Small Scale Cannabis Growers Carve Out a Niche in the Burgeoning Industry

NEW YORK, Sept. 19, 2019 /PRNewswire/ -- As the cannabis industry continues to advance, competition among operators is becoming more and more fierce. In particular, the competition between growers has become much more prevalent when compared to retailers, according to Deepak Anand, a cannabis industry expert based in Vancouver. As of March 2019, statistics released by Health Canada indicated that the agency only received 150 applications for micro-cultivation or processing licenses. Generally, macro-cultivators tend to dominate the cultivation segment of the overall cannabis industry, as they are able to produce tons of cannabis each harvest. By mass-producing cannabis, macro-cultivators can wholesale their supply to distributors and retailers at a cheaper price. However, Anand noted that micro-cultivators have to wait for at least 18-months before getting approved for a license, which usually deters entrepreneurs from applying. As a result, many micro-cultivators find themselves working in gray markets while waiting for approvals. Nonetheless, numerous service providers within the industry have secured partnerships and contracts with companies awaiting such license approvals. For instance, companies have hired consultants to guide them throughout the process of receiving an approval. Moreover, some producers have inked agreements with companies to supply them with their own products in an effort to accelerate their approval time. Furthermore, according to data compiled by GlobalInfoResearch, the global legal marijuana market was valued at USD 7.97 Billion in 2019. And by 2024, it is expected to reach USD 35 Billion while registering a CAGR of 28% over the next five years. Pasha Brands Ltd. (OTC: CRFTF) (CSE: CRFT), Innovative Industrial Properties, Inc. (NYSE: IIPR), Aphria Inc. (NYSE: APHA) (TSX: APHA), HEXO Corp. (NYSE: HEXO) (TSX: HEXO), Green Thumb Industries Inc. (OTC: GTBIF) (CSE: GTII)

In 2017, Health Canada announced its intent to issue more licenses for micro-cultivators in hopes to "enable a diverse, competitive legal industry comprised of both large and small players in regions across the country." However, in January 2019, there were only 145 authorized cultivators in Canada. Moreover, there were approximately 840 site applications in process at the end of December 2018, Health Canada told Marijuana Business Daily. Nonetheless, approved micro-cultivators are already moving towards redefining the cannabis industry. Typically, micro-cultivators are limited to only 200 square meters of space, which can sustain anywhere from one to eight plants per square meter. The yield per plant can heavily vary depending on environmental factors such as the lighting, airflow, humidity, and spacing between the plants. Most importantly, the yield can be substantially increased by hand-trimming plants instead of using machinery. Notably, micro-cultivators, specifically "craft cannabis cultivators," boast about their high quality and organic growing process that produces premium cannabis. Specifically, craft cultivators strive to provide their consumers with all natural and potent products that stand out against competitors. Normally, craft producers avoid using artificial products such as pesticides to appeal to health conscious consumers. However, as a result of avoiding the use of pesticides, craft producers are required to manually tend to each and every individual plant to ensure a healthy growing process. While it may seem tedious to tend to each plant, it allows cultivators to create premium cannabis strains by carefully monitoring each growing phase. And then when it's time to harvest, craft producers hand-trim every plant in order to preserve and maintain the cannabinoid integrity throughout the harvest. "Nearly every marijuana cultivator wants to call its cannabis craft. Whether the plant is grown indoors or outside, with a hydroponic irrigation system or a watering can, under the sun or high-tech LED lights, few growers want their flower to be considered corporate cannabis," said Bart Schaneman, Cultivation and Extraction Reporter at Marijuana Business Daily. "As a general philosophy, a cannabis grower looking to brand its flower as craft needs to show the consumer that the flower was grown with mindfulness and close attention paid to each plant."

Pasha Brands Ltd. (OTC: CRFTF) (CSE: CRFT) is also listed on the Canadian Securities Exchange under the ticker (CSE: CRFT). Just announced breaking cannabis news, "North America's largest craft cannabis brand house, is delighted to announce that its wholly owned subsidiary, BC Craft Supply Co. Ltd ("BC Craft"), has signed over 100 micro-cultivator applicants ("Micros") across Canada to date.

Once licensed, a Micro can produce approximately 500 kilograms of dried flower per year in the 2150 sq ft legally allowed. With these supply deals in place, including the first three Micros licensed by Health Canada, Pasha anticipates being able to bring an excess of 50,000 kilograms of craft cannabis per year to market as more licences are issued. This would make Pasha one of the largest craft cannabis providers in the world.

Tens of thousands of grey market cannabis producers coast to coast still supply as much as 85% of the cannabis Canadians are consuming. Issues with quality, freshness, and availability have plagued legalization so far as industrial cannabis producers strive to grow mass quantities of cannabis. Prices for limited supplies of small batch craft cannabis flower, sold through online Provincial cannabis retailers are now exceeding $20 per gram, and little has been done to address the impact on local economies of not transitioning these farmers.

"Our objective in creating the BC Craft platform was to assist these craft producers in Canada that have been supplying Canadians their cannabis products for decades," said Patrick Brauckmann, Executive Chairman of Pasha, "and help them transition into the regulated market through Health Canada's new Micro licence."

BC Craft enters into a supply contract to purchase a Micro's annual supply, and provides exclusive go-to market plans, with appropriate guidance and resources, in order to receive a micro cultivation licence from Health Canada, as well as market support and infrastructure to get their products to the legal marketplace.

"Reaching this milestone so early in our existence really speaks to the faith craft producers have put in us," said Brauckmann. "They know we share their values, and that we can help them succeed in the legal marketplace in a way they can believe in, by allowing them to do what they do best."

About Pasha Brands - Based in Vancouver, British Columbia, Pasha is a prohibition-era brand house firmly rooted in BC's craft cannabis industry and is developing a nation-wide network of craft cultivators to provide the nation with high grade quality craft cannabis. With proven capabilities in cannabis cultivation, genetic research and development, product processing, and retail, Pasha is uniquely positioned in the new legal cannabis market through its network of hundreds of craft cannabis suppliers under the Pasha umbrella. Pasha subsidiary, Medcann Health Products Ltd., is a Health Canada licensed cultivator and processor with a licence to sell medical cannabis products in Canada. Pasha and BC Craft are also developing a craft cannabis campus, which is dedicated to bringing craft quality into the newly legal cannabis market in Canada. BC Craft is driven to assist craft growers in obtaining security clearance and licensing to grow as micro-cultivators, specializing in education and compliance to bring growers into the regulated cannabis supply market. Pasha's common shares trade on the CSE under the symbol "CRFT" and on the FSE under the symbol "ZZD" For more information, please visit www.pashabrands.com

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Innovative Industrial Properties, Inc. (NYSE: IIPR) is a self-advised Maryland corporation focused on the acquisition, ownership and management of specialized industrial properties leased to experienced, state-licensed operators for their regulated medical-use cannabis facilities. Innovative Industrial Properties, Inc. recently announced that it closed on the final parcel of a four-property portfolio in southern California, which comprises approximately 79,000 sq. ft. of industrial space in total. Vertical is a multi-state operator licensed for cannabis cultivation, extraction, manufacturing and distribution in California and cultivation operations in Arizona and Ohio, with an extensive portfolio of branded cannabis products. Vertical's management team has decades of experience in starting, building and running highly successful businesses in the alcohol, agriculture, consumer product goods, distribution, entertainment, food healthcare and medical industries. "We are thrilled to add Vertical and its strong management team to our tenant roster," said Paul Smithers, President and Chief Executive Officer of IIP. "With its breadth of cannabis brands and highly experienced team, Vertical is well-positioned to capitalize on the tremendous growth of the California regulated cannabis industry in the many years to come, and we look forward to continuing to support Vertical and its long-term growth initiatives."

Aphria Inc. (NYSE: APHA) (TSX: APHA) is a leading global cannabis company driven by an unrelenting commitment to our people, product quality and innovation. Aphria Inc., through its subsidiary Aphria Deutschland GmbH, recently launched the Company's first CBD-based nutraceutical, the first product in its CBD-based cosmetics line for the German market. Featuring CBD derived from hemp, the CannRelief brand of products are being produced in the European Union and distributed by the Company's subsidiary, CC Pharma, which has access to more than 13,000 pharmacies throughout Germany. "We are excited to introduce our first brand of CBD products for the German nutraceutical and cosmetics market," said Jakob Ripshtein, President of Aphria. "Supported by our extensive distribution network through CC Pharma, CannRelief provides a natural extension to Aphria's growing business opportunities in the German medical cannabis market. We look forward to providing a full range of CannRelief CBD products this year."

HEXO Corp. (NYSE: HEXO) (TSX: HEXO) is an award-winning consumer packaged goods cannabis company that creates and distributes innovative products to serve the global cannabis market. HEXO Corp. recently announced that its dried flower cannabis products are now available to Ontario consumers, after finalizing terms with the Ontario Cannabis Store (OCS). HEXO now adds nine of its dried flower offerings in both 3.5g and 15g SKUs to the OCS, including the Company's award-winning Helios dried flower, which was named Best Sativa at the O'Cannabiz 2019 Industry Awards. The new dried flower offerings at the OCS join HEXO's award-winning Elixir cannabis oil oral spray, which has been available in Ontario since legalization. Elixir CBD was named Cannabis Product of the Year and Innovation of the Year at the 2018 Canadian Cannabis Awards. The OCS also carries product from Up Cannabis, which is part of the HEXO family of brands. "We are thrilled to increase our offering at the OCS," said HEXO Corp. Chief Executive Officer and Co-Founder, Sebastien St-Louis. "Apart from being our nation's most populous province with the highest demand for cannabis products, the Ontario marketplace is among the most competitive?and we are rolling out high quality products to which we believe Ontario consumers will strongly gravitate."

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 it serves. Green Thumb Industries Inc. recently announced that it had been awarded a cultivation license by the Ohio Department of Commerce following an appeal. The cultivation operation will be located in Toledo as part of a processing and manufacturing facility that will also produce GTI's branded product portfolio. The cultivation license supports GTI's processing facility currently under construction in Toledo and three Risetm stores that opened earlier this year in Cleveland, Toledo and Lorain. Two additional Risetm stores in Lakewood are on track to open later this year. "We are grateful the Ohio Department of Commerce has awarded GTI the cultivation license we applied for in 2017 based on exemplary scores and look forward to further serving the people of Ohio as they seek relief with medical cannabis," said GTI Founder and Chief Executive Officer Ben Kovler. "This win allows GTI to expand our brand portfolio in Ohio to include the cultivation of our award-winning genetics and supports the company's strategic goal of distributing brands at scale."

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