CannabisNewsWire
Editorial Coverage: Cultivation by both large and small growers
is powering growth across the cannabis industry.
- Cultivation is fueling the growth of the cannabis
industry.
- $718 million was invested in cultivation and retail last year
as the industry continued to grow.
- Raw materials from cultivators are used in a wide range of
cannabis products.
- Cultivation locations are critical to distribution channels and
partnerships.
Within this growing industry, Cannabis Strategic
Ventures (OTC: NUGS) (NUGS
Profile) is working to foster emerging brands by
targeting investment through a la carte partnerships and
acquisitions. Tilray, Inc. (NASDAQ: TLRY), one of
Canada’s largest cultivators, has seen earnings rise 78.9 percent
so far this year thanks to growing demand and a maturing business.
Cultivation means profits for hydroponics suppliers such as
GrowGeneration Corp. (OTCQX: GRWG), which provides
the materials growers need. Some companies are working to stand out
through branding, such as the feel-good ethos of
Charlotte’s Web Holdings, Inc. (OTCQX: CWBHF) (CSE:
CWEB). Others, such as Aurora Cannabis, Inc.
(NYSE: ACB) (TSX: ACB), are working with local authorities
to reach new customers.
To view an infographic of this editorial, click here.
Cannabis Cultivation
When economic historians look back on the early 21st
century, the cannabis industry will likely feature prominently in
conversations. The industry, which has operated in the black market
since the turn of the millennium, has grown to a revenue cap of
over $9 billion in the United States alone, with an expected value of $47.3 billion by 2027. From retail
outlets to research groups, edibles, technology, vaping liquids to
health supplements, cannabis has become a diverse and powerful
industry.
Underlying it all is cultivation. As much the work of craft
businesses as of big corporations, cultivation supplies the plants
without which none of the rest would be possible. Licensed growers
are providing the materials needed to drag cannabis profits away
from funding crime and turning them into a legal, taxable,
sustainable industry.
Cultivators make the cannabis industry possible.
The Growth of Cultivation
Cannabis cultivation is hardly a new activity in the United
States, but a legal, corporate-fronted version of it is. Since the
first medical legalization in California in 1996, many respectable
growers have sprung up, whether as new businesses entering the
emerging market or as once-clandestine farmers turning their
previously illegal operations into law-abiding producers. In
today’s cannabis environment, many corporate-fronted companies,
such as Cannabis
Strategic Ventures (OTC: NUGS), are eyeing small to
large commercial cultivation as part of their business model.
This interest of Cannabis Strategic Ventures shows how quickly
cannabis cultivation has acquired the trappings of a legally
established industry. As a publicly traded company that incubates,
develops and partners with brands, Cannabis Strategic Ventures is a
sort of meta-business that emerges in sophisticated markets —
bolstering the development of production, services and retail
through its application of business acumen and strategically
applied capital.
It’s not surprising that such companies are engaging with
cannabis cultivation. Investment in cannabis cultivation and retail
reached $718 million last year as investors
were increasingly drawn to this growing and profitable market.
Looking ahead, the trend shows no sign of declining.
Cannabis cultivation is a specialist form of agriculture,
requiring an understanding of hydroponics, plant strains and
environmental factors that affect the potency of crops. Acquiring
those skills hasn’t been easy, especially given how long the
industry operated in the shadows, its techniques and collective
knowledge shared only through illicit channels. As cultivation
takes off, the industry needs the support of companies such as
Cannabis Strategic Ventures to acquire equipment, train staff and
build facilities to meet the demand of a growing customer base.
Cultivation is fundamental to the market, so the sector is a
natural target for investors looking to ensure a lasting place in
the cannabis industry. Cannabis Strategic Ventures is actively seeking out cultivation facilities with existing
infrastructure to speed up its move into cultivation. This
initial step provides a foundation upon which much bigger moves can
be built.
Building on the Foundations of Cultivation
Growers aren’t just selling the plants as the dried or refined
forms of cannabis that users have been consuming for decades. With
legality, cultivators have experimented with different ways
cannabis can be used. Much of the plant is still sold for smoking,
but some of the valuable crop is turned into products such as
vaping liquid, oils, capsules, drinks and other consumables.
Cannabidiol (CBD) and hemp phytocannabinoids, nonpsychoactive
chemicals that appears in cannabis alongside the high-inducing THC,
have become the core ingredient of a range of products as research
and design departments find ways to use it for health, well-being
and relaxation.
The range of brands in the Cannabis Strategic
Ventures portfolio reflects this varied approach to cannabis
and its derivatives through commitments in category leaders in the
space. None of these brands would be possible without the
cultivation of cannabis plants. Bringing cultivation under the same
umbrella as the products will offer opportunities for improved
efficiency and profitability. By sourcing cannabis from its own
facilities, Cannabis Strategic Ventures should be able to achieve
vertical integration in the supply chain, which naturally leads to
greater certainty over the supply of raw materials and increased
efficiencies into the system, likely cutting costs and improving
the timeline from cultivation to shelf.
The growth of cannabis cultivation has led to a boom for support
services as well, such as the provision of staff and hydroponic
equipment. Here, too, efficiencies can be realized through vertical
integration as cultivators work more closely with their
suppliers.
This is yet another way Cannabis Strategic Ventures may benefit
if cultivation is brought in-house. As the owner of BudHire, a
subsidiary specializing in cannabis industry recruitment, the
company looks to be in an ideal position to source the most skilled
staff for its facilities.
Cultivation in California
Geography makes a big difference to U.S. cannabis companies. The
industry isn’t legal in every state, and among those that have
legalized, the laws vary substantially from state to state, as do
market sizes. Given the challenges of working across state lines
without federal legal reform, being based in the right location can
be critical.
Cannabis Strategic Ventures is headquartered in Los Angeles and
benefits from easy access to the oldest, largest and most complex
legal cannabis market in the United States. Many growers in
California are now trying to transition from the black market to
the legal one, but the move can be challenging. Volumes of cannabis
that could have been sold for $3,000 illegally go for a fifth of
that price now. Growers must pay taxes and work within well-defined
regulations. Working with firms such as Cannabis Strategic
Ventures, which offers essential financial and intellectual
capital, can help a grower make the transition more
successfully.
Being located in California, therefore, provides two significant
advantages for a company such as Cannabis Strategic Ventures. On
one hand, the state has a large consumer base for the company’s
products and services. On the other hand, it has a plentiful supply
of small companies looking for financial support, creating
opportunities for growth through mergers, acquisitions and
partnerships.
Colleagues and Competitors in Cultivation
Cannabis Strategic Ventures is not alone in its interest in this
promising industry. An impressive variety of companies are now
cultivating cannabis.
Tilray, Inc. (NASDAQ: TLRY) is one of the
largest cultivation companies in Canada, a country with a
fast-growing and well-regulated market. A global pioneer in
production, distribution and research in the cannabis market,
Tilray was the first licensed producer of medical cannabis in the
world to have its facility Good Manufacturing Practices
(GMP)-certified in accordance with European Medicine Agency (EMA)
standards. Its recent earnings
report reflected the extraordinary growth being experienced by
well-run cannabis companies, with an 85 percent rise in revenue in
the third quarter and a 78.9 percent rise for the year to date.
With recreational cannabis having just become legal in Canada, this
growth is likely to continue that increase over the next few
years.
The growth of such companies has provided a boost for
GrowGeneration Corp. (OTCQX: GRWG), a supplier of
hydroponic systems and the nutrients used with them. Like Cannabis
Strategic Ventures, GrowGeneration has been acquiring other companies to expand its presence
within the market. It also has an eye on reaching different market
sectors. The company recently established the
GrowGeneration Hemp Corp subsidiary to market its products to
hemp farms and GrowGeneration
Canada to sell to Canadian cultivators.
In this booming market, branding is crucial to help companies
stand out from the pack. Charlotte’s Web Holdings, Inc.
(OTCQX: CWBHF) (CSE: CWEB) is winning over customers with
the feel-good factor as a company committed not just to sales but
to improving the planet and people’s lives. Given the correlation
between cannabis use and liberal values, adopting such a strong
identity seems to be bringing the company success.
For Aurora Cannabis, Inc. (NYSE: ACB) (TSX:
ACB), the recent focus has been on reaching new customers.
As a Canadian company, Aurora is looking to profit from the
country’s legalization of recreational cannabis in mid-October this
year. The market is regulated on a regional basis, so Aurora has
been busy setting up
agreements with local authorities to give it a strong reach
across the country and even stretching into international
markets.
With revenues rising and markets growing, cannabis cultivators
are seeing a period of great expansion, making the growth of a
whole industry possible.
For more information on Cannabis Strategic Ventures, visit
Cannabis
Strategic Ventures, Inc. (NUGS)
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