Canadian Regulators Open Door to More Robust Cannabis Market Growth

NEW YORK, July 11, 2019 /PRNewswire/ -- Canada made headlines in 2018 after it became the second country in the world to completely legalize adult cannabis use. Canada's Prime Minister Justin Trudeau was a strong advocate for legalization and ultimately, the country decided to pass new legislation and initiate legal adult-use in late 2018. However, despite Canada's legal market, the enormous U.S. market continues to cast a cloud over its northern neighbor, even though the U.S. has not yet moved to federally legalize cannabis. Instead, U.S. states are given the jurisdiction to legalize cannabis for either medical or recreational purposes. And as of June 2019, 33 states and the District of Columbia allowed the use of cannabis for medical applications. Moreover, 11 of those states, including the District of Columbia, have legalized adult recreational use. The U.S. adopted cannabis as early as the late 1990s when states such as California, Oregon, Alaska, and Washington were the first to implement a medicinal cannabis program. However, the industry was completely reshaped when Colorado and Washington legalized recreational cannabis in 2014. Throughout the beginning phases, legal cannabis sales were slow. For instance, Colorado reported total marijuana sales of USD 683 Million in 2014. But by the end of 2018, Colorado's legal cannabis market delivered revenues of USD 1.54 Billion, according to the Colorado Department of Revenue. Furthermore, Colorado is on pace to report another record-breaking year in marijuana sales for 2019. As of January 2019 to April 2019, the state had already reported sales of USD 522 Million. While Canada's market may seem minuscule in comparison to the U.S. market, it is still positioned to become a major global growth driver. Unlike the U.S., Canada has federally legalized cannabis, meaning that its market penetration is much greater, even as Canada's legal market still remains relatively new. Nonetheless, the market will continue to mature as the legal business progresses. And according to data compiled by ArcView Market Research and BDS Analytics, the legal cannabis spending in Canada was USD 569 Million in 2018. By 2024, the spending is expected to reach USD 5.2 Billion while exhibiting a CAGR of 44.4%. Canopy Rivers Inc. (OTC: CNPOF) (TSX-V: RIV), Tilray, Inc. (NASDAQ: TLRY), Cronos Group Inc. (NASDAQ: CRON) (TSX: CRON), Curaleaf Holdings, Inc. (OTC: CURLF) (CSE: CURA), Green Thumb Industries Inc. (OTC: GTBIF) (CSE: GTII)

Canada's initial legal sales could have potentially been much greater if there wasn't a barrage of legal barriers. For instance, the government limited the number of licenses that were distributed to cultivators and curtailed retail operating hours. These restrictions hurt businesses due to the rapidly growing demand which quickly began to outweigh the supply. Some provinces experienced severe shortages, which forced a few retailers to shut down their businesses. However, industry experts believe that the shortages could end sooner than anticipated. Brock University Professor Michael Armstrong expects shortages to halt by the end of 2019 due to the accelerating production rates. Armstrong cites data from 2017 and notes that production rates have drastically increased year-over-year. Moreover, he highlights that many producers have been stockpiling cannabis supply and are continuing to grow cannabis at a faster rate. Furthermore, Canadian provinces have been distributing additional retail licenses to create more brick-and-mortar and online channels for consumers. Certain provinces, including Ontario and Quebec, are unable to meet the demands of consumers due to the store to population density ratio. In particular, Ontario didn't open its first retail store until April, and only 25 store licenses have been issued as of May 2019, which equates to 0.2 stores for every 100,000 residents, according to the Globe and Mail. On the other hand, Colorado operates roughly 10 stores per 100,000 residents. Investment group, Altacorp highlighted that Ontario would need to add roughly 1,400 stores to meet Colorado's ratio. Nevertheless, provinces such as Alberta have already taken on an initiative to close the gap. Alberta provincial regulator said they plan to issue five new licenses each week, totaling 115 new cannabis store licenses in the next six months if supply steadily increases, according to Marijuana Business Daily. "The legal recreational cannabis market in Canada is in its infancy, and as such, a significant number of consumers will likely be first-time users without much knowledge of the different products and their effects," Altacorp said. "A well-developed retail platform allows customers to interact with knowledgeable staff and provide them with a holistic customer experience, which is essential to attracting first-time and existing users to the legal recreational channels."

Canopy Rivers Inc. (OTC: CNPOF) (TSX-V: RIV) is also listed on the TSX Venture Exchange under the ticker (TSX-V: RIV). Yesterday, the Company congratulated, "its portfolio company, YSS Corp. ("YSS") (TSXV: YSS) (WKN: A2PMAX), on receiving five cannabis retail licences from the Alberta Gaming, Liquor and Cannabis Commission ("AGLC"). The five new licences are located throughout Alberta and will operate under the YSS™ brand name.  

'YSS has made tremendous progress building up their retail presence in Alberta – doubling their current AGLC licensed stores to ten,' said Narbe Alexandrian, President and CEO of Canopy Rivers. 'With plans to have all ten stores open by the end of August, this announcement represents positive momentum for YSS in the second half of 2019.'    

Canopy Rivers currently holds approximately 8% of the issued and outstanding common shares in the capital of YSS on a fully-diluted basis. For more information regarding Canopy Rivers' investment in YSS, please refer to the joint management information circular of Canopy Rivers Corporation and the Company dated August 8, 2018, filed with Canadian securities regulators and available on the Company's profile on SEDAR at www.sedar.com. For additional information about YSS, please refer to YSS's profile on SEDAR or their website at www.ysscorp.ca/investors.

About Canopy Rivers: Canopy Rivers is a unique investment and operating platform structured to pursue investment opportunities in the emerging global cannabis sector. Canopy Rivers works collaboratively with Canopy Growth Corporation (TSX: WEED, NYSE: CGC) to identify strategic counterparties seeking financial and/or operating support. Canopy Rivers has developed an investment ecosystem of complementary cannabis operating companies that represent various segments of the value chain across the emerging cannabis sector. As the portfolio continues to develop, constituents will be provided with opportunities to work with Canopy Growth and collaborate among themselves, which Canopy Rivers believes will maximize value for its shareholders and foster an environment of innovation, synergy and value creation for the entire ecosystem."

For our latest "Buzz on the Street" Show featuring Canopy Rivers Inc. recent corporate news, please head over to: https://www.youtube.com/watch?v=5Uh3ZkzgOfU

Tilray, Inc. (NASDAQ: TLRY) is a global pioneer in the research, cultivation, production and distribution of cannabis and cannabinoids currently serving tens of thousands of patients and consumers in 12 countries spanning five continents. Tilray Inc. recently announced that it had imported medical cannabis oral solutions in bulk into the United Kingdom from its Good Manufacturing Practices (GMP)-certified facility in Canada. This export allows Tilray to provide authorized U.K. patients in need with a locally maintained supply of medical cannabis oral solutions. "As demand ramps up in the U.K., Tilray is well positioned to be a leading supplier of medical cannabis products," says Sascha Mielcarek, Managing Director of Tilray Europe. "Regulations are progressing as more and more countries across Europe are recognizing the benefits of medical cannabis and its potential to improve patients' quality of life. We're pleased to reaffirm our commitment to delivering medical cannabis to patients in the U.K.and look forward to offering a variety of GMP-certified, pharmaceutical-grade products in the coming months."

Cronos Group Inc. (NASDAQ: CRON) (TSX: CRON) is an innovative global cannabinoid company with international production and distribution across five continents. Cronos Group Inc. recently announced that it had entered into a multi-year supply agreement with MediPharm Labs Corp. MediPharm Labs will supply Cronos Group with approximately USD 30 Million of high-quality private label cannabis concentrate over 18-months, and, subject to certain renewal and purchase options, potentially up to USD 60 Million over 24-months. In addition, Cronos Group and MediPharm Labs have entered into a multi-year tolling agreement, where Cronos Group will supply bulk cannabis to MediPharm Labs' state of the art extraction facility in Barrie, Ontario, to fulfill certain additional processing needs of the Company. "As the industry develops and matures, we see opportunity to work with companies like MediPharm Labs that provide specialized, high-quality services and inputs for our products," said Mike Gorenstein, Chief Executive Officer of Cronos Group. "Along with our internal capabilities, we are pleased to be working with MediPharm Labs to bring great products to consumers in anticipation of the derivative market launching in Canada this fall."

Curaleaf Holdings, Inc. (OTCQX: CURLF) (CSE: CURA) is the leading vertically integrated multi-state cannabis operator in the United States. Curaleaf Holdings, Inc. recently announced that it has made two separate acquisitions in Arizona for combined consideration of USD 25.5 Million. Curaleaf entered into an agreement to acquire Glendale Greenhouse, a vertically integrated cannabis business operating a cultivation and processing facility, as well as a prime retail location, with plans to rebrand as Curaleaf after the transaction closes. The Glendale Greenhouse production facility is a 20,000 square-foot, multi-level cultivation center which is capable of producing 3,600 pounds of flower annually. Its 1,500 square-foot dispensary, located directly off the Agua Fria Freeway with 90,000 cars passing daily, can be expanded to nearly 5,000 square-feet. Glendale Greenhouse holds the master lease on the 15,000 square-foot multi-tenant building where the dispensary is located. The facility also operates a state-of-the-art CO2 extraction lab and a kitchen, which is already producing various edible lines such as mints, gummies, brownies and ice cream, with additional products expected to launch later this year. "The acquisition of both Glendale Greenhouse and the opening of our 83rd Avenue location demonstrates our commitment to the Arizona market and to providing consumers with reliable and high-quality cannabis experience," said Joseph Lusardi, Chief Executive Officer. "This transaction not only strengthens our position with the seventh and eighth Curaleaf branded dispensaries in the fast-growth Phoenix metro market, but greatly enhances our processing capabilities and accelerates our plans to produce and distribute wholesale products in the state."

Green Thumb Industries Inc. (OTCQX: GTBIF) (CSE: GTII), a national cannabis consumer packaged goods company and retailer, is dedicated to providing dignified access to cannabis while giving back to the communities in which they serve. Green Thumb Industries recently announced it opened its fourth retail location in Florida, Rise Oviedo, the community's first cannabis store, on July 9, 2019. This is GTI's 26th open location in the country. Rise Deerfield Beach, Rise Pinellas Park and Rise Bonita Springs all opened earlier this year, and GTI has a retail footprint for up to 35 stores throughout Florida. The company owns and operates a manufacturing facility in Homestead where it cultivates and produces GTI's branded cannabis products including Rythm and The Feel Collection. Rise™ also offers delivery to registered cardholders in Florida via orders placed at RiseCannabis.com or by contacting a Rise™ store directly.  "We are honored to be the first company to provide access to medical cannabis in Oviedo and to help Floridians exercise their right to wellness," said GTI Founder and Chief Executive Officer Ben Kovler. "Our Rise™ stores provide exceptional customer care and we're thrilled to serve the people of Oviedo and surrounding communities."

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