Cannabis oil is a significant revenue stream for licensed producers in Canada and this is a trend we expect to continue for the foreseeable future. Cannabis oil represents a fantastic opportunity and solution for licensed producers.
The opportunity is great because not only does the product generate more revenue for the company but it also has higher margins. Cannabis oil is also a great solution when a licensed producer has too much dried cannabis product. The process of turning dried product into oil increases the shelf life of medical cannabis.
Cronos Subsidiary Completes Initial Shipment
Earlier this week Cronos Group Inc. (MJN.V) (PRMCF) announced that one of its wholly-owned licensed producers, Peace Naturals Project completed its first shipment of medical cannabis oil to the Cayman Islands, marking the company’s first exported extract based product.
Caribbean Medical Distributors purchased the cannabis oil and the company is working with Professional Pharmacy Services Ltd., located in the CTMH Doctors Hospital, in George Town, Cayman Islands.
Peace recently built out a commercial oil production lab that is expected to be fully operational following final approval from Health Canada in September. Peace has almost completed a new 28,000 sq. ft. greenhouse, which will provide low-cost cannabis for extraction as well as an additional 1,200 sq. ft. pharmaceutical-grade extraction lab.
Organigram Debuts Pure CBD Oil
Organigram Holdings Inc. (OGI.V) (OGRMF) launched a brand new, diversified cannabis oil product, expanding its cannabis oil product offerings. The new product is called Shubie and it is a pure CBD edible oil. This pure CBD product is a first for Organigram, complementing the company's existing line of medical cannabis oil products.
While Tetrahydrocannabinol (THC) has received the most attention out of all cannabinoids, which are the chemical compounds unique to cannabis that act upon the human body's cannabinoid receptors, research has shown that cannabidiol (CBD) provides a therapeutic or calming effect and does not get the user high.
We are favorable on this move as it helps Organigram capitalize on a different, but significant side of the cannabis industry. The trend toward smokeless products is evident and this move provides more confirmation of this trend.
CanniMed Expand Oil Distribution
CanniMed Therapeutics (CMED.TO) (CMMDF) is focused on the Canadian medical marijuana market with its go to market strategy of physician education and significant investments into alternative delivery formats. CanniMed produces cannabis in a GMP compliant facility and has benefited from a trend toward smokeless marijuana products.
We are favorable on CanniMed’s leverage and focus on the cannabis oil market. The company was one of the first licensed producers to receive a license to sell cannabis oils and in the second quarter, cannabis oil accounted for almost 50% of total revenues.
CanniMed has also benefited from a legal marijuana trend sweeping the globe. The company is capitalizing on new international marijuana markets and completed a shipment of cannabis oil to Australia and the Cayman Islands.
Last week, the company signed a definitive supply agreement with Akula Trading 2 Pty Ltd., a private South African corporation. The agreement contemplates export sales of CanniMed oil products in Africa and is initially focused on South Africa, with a population of 55 million, followed by other African countries.
CanniMed is also preparing an application for the sale of cannabis oil for the South African Medicines Control Council (MCC) and will prepare an application for the sale of capsules next.
Medical marijuana is expected to be prescribed in South Africa through an application by a medical doctor and dispensed through pharmacies.
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