Canadian Cannabis Growers Focus on Scaling Production

NetworkNewsWire Editorial Coverage: The legalization of recreational cannabis is set to make the Canadian cannabis industry worth billions of dollars. Those companies that can navigate the arduous licensing processes will be in a position to make the most of this opportunity. Choom Holdings, Inc. (CSE: CHOO) (OTCQB: CHOOF) (CHOOF Profile) has built a strong leadership team to meet this challenge while preparing the company for cultivation and retails sales to meet regulatory needs. Aurora Cannabis, Inc. (TSX: ACB) (OTCQX: ACBFF) is one of the largest licensed medical growers and is expanding in preparation for the change in the law, acquiring cannabis related companies and striking deals with others. Namaste Technologies (CSE: N) is showing a different approach to cannabis retail through its ecommerce platform and telemedicine portal. Companies such as Emerald Health Therapeutics, Inc. (TSXV: EMH) (OTC: EMHTF) are partnering with Village Farms to more quickly establish growing facilities that meet regulatory standards. And the Supreme Cannabis Company, Inc. (TSXV: FIRE) (OTC: SPRWF) is planning annual production capacity provide product for retail from their leading-edge production facilities.

A Long-Awaited Change

The legalization of recreational cannabis has been coming to Canada for some time.

Over the past 20 years, attitudes about marijuana have shifted internationally. More and more people take a liberal view on drugs, while public health research has shown that licensing is more beneficial than banning cannabis. When Justin Trudeau became prime minister of Canada in 2015, his Liberal Party stood for this changing attitude. Though it’s taken several years, the Liberals’ legislation is now passing through the Senate, with the Cannabis Act (Bill C-45) just passed successfully through the second reading in the Senate (http://nnw.fm/GzC0n), paving the way for further study and a third and final reading in June 2018.

If passed as expected into law, Bill C-45 will make recreational cannabis openly available and ready for recreational by the end of this summer.

With estimates for the market ranging from $10 billion to $22 billion, this move will be huge for Canadian cannabis businesses. A number of companies are preparing to make the most of the opportunity. Some are established cannabis companies that have made their names serving the medical market. Others are new companies founded to enter the recreational sector. For all of them, recreational licensing is critically important. The ability to successfully enter the retail market will be a key differentiator for these companies over the next year.

The Right Team for the Challenge

Having the right mix of skills and experience will be critical in order for companies to earn licenses to grow and sell cannabis. Choom Holdings (CSE: CHOO) (OTCQB: CHOOF), one of the new companies looking to focus on the recreational sector, has established a strong team for this task.

At the Choom™ head is president and CEO Chris Bogart. With more than 20 years of experience in international capital markets, he has dealt with the wide range of capital markets requirements that surround mergers, acquisitions and corporate finance. This experience includes work in the medical sector as co-founder of cannabis biotech InMed Pharmaceuticals. He has a strong grasp of both the broad process of financing and operating demands required to adapt to the cannabis sector.

COO Michael Forbes has proven expertise in running retail pharmacies and related businesses. During a 14-year business career, he has established and run a chain of nine pharmacies and eight medical clinics, including methadone clinics. With a degree in pharmacy, he was a natural choice to help create the procedures for the College of Pharmacists of B.C. in 2010. His experience with tightly regulated pharmaceutical and medical businesses, as well as his understanding of the retail operations and distribution, will ensure the smooth running of Choom’s retail and compliance operations.

ACMPR (Access to Cannabis for Medical Purposes Regulations) licenses for growing cannabis specify a Senior Person in Charge (SPIC), so having a skilled professional for this position is vital. Robert Bayrack, the company’s master grower, takes this role at Choom. Robert brings extensive knowledge of cannabis horticulture, plant pathology and cultivation mastery, as well as experience in project management and construction. Having worked within the medical cannabis industry, he has a proven track record in growing high-quality products within the rules set down by regulators.

Licensed Production

Choom is expected to receive its first cultivation license this month and has three more in the pipeline. These are attached to four separate growing facilities, each with space to expand their annual production capacity.

First is the facility at Sooke, B.C., for which the license is expected to be approved soon. This facility has 10,000 square feet of space spread across two buildings. Both have state-of-the-art facilities that are operationally ready and compliant with the ACMPR standards and are expected to be growing by fourth quarter 2018.

This site also has space and plans in place for a second and third phase of building and growth. The second phase will more than double the growing area to over 19,000 square feet. But it’s the third phase that is truly ambitious, expanding the site to just over 700,000 square feet of mixed indoor and greenhouse growing. Zoning for phase three has already been approved.

A second site, High Way 10, covers 16,000 square feet on a 120-acre parcel. It is in the active review stage of ACMPR licensing process. The company is also actively working on obtaining a retail license from Saskatchewan authorities in order enter the retail market and sell product across the province.

The other two sites, at Vernon and Chemainus, are also key to Choom’s growing capacity. With 11,300 square feet of growing space between them, these facilities are being prepped for cannabis production, with Vernon undergoing state-of-the-art retrofits to create some of the most effective cultivation facilities for the company. As at Sooke, plans are in place for extensive expansion at both facilities so that Choom can increase its production capacity once the recreational market is established and the sales start to flow.

Streamlined Stores

Licensed stores will also be important for a vertically integrated cannabis company such as Choom. The company has established a design and plan for these stores that are helping to demonstrate that it is ready for licensing and that will communicate its brand appeal to customers.

Choom itself will operate some corporate stores. Others will be run by independent investor/operator owners. This will allow the company to present a consistent brand with well-regulated outlets across the country.

The design of these outlets combines a modern store design with a relaxed style that is the Choom brand. A combination of clean lines and warm interiors will offer a distinctive and inviting space that will be comfortable for customers. Choom retail is designed to appeal to both established cannabis users with outstanding product selection and offer education for those new consumers who are curious about the product. Created by the design team behind some of the most popular modern retail environments, the stores have a style meant to help Choom stand out. And with a leadership team well versed in navigating regulatory processes, the company should be able to gain a foothold within Canada’s new retail cannabis market.

Expanding the Cannabis Sector

A variety of other companies are also preparing to take their places in Canada’s expanding cannabis sector. Some are purely recreational, while others are moving in from the medical side.

One of the world’s largest and fastest-growing cannabis companies, Aurora Cannabis, Inc. (TSX: ACB) (OTCQX: ACBFF) is preparing to expand from medical product sales into recreational uses. It recently finalized the largest acquisition in the history of the cannabis industry, with the purchase of over 95 percent of shares in CanniMed and plans to compulsorily obtain the rest. Having entered a supplier agreement with Shoppers Drug Mart, Aurora is in a position to effectively market the products of its expanded capacity.

Though still focused entirely on the medical side, Namaste Technologies (CNX: N) may well be showing the way forward for recreational brands. The company began as a cannabis e-commerce provider, with 32 sites in 20 countries. It is now working on a telemedicine portal that will connect cannabis-using patients with doctors. Such streamlined approaches let customers more easily obtain their cannabis, and may be only a matter of time before similar approaches are adopted by the recreational sector.

Emerald Health Therapeutics, Inc. (TSXV: EMH) (OTC: EMHTF) is one of several companies partnering with greenhouse farms ahead of the legalization of recreational cannabis. These partnerships will provide an economic boost to struggling farmers while giving cannabis companies access to experienced horticultural staff and more flexibility in their growing capacity as the market expands.

Other sorts of partnerships will also help the industry to grow. The Supreme Cannabis Company, Inc. (TSXV: FIRE) (OTC: SPRWF) is setting up a series of supply agreements with companies such as BlissCo, in which it holds a 10 percent ownership stake. This provides an outlet for 7ACRES, a Supreme subsidiary that the company is developing into a leading cannabis cultivator.

Any company entering the cannabis market will face plenty of competition, with companies expanding their growing capacity and developing new technologies, partnerships and business practices. Only those who can successfully manage the licensing processes will be able to make the most of these advances, and so ensure their place in the new recreational market.

For more information on Choom Holdings, please visit Choom Holdings (CSE: CHOO) (OTCQB: CHOOF).

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