Session's 'Rational' Marijuana Could be Positive for Leading Key Pot States

Session's 'Rational' Marijuana Could be Positive for Leading Key Pot States

USA News Group News Commentary

PR Newswire

LOS ANGELES, December 7, 2017

LOS ANGELES, December 7, 2017 /PRNewswire/ --

USA News Group - While several states made the decision to vote in favor of cannabis legalization last year, the feds lead by the Attorney General are still wrestling with the legal terms. In a positive step, AG Jeff Sessions released a statement that the DOJ is looking at what he called a 'rational policy' toward marijuana.

This news sent positive signals to the legal cannabis industry, which is already seeing huge demand as states move into various legalization phases in 2018 led by California.

Companies impacted in the grower and producer category include Aphria (TSX: APH) (OTCQB: APHQF), Cannabics Pharmaceuticals Inc. (OTC: CNBX), AmeriCann, Inc. (OTC: ACAN) and MYM Nutraceuticals Inc. (CSE: MYM) (OTC: MYMMF).

Based on the softening attitudes towards legalization and growth in demand, marijuana stocks have been trending higher over the entire year. Data shows that of the dozen largest pot stocks by market cap, the average marijuana stock is up well in excess of 100% - some Canadian based companies even more.

Leaders in the producer group include Cannabics Pharmaceuticals Inc. (OTCQB: CNBX), Aphria (TSX: APH) (OTC: APHQF) and AmeriCann, Inc (OTCQB: ACAN). These companies are already licensed legal growers of cannabis and are rapidly expanding their growing capacity to accommodate demands from new markets.

Several of the cannabis Licensed Producers (or LPs) are in the grower end of the business and combining their efforts with product development, sales and distribution. MYM Nutraceuticals Inc. (CSE: MYM) (OTC: MYMMF), is a unique example of a developer of three sizeable growing operations that is broadly diversified into multi-brand development and product distribution.

California is preparing for legal sales of recreational marijuana to begin on January 1, 2018.

Nevada followed Oregon's model, allowing medical marijuana dispensaries to sell to adults 21 and older while they prepare by licensing and regulating new cannabis businesses. Authorities in California, Maine and Massachusetts all decided to wait until 2018 to begin sales of recreational pot.

SESSIONS TAKES A MORE REASONABLE POSITION 

Attorney General Jeff Sessions said last week that the Justice Department is examining ways to work toward a 'rational' marijuana policy. He did not provide details, such as whether the DOJ will crack down on states where the drug has been legalized.

"We're looking very hard on that right now. In fact, we had meetings yesterday and talked about it at some length," Sessions said about the department's stance toward marijuana during an announcement on new funding and tools to combat the opioid crisis. He did not provide further details.

The attorney general says that he views pot as 'detrimental' and noted that consumption is still a federal violation.

"I don't want to suggest in any way that this department in any way believes that marijuana is harmless, people should avoid it," he said.

However, this new language by Sessions signals a softer, more reasonable approach to the larger issue.

Sessions holds the power over the federal enforcement arm of criminal laws, such as the Controlled Substances Act.

The marijuana industry is governed by a legal memorandum issued by the Justice Department in 2013 that adopted a policy of non-interference with marijuana-friendly state laws, so long as they don't threaten other federal priorities. That would include things like preventing the distribution of the drug to minors, supporting cartels or other illegal activities.

That memorandum is open to modification by the Justice Department under Sessions.

CALIFORNIA FIRST TO FEEL THE NEWS 

Much like Canada, which has been a front runner in the push to legalize marijuana, California is poised to be the first state to have a fully functional legal recreational cannabis market open for business. This puts California right in the crosshairs.

The state is clearly getting ready; the Bureau of Cannabis Control put their proposed regulations up for review in September in Long Beach, Fresno, and Sacramento.

All this is pushing up the numbers for cannabis.

Cannabis sales are expected to reach $3.8 billion in 2018, and up to $6.6 billion by 2025, according to projections from New Frontier Data.

Based on these numbers, this could increase nationwide sales of the plant to $24.1 billion by 2025 - a number is going to continue to grow as more states enter the legal cannabis market in the coming years.

The X factor in this mix is Canada, which is expected legalize recreational use in mid-2018. The added demand for weed there is creating a real boom -one that could easily create a shortfall in as little as a year from now.

It's important to note that Medical marijuana has been legal in Canada since 2001. According to their national health agency, the number of eligible registered medical patients is increasing by about 10% a month. 

The rapid growth in medical-cannabis customers and the now forecast legalization demand has cannabis producers in that country working to expand their production capacity at a breakneck pace.

MYM NUTRACEUTICALS MOVING UP THE RANKS 

A perfect example of the efforts to increase supplies is MYM Nutraceuticals - a junior company quickly vaulting itself up the ranks of the major legal producers in Canada.

MYM Nutraceuticals is moving full speed on three planned facilities; a grow operation in Laval, Quebec to be completed this year, a joint-venture for a 1 million square foot facility in Casino, Australia and the flagship facility; a 1.5 million square foot greenhouse facility in Weedon, Quebec.

Weedon will be a massive marijuana operation -one of the largest grow operations on the planet. It will house the potential to produce over 150,000 kg of cannabis per year worth a staggering $750 million.

MYM Nutraceuticals is also diversifying; besides growing and cultivation at Laval, Casino and Weedon, MYM is advancing formulation and production to support branding and distribution of its entities Joshua Tree, MyHemp Skin Therapy, and HempMed offerings.

These subsidiaries develop and sell a variety of cannabis based natural products including custom-made cannabis products with tailored CBD chemistries along with tinctures, concentrates and oils, edibles, vape products and pet care products.

As the industry matures and seeks more sophisticated solutions from leading suppliers, this model is likely to become more common in states like California too.

CALIFORNIA A GOOD TEST CASE 

Since California already has the oldest and most profitable medical marijuana market in the country, it's likely that they will have one of the most successful recreational markets as well.

California lawmakers have been working diligently to stick to a one-year plan to get the new market up and running, while Massachusetts and Maine have to pause until later in 2018.

If, as the numbers suggest, the industry will experience an aggregate of 300% growth in legal U.S. sales between 2016 and 2021, Cannabis sales will easily reach the expected $17 billion mark.

Those are some massive numbers that put pressure on legislators to 'do the right thing'.

And while Canadian cannabis companies may have set the standard for sales growth and early profits, California's model is about to test the boundaries with a need for much greater supplies.

If legalized on time as envisioned, and taken with a 'rational' approach, companies in the production, product development and distribution and their investors now could be the biggest benefactors of this new national attitude.

POTENTIAL COMPARABLES 

Cannabics Pharmaceuticals Inc. (OTCQB: CNBX)

Cannabics Pharmaceuticals announced recently that it has received a new research license from the Israeli Ministry of Health for the Characterization of anti-tumor activity of cannabinoids. The new license will enable the company to continue our vision of developing an ecosystem for creation of diagnostic tools and bringing to the market diagnostic services for cancer patients who are medicated with cannabis. Our forward looking plan encompasses a synergy between HTS (High Throughput Screening), CTCs (Circulating Tumor Cells), Drug Efficacy, and Genomic Data to provide therapists and their patients with personalized supportive data for their treatment. 

Aphria (TSX: APH.TO) (OTC: APHQF)

Aphria Inc., boasts itself as one of Canada's lowest cost producers, that produces, supplies and sells medical cannabis. Located in the greenhouse capital of Canada, Leamington, Ontario, Aphria provides pharma-grade medical cannabis, and quality patient care. Aphria was the first public LP to report positive cash flow from operations, and the first to report positive earnings in consecutive quarters.

AmeriCann, Inc. (OTCQB: ACAN)

AmeriCann, Inc. develops, owns and supports advanced medical cannabis cultivation and processing facilities nationwide. The Company has a multi-market portfolio of over 1,000,000 square feet of sustainable cannabis production infrastructure in various stages of development. To support local businesses that seek to serve cannabis patients in their communities the company initiated the AmeriCann Preferred Partner Program. Through this program they provide an essential set of resources including advance cultivation facilities, access to a team of experts and in certain cases, capital for our partner's businesses. In addition, AmeriCann's team has been instrumental in winning cannabis licenses in competitive application processes throughout the country.

For a more in-depth look into MYM you can view the in-depth report at USA News Group: http://usanewsgroup.com/2017/12/04/billionaire-founder-of-virgin-group-richard-branson-is-pro-cannabis-and-for-good-reason/

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