Talks of Legalization in the US Present Growth Opportunities for Cannabis Companies

growth opportunities

The cannabis edibles market is looking up as top US lawmakers show their support for the legalization and decriminalization of cannabis at the federal level. More states are also legalizing recreational cannabis, with states like Virginia getting closer to this step following the recent passing of a bill by the House of Delegates and the Senate. As these potential regulatory changes continue to occur, companies in the cannabis industry are taking steps to move into the US market with edibles that match the current regulatory framework. Among these companies are Pure Extracts Technologies Corp. (CSE:PULL) (OTC:PRXTF) (XFRA: A2QJAJ), Sundial Growers Inc. (NASDAQ:SNDL), Fire & Flower Holdings (TSX:FAF) (OTCQX:FFLWF), OrganiGram Holdings Inc. (NASDAQ:OGI) (TSX:OGI), and Aurora Cannabis Inc. (NYSE:ACB) (TSX:ACB). 

New Collaborations Could Strengthen Prospects into the International Cannabis Market

Pure Extracts Technologies Corp. (CSE:PULL) (OTC:PRXTF) (XFRA: A2QJAJ) , a plant-based extraction company, recently announced a licensing deal with Taste-T, LLC, a US-based firm that produces the Fireball brand of gummies using a proprietary manufacturing system. Taste-T sells its products in states such as Massachusetts, Michigan, Nevada, and Oklahoma. 

The agreement gives exclusive rights to Pure Extracts in the Canadian market and first rights to other countries in the world. Ben Nikolaevsky, Pure Extracts’ CEO remarked, “[the Taste-T] gummy line up represents a great opportunity for our Company to leverage one of the few US cannabis products that can legitimately be called a ‘brand’ and of course, as a Canadian Company, Pure Extracts is ideally suited to export these products to numerous countries around the world.” Pure Extracts will distribute these products in Canada under their Pure Chews brand in compliance with Health Canada’s regulations. 

Pure Extracts also partnered with Canada House Wellness Group, an integrated medical cannabis company. Through the distribution agreement, Abba Medix Corp., a subsidiary of Canada House, will distribute Pure Extracts’ concentrate products through Abba Medix’s existing distribution channels. 

Chris Churchill-Smith, Canada House’s CEO, commented, “We’ve been extremely impressed with the Pure Extracts team and the brand presence they have established particularly in western provinces and are looking forward to supporting their commercialization efforts in a mutually beneficial way.”

Adding to this statement, Pure Extracts’ CEO said, “this agreement allows us to quickly and efficiently get our outstanding line of full-spectrum oil vape and edible products to retail buyers across Canada while our Sales Amendment application is being processed by Health Canada.” 

Companies Form Strategic Relationships in Positioning Themselves for a Growing Cannabis Edibles Market

Sundial Growers Inc. (NASDAQ:SNDL) recently completed a $22 million strategic investment into Indiva, a Canadian licensed producer of cannabis edibles. The CEO of Sundial, Zach George, said concerning this investment, “Sundial is pleased to support the development of Indiva’s high-quality products… This transaction broadens our exposure to the rapidly expanding cannabis edibles category.” Indiva intends to use the proceeds of the investment onto retiring its outstanding debt and for working capital and corporate purposes. The President and CEO of Indiva said about this investment, “the capital from this $22 million investment significantly improves Indiva’s balance sheet, expands our working capital, and provides the resources necessary to support strong growth in our industry.”

Fire & Flower Holdings (TSX:FAF) (OTCQX:FFLWF) announced strategic agreements with Canadian Private Company, American Acres Managers, which allows Fire & Flower Holdings to enter into US cannabis retail stores and major markets. The agreement also gives Fire & Flower the option to acquire American Acres at a discount should the federal government legalize adult-use of cannabis in the US or when permitted by stock exchanges in which the company trades. Trevor Fencott, Fire & Flower’s CEO, commented about the agreements, “Due to the rapid success of our operational model in Canada, the Fire and Flower brand is poised to become a key player in the US cannabis industry, where the demand for incorporating technologically advanced systems has never been greater. Our Hifyre technology has surpassed our competitor’s offerings by streamlining the customer experience and driving greater margins, and places the Fire and Flower brand in a unique position to play a leading role in competitive US cannabis markets.”

OrganiGram Holdings Inc. (NASDAQ:OGI) (TSX:OGI) spent 2020 revitalizing its product portfolio with different offerings and intends to launch up to an additional 14 new SKUs before Q2 of the fiscal year 2021. OrganiGram made a strategic move to appoint Ms. Marni Wieshofer to the board of directors. Speaking about the appointment, OrganiGram’s chairman, Peter Amirault, said, “It is my pleasure to welcome Marni to OrganiGram’s Board of Directors… Over the course of her impressive career, she has acquired tremendous M&A and financial expertise and demonstrated outstanding ability as a strategic leader. As we chart an ambitious course for the future of the company nationally and internationally, we look forward to her contribution and insight.”

In 2020, Aurora Cannabis Inc. (NYSE:ACB) (TSX:ACB) agreed to buy Reliva, a US-based CBD company, giving it a foothold in the US cannabis market. Michael Singer, Aurora’s executive chairman commented, “it’s immediate access into the world’s largest cannabinoid market. I think the Reliva acquisition is a responsible strategic entry into the US market; and for Aurora, delivers a key aspect of our reset plan… Reliva has access to 20,000 retail locations and even more important strong relationships with the leading wholesalers and distributors in the US.” 

Companies such as Pure Extracts are positioning themselves to benefit from the opportunities that will open up if the US federal government legalizes and decriminalizes cannabis.

For more information about Pure Extracts Technologies Corp., click here.

Featured image: DepositPhotos © gustavofrazao

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