Canada’s Cannabis Industry Looks Global for Growth

Canada’s cannabis industry is projected to reach C$22.6 billion over the coming years, according to Deloitte analysts, driven by the legalization of adult-use cannabis last year. With the legalization of edibles later this year, the market could attract an even larger share of cannabis consumers that may have no interest in smoking or vaping. Still, the country is quickly becoming a crowded market with only 35 million residents.

Many Canadian companies have been looking abroad for growth. While the United States has become a popular market, there has been a fair bit of tension between the two countries on cannabis issues. The United States also has its own burgeoning cannabis industry that could create stiff competition for foreign firms. These trends have many Canadian companies looking into other markets around the world, such as Europe and Australia.

Global Cannabis Security

Cannabis companies around the world must adhere to strict security regulations. In Canada, Health Canada has strict requirements governing the security measures that must be installed in cultivation facilities. In the U.S., dispensaries have become popular targets for criminals given the large amount of cash that’s kept on-hand due to banking restrictions. These dynamics have created strong demand for experienced security companies.

3Sixty Risk Solutions Ltd. (CSE: SAFE) has become a leader in Canada’s cannabis security industry with more than 500 customers, 60 licensed producers, 275 employees, 60 vehicles, and a patrol footprint of about 30 million square feet. In addition, the company’s merger with David Hyde & Associates added significant compliance expertise. The consulting firm has worked with more than half of all licensed producers, processing over 450 applications.

In addition to expansion into the U.S. cannabis industry, the company is actively pursuing international expansion into new markets through organic growth and acquisitions. The focus on security services opens the door to adjacent market opportunities, which could result in growth by entering new verticals. Investors may want to keep an eye on the company as it continues to grow its leadership position in the global cannabis security market.

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Bringing Concentrates Global

Cannabis concentrates are rapidly replacing cannabis flower as the preferred consumption method for consumers. In addition to rising consumer demand, cannabis concentrates command much higher profit margins and can be used in more differentiated product types, making them attractive for product developers and retail outlets. Canada has a major advantage in producing concentrates given its federal-level legalization.

MediPharm Labs Inc. (TSX-V: LABS) (OTCQB: MLCPF) (FSE:MLZ) aims to become a global leader in purified cannabis concentrates. As the first Canadian LP to exclusively focus on cannabis oil extraction, the company plans on reaching an annual production capacity of 250,000 kilograms of dried cannabis for extraction by the second quarter of 2019. The company also has existing white label and contract processing agreements in place with many licensed producers.

MediPharm’s international expansion is initially focused on Australia, which is seen as a gateway to other Asia-Pacific markets. With a processing facility under construction, the company is in negotiations with more than 25 Australian cultivation partners to provide options for significant supply inputs. MediPharm very recently made its first sale of concentrates to AusCann, which will turn the concentrated cannabis resin into medical cannabinoid capsules.

MediPharm’s facilities are designed and built to the highest standards, the European Union GMP protocols. The company is nearing that certification, which would open the door to exports throughout the EU as well as to other jurisdictions that rely on EU GMP certifications to ensure quality.

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Global Ancillary Markets

Many investors are focused on cannabis cultivation, distribution, and retail opportunities, but there is a bigger potential opportunity in the health and wellness space. This industry is worth more than $4 trillion per year on a global level, while the beauty subset of the industry alone is worth upwards of $120 billion per year. These markets are much bigger than the global cannabis industry, which is projected to reach only about $150 billion over the coming years.

The Yield Growth Corp. (CSE: BOSS) manufactures and distributes cannabis-infused wellness products under the Urban Juve and UJ Topicals brands. Currently, the company has more than 50 wellness products, including anti-aging serums, bath salts, essential oil wellness blends, and capsules. Unlike most companies that use hemp seed oil, the company sets itself apart with the use of hemp root oil, which may have superior anti-inflammatory properties.

The company has already expanded into the United States with its innovative product lines. In fact, its products were recently included in gift bags given to the Awards presenters during a pre-Oscars event at the Four Seasons Hotel in LA. Management plans to further expand its sales footprint into Europe, where there is strong and established demand for cannabidiol (CBD) infused beauty, health and wellness products.

Click here to receive an investor presentation and updates for The Yield Growth Corp.

Looking Ahead

Canada’s cannabis industry is experiencing significant growth, but investors may want to look at companies leveraging that growth in international markets. These companies could become the next global leaders in niche subsets of the multi-billion dollar cannabis industry.

Disclaimer

The above article is sponsored content. Emerging Growth LLC, which owns CannabisFN.com and CFN Media, has been hired to create awareness. Please follow the link below to view our full disclosure outlining our compensation: http://www.cannabisfn.com/legal-disclaimer/

About Ryan Allway

Mr. Allway has over a decade of experience in the financial markets as both a private investor and financial journalist. He has been actively involved in the cannabis industry since its inception, covering public and private companies.