Co. for a joint venture to begin selling multiple types of pot beverages on Canadian shelves before the end of the year. The JV insists that none of these products will contain alcohol, however, Molson Coors’ reach and distribution capabilities, coupled with HEXO’s growing capacity should make an impact once launched.
Not to be left out of the edibles market, The Green Organic Dutchman (TSX:TGOD) (OTCQX:TGODF) established its supply chain for new edible products in time, ahead of December. Through a definitive long-term extraction supply agreement with Neptune Wellness Solutions signed in March, ‘TGOD’ will supply more than 230,000 kgs of cannabis and hemp biomass over a three-year period. The deal is believed to signal TGOD’s anticipation of launching a line of cannabis edibles and alternative products later this year.
TGOD has also positioned itself for the unfettering of the popular cannabis vape market. Back in May, the company announced an exclusive agreement with CBx Enterprises LLC for the licensing of the Evolab and CBx Sciences brands. CBx Sciences likely is more in line with developing products for the edibles market, whereas Evolab is a top cannabinoid vaporization brand that’s gained a significant market share through its variety of products.
Joining in on the vape movement, both The Supreme Cannabis Company (TSX:FIRE) (OTCQX:SPRWF) and Organigram Holdings Inc. (OGI) have secured agreements with US vape pen company, PAX Labs Inc. Through their respective 7ACRES and Edison Cannabis Co brands, Supreme Cannabis and Organigram are two of the only four Canadian suppliers of cannabis oil pods for the strong brand Pax Era, which sells as many as 1.5 million units of products globally per year.
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 twenty six hundred dollars by PSN, a non-affiliated third party to distribute this commentary on behalf of Organigram Holdings 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
 Certain factors may cause actual capacity to differ. See company’s Q2 MD&A.
 Cash cost and all-in cost of cultivation is a non-IFRS measure. See company’s Q2 MD&A.