Cannabis Makes Medical Inroads as Opioid Epidemic Continues
New York, Feb. 12, 2019 /PRNewswire/ -- The opioid epidemic has become a growing concern among many countries worldwide as opioids are commonly used to treat medical conditions such as chronic pain or cancer. However, research has shown that cannabis is linked to successful treatment of the same conditions that opioids are currently used for. Now, many countries worldwide are exploring opportunities in the cannabis market, in an effort to replace opioids with cannabis. According to data compiled by Energias Market Research, the global medical cannabis market is projected to grow from USD 8.28 Billion in 2017 to USD 28.07 Billion in 2024. Additionally, the market is expected to grow at a CAGR of 19.1% during the forecast period. Growing awareness, increasing demand and R&D initiatives will all play a part in increasing demand, helping to grow the market. As research continues, other countries may examine cannabis as a potential medical treatment alternative, potentially driving the industry even further. Medipharm Labs Corporation (OTC: MLCPF) (TSX-V:LABS), Cronos Group Inc. (NASDAQ: CRON) (TSX:CRON), Pyxus International Inc. (NYSE: PYX), New Age Beverages Corporation (NASDAQ: NBEV), Youngevity International, Inc. (NASDAQ: YGYI)
Currently, chronic pain is expected to grow into one of the largest growing segments in the medical cannabis industry. In 2016, it was reported that nearly 20% of U.S. adults dealt with chronic pain, while 8% suffered from high-impact chronic pain, according to the National Center for Complementary and Integrative Health. The data also showed that many adults used opioids in order to suppress pain. Additionally, research conducted by the National Institutes of Health showed that patients diagnosed with chronic pain were also linked to opioid dependency. Now, around the world, many cannabis-based companies have seized the opportunity and entered into the medical market to provide consumers with an effective treatment that poses fewer side effects. Consumers can be seen using products such as oils, flower, and topicals in order to treat their conditions. "As legislation expands rapidly worldwide, the volume of efficacy data is growing, as are legitimate clinical trial studies," says Liam McGreevy, Chief Executive Officer of Ethnopharm, a European cannabis company specializing in genetics and distribution, "This data will enable us to better understand the effects of the various cannabinoids and terpenes, their synergistic effect and how their impact links to the individual's genetics or biomarkers. This data is key to understanding the most effective combinations and strengths for various conditions, moving towards targeted personalized medicines."
Medipharm Labs Corporation (OTCQB: MLCPF) (TSX-V: LABS) is also listed on the TSX Venture Exchange under the ticker symbol (TSX-V: LABS). Earlier today the company announced breaking cannabis news that, "its wholly-owned subsidiary, MediPharm Labs Inc. ("MediPharm Labs" or the "Company"), has entered into a significant sales agreement with a leading Licensed Producer to supply approximately $35 million of private label purified cannabis oil concentrates. Under the terms of the agreement, the Licensed Producer will immediately purchase upfront $7.66 million of cannabis oil concentrate from MediPharm Labs' inventory in February 2019. In addition, the Licensed Producer will purchase a minimum of $27 million of cannabis oil concentrate over a 12-month period commencing March 2019, with an option to purchase an additional $13.5 million over the same period, bringing the total potential aggregate value of the agreement to over $48 million to February 2020.
MediPharm Labs' private label program is a high margin business for the Company, whereby it opportunistically procures dry cannabis flower and trim from its thirteen product supply partners, to produce proprietary cannabis oil concentrate products for resale globally on a private label basis. This is MediPharm Labs' fourth private label sales agreement to date. In total, these four agreements have aggregate potential value of over $85 million in the 15-month period that commenced December 2018.
"As the cannabis industry continues to rapidly grow and evolve, MediPharm Labs has quickly established itself as a dominant player and leading provider of private label cannabis oil concentrates to other Licensed Producers and branded product manufacturers. We have also demonstrated the permanent need for a specialized extraction provider to fulfil and secure the cannabis supply chain for medical and recreational consumers," said Pat McCutcheon, CEO of MediPharm Labs. "With our significant first mover advantage, deep expertise, leading-edge proprietary technology to manufacture and develop high-quality cannabis oil and concentrate products at commercial scale, we have quickly been able to execute several major contracts already and continue to see robust demand for our specialized products and services and are well positioned to achieve strong revenue growth as a dominant extraction company in the cannabis industry."
As an agnostic supplier of pharmaceutical grade cannabis oil concentrates to the global cannabis industry, MediPharm Labs has demonstrated its ability to strengthen and further secure the domestic supply chain for high-demand cannabis oil. This new supply agreement, combined with a large, long-term oil supply agreement previously announced with Canopy Growth Corporation, represents less than 10% of MediPharm Labs' annual extraction capacity of 150,000 Kg, which is currently being expanded to 250,000 Kg of annual extraction capacity, with completion expected Q2 2019.
To date, MediPharm Labs has completed four private label wholesale agreements for cannabis oil concentrate supply (including Canopy Growth Corporation); five long-term cannabis concentrate program (tolling) agreements with James E. Wagner Cultivation Corp., Emerald Health Therapeutics, Inc., INDIVA Limited, The Supreme Cannabis Company, Inc. and TerrAscend Corp. Additionally, the Company has completed bulk purchases and/or off-take agreements with thirteen Licensed Producers securing dried cannabis supply to build MediPharm's oil inventories for private label sale. The Company also continues to make progress on new partnership agreements with additional Licensed Producers and branded product manufactures for cannabis private label manufacturing, as well as partnerships to purchase cannabis concentrates for global export for private label and research and development.
About MediPharm Labs Corp. - Founded in 2015, MediPharm Labs is a pioneer in the cannabis industry and has the distinction of being the first company in Canada to become a licensed producer for cannabis oil production under the Access to Cannabis for Medical Purposes Regulations (ACMPR) without first receiving a cannabis cultivation licence. This expert focus on cannabis concentrates from its cGMP (current Good Manufacturing Practices) and ISO standard-built clean rooms and critical environments laboratory, allows MediPharm Labs to work with its established, Health Canada-approved cultivation partners to produce pharmaceutical-grade cannabis oil with a competitive advantage. MediPharm Labs is research-driven and focused on downstream secondary extraction methodology, distillation, and cannabinoid isolation and purification. MediPharm Labs provides B2B contract processing of cannabis to Canadian authorized licensed producers and appropriate international growers, supplying integrity-assured cannabis oil to qualified companies for sale under their own brand. In addition, MediPharm Labs will supply raw materials, formulations, processing and packaging for the creation of ready-to-sell advanced derivative products. MediPharm Labs was awarded Start-up of the Year at the recent Canadian Cannabis Awards hosted by Lift & Co.
Through its subsidiary, MediPharm Labs Australia Pty. Ltd., MediPharm has also completed its application process with the federal Office of Drug Control to extract and import medical cannabis products in Australia."
Cronos Group Inc. (NASDAQ: CRON) (TSX:CRON) is a globally diversified and vertically integrated cannabis company with a presence across five continents. Cronos Group Inc. recently announced that it has entered into a subscription agreement with Altria Group, Inc. pursuant to which Altria has agreed to make an approximately CAD 2.4 Billion equity investment in Cronos Group on a private placement basis in exchange for common shares in the capital of the Company. Altria will also receive Warrants of Cronos Group, that if fully exercised, would provide the Company with an additional approximately CAD 1.4 Billion of proceeds. The Shares issuable to Altria pursuant to the Subscription Agreement will result in Altria holding an approximately 45% ownership interest in Cronos Group (calculated on a non-diluted basis), exercise of the Warrants would result in incremental ownership of 10% for a total potential ownership position of 55%. This strategic partnership provides Cronos Group with additional financial resources, product development and commercialization capabilities, and deep regulatory expertise to better position the Company to compete, scale and lead the rapidly growing global cannabis industry. "Altria is the ideal partner for Cronos Group, providing the resources and expertise we need to meaningfully accelerate our strategic growth," said Cronos Group's Mike Gorenstein, Chairman, President and Chief Executive Officer. "The proceeds from Altria's investment will enable us to more quickly expand our global infrastructure and distribution footprint, while also increasing investments in R&D and brands that resonate with our consumers. Importantly, Altria shares our vision of driving long-term value through innovation, and we look forward to continuing to differentiate in this area. As one of the largest holding companies in the adult consumer products sector, Altria has decades of experience in regulatory, government affairs, compliance, product development and brand management that we expect to leverage, particularly as new markets for cannabis open around the world."
Pyxus International Inc. (NYSE: PYX) is a global agricultural company with 145 years of experience delivering value-added products and services to businesses and customers. Criticality, a North Carolina-based agricultural hemp company, recently announced the expansion of its consumer products under its brand name Korent with the launch of its line of cannabidiol (CBD) e-liquids. The announcement follows the brand's launch of CBD oils in December 2018. Criticality currently partners with family farmers in three states to grow industrial hemp. The hemp is analyzed and validated for cannabinoid levels and potential contaminants by independent third-party laboratories during the growing and processing phases, as well as prior to the release of products. Criticality uses all-natural, environmentally-friendly methods to extract CBD from plant material without the use of harsh chemicals. "Korent's CBD products are expertly crafted and designed to help consumers effectively restore balance to their lives. Our new line of CBD e-liquids uses high-quality, verifiable ingredients," said Brian Moyer, Chief Executive Officer of Criticality.
New Age Beverages Corporation (NASDAQ: NBEV) is a Colorado and Utah-based healthy beverage company dedicated to inspiring, educating consumers to live healthy. New Age Beverages Corporation recently announced the signing of an agreement to develop and distribute Marley branded cannabis-infused beverages. The first product to rollout in the Marley+CBD portfolio will be Marley+CBD Mellow Mood, relaxation drinks in 15.5 oz cans with 25 mg of pharmaceutical grade CBD per serving. Initial market rollout to customers will be in Colorado, Oregon, Washington, and Michigan where cannabis is legal for responsible adult consumption. This rollout gives New Age a significant first-mover advantage in the CBD space with a globally-recognized brand platform, and positions the venture well for further expansion as regulations permit. Michael Cunningham, Senior Vice President of Sales for New Age commented, "It makes my job a lot easier when I have retailers and distributors reaching out to me asking for specific products. From the moment the CBD movement began, I've been receiving calls nonstop asking when we'd be going to market with a Marley+CBD product. Retailers and distributors realize that it will be a long road for smaller CBD brands to gain traction and brand equity. Under the Marley brand platform, we are able to leverage a massive global brand with ties to healthy cannabis use, to ultimately grow a beverage brand beyond anything we have seen to-date."
Youngevity International, Inc. (NASDAQ: YGYI) is a leading omni-direct lifestyle company offering a hybrid of the direct selling business model, that also offers e-commerce and the power of social selling. Youngevity International recently announced that it will be adding Icelandic Glacial™–The Purest Tasting Water on Earth–to its growing, multifaceted lineup of lifestyle brands in the health, wellness, and food and beverage industries by agreeing to an exclusive sales and marketing agreement with the brand. Icelandic Glacial and Youngevity will work exclusively with one another as joint development partners to create exciting new products across the lifestyle, health, and food and beverage industries with the potential for a drinkable CBD product being at the forefront of potential collaborations. "I'm ecstatic to have a brand like Icelandic Glacial join the Youngevity team," said Steve Wallach, Chief Executive Officer of Youngevity International, Inc. "Icelandic Glacial offers a product unlike anything else on the market. Its rare, naturally occurring high pH level and unique lava rock filtering system certainly set it apart. But beyond that, Icelandic Glacial is the world's first Carbon Neutral bottled water company. It's perfectly positioned to serve not only customers who want a pure tasting water that makes them feel and perform their best, but also eco-friendly consumers who want to make sure their money goes to brands with a conscience."
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