FinancialBuzz.com News Commentary
PR Newswire
NEW YORK, February 27, 2018
NEW YORK, February 27, 2018 /PRNewswire/ --
According to a recent report from Brightfield Group, the global cannabis market is presently worth $7.7 billion and is projected to reach $31.4 billion by 2021. The United States accounts for about 90 percent of the whole market. But the U.S. domination of the market is expected to decrease to approximately 57 percent due to legalization of cannabis products in other countries. Canada is considered as one of the largest markets for cannabis products. Canada plans to legalize recreational cannabis later this year. Pivot Pharmaceuticals Inc. (OTC: PVOTF), Zynerba Pharmaceuticals, Inc. (NASDAQ: ZYNE), Innovative Industrial Properties, Inc. (NYSE: IIPR), General Cannabis Corp. (OTC: CANN), Aphria Inc. (OTC: APHQF)
According to Benzinga, Viridian Capital President Scott Greiper explained that the cannabis industry received $1.23 billion investments in the first five weeks of 2018, up from $178 million a year earlier. Viridian Capital Advisors' Vice President Harrison Phillips said: "Investments in cultivation and retail this year have been driven predominantly by the Canadian player. This has been happening pretty consistently from late 2016 through 2017. This reflects the necessity to scale cannabis businesses, to get some kind of advantage, and to explore strategic opportunities, both through acquisitions and international expansion."
Pivot Pharmaceuticals Inc. (OTCQB: PVOTF) also listed on the Canadian Stock Exchange under the Ticker 'PVOT'. Just announced breaking news this morning that, "The Company has completed the acquisition of ERS Holdings, LLC ("ERS"), a privately-held California company." As previously announced on December 20, 2017, ERS has developed a patented technology called "RTIC" Ready-To-Infuse-Cannabis (the "Patent"), relating to the transformation of cannabis oil into powder for infusion into a variety of food and beverage products such as capsules, K-Cups, stick packs, baked mixes, liquid shots, protein shakes, topicals, lotions, and bottled beverages. ERS has also filed several continuation patents that would allow cannabis powder to be combined with other health and wellness products such as natural sleep-aids, cold medications and vitamins.
Invented by Ross Franklin and Ed Rosenthal, the Patent "Relates generally to methods and compositions of matter for enabling concentrated cannabis oil to be stable, emulsifiable and flavorless for use in hot beverages or food by combining cannabis oil with a starch powder or starch-derived powder. Embodiments also relate to a variety of culinary uses for the stabilized, emulsified, flavorless concentrated cannabis oil powder."
Additionally, Mr. Patrick J. Rolfes has been appointed President of ERS Holdings, LLC, a wholly-owned subsidiary of Pivot. Mr. Rolfes will focus on monetizing the intellectual property ("IP") and has already received expressions of interest from multi-national beer and spirits companies interested in partnering with Pivot to develop and commercialize THC and/or CBD infused branded products. Further, Mr. Ross Franklin, co-inventor of the Patent, has been appointed as ERS' Director of Research and Development and will continue to invent new and innovative ways to infuse cannabis into foods and beverages. Alcoholic beverage sales fell by 15 percent following the introduction of medical marijuana laws in a number of US states, according to a new working paper by researchers at the University of Connecticut and Georgia State University. The study also concludes that marijuana availability can reduce alcohol consumption. Another study by Deloitte suggests that "on sales of recreational marijuana alone, the Canadian marketplace could be as much as C$5B per year to start - a number on par with the Canadian spirit market (whiskey, vodka, rum, etc.). At the upper threshold, which takes into account the people who are 'likely to consume,' marijuana sales alone could be as high as C$8.7B, similar to sales generated by wine." As a consequence, Molson Coors has acknowledged that legal cannabis is a "risk" to their business, stating in their most recent 10-K that, "Although the ultimate impact is currently unknown, the emergence of legal cannabis in certain U.S. states and Canada may result in a shift of discretionary income away from our products or a change in consumer preferences away from beer. As a result, a shift in consumer preferences away from our products or beer or a decline in the consumption of our products could result in a material adverse effect on our business and financial results."
Dr. Patrick Frankham, CEO of Pivot, stated that, "The RTIC family of patents will be transformational for the food and beverage industry. Based on our interaction with key players in the beverage market, we anticipate that there will be a significant substitution in consumer choices towards cannabis infused drinks. With this acquisition, we have positioned Pivot to be at the forefront of this enormous new market. Closing this transaction will enable us to further engage interested parties to work with us on developing the full potential of these Patents. Pivot intends to monetize the Patents as quickly as possible and thus I am delighted that Patrick Rolfes and Ross Franklin have joined the Pivot team to accelerate the process."
Dr. Frankham also stated that, "Today's related financing confirms that our vertically integrated cannabis business model is differentiated in the Canadian marketplace and recognized by a strong sponsorship from a sophisticated institutional investor. The Company will continue working with its financial advisor, Origin Merchant Partners, to successfully close our pending acquisitions and aggressively execute the remainder of our business plan in 2018/2019."
Convertible Debenture Units - Pivot also announced today a private placement offering of senior secured convertible debentures ("Convertible Debentures") of the Company with a conversion price of $1.74 per common share for aggregate gross proceeds of $5,000,000 (the "Offering"). The net proceeds received by the Company will be used to, among other things, fund working capital and general corporate purposes, including but not limited to, development of its pipeline of products and intellectual property acquisitions. The Company has entered into an agreement with an institutional investor with respect to the Offering, whereby the institutional investor has agreed to subscribe for up to $5,000,000 aggregate principal amount of Convertible Debentures. Closing of the Offering is subject to the satisfaction of customary conditions, including the receipt of all requisite regulatory approvals. The Convertible Debentures will bear interest at the rate of 10% per annum, payable quarterly, will mature 12 months following the date of their issuance and will be convertible at the option of the holder for a period of 12 months into common shares of the Company ("Common Shares") at a conversion price of $1.74 per Common Share (the "Conversion Price"), subject to adjustment of the Conversion Price in certain events.
Beginning on the date that is four months and one day following the issuance of the Convertible Debentures, the Company may force the conversion of the principal amount of the then outstanding Convertible Debentures at the Conversion Price on not less than 30 days' notice should the daily volume weighted average trading price of the Common Shares be greater than $2.50 for any 20 consecutive trading days on the Canadian Stock Exchange, or such other exchange as the Common Shares are principally traded. The Convertible Debentures shall be offered and sold by way of private placement to "accredited investors" within the meaning of NI 45-106 - Prospectus Exemptions and other exempt purchasers (i) in Canada, and (ii) outside Canada and the United States on a basis which does not require the qualification or registration of any of the Convertible Debentures or the Company. The Convertible Debentures and the Common Shares issuable upon the conversion of the Convertible Debentures will be subject to a statutory four month and one day hold period. Subject to the satisfaction of customary of conditions, the Offering is expected to be completed on or about February 28, 2018.
Zynerba Pharmaceuticals, Inc. (NASDAQ: ZYNE), a clinical-stage specialty pharmaceutical company dedicated to developing and commercializing innovative pharmaceutically-produced transdermal cannabinoid treatments. On January 03, 2018, the company announced that it will concentrate its focus on rare (meeting the US FDA designation of an orphan disease, affecting fewer than 200,000 people in the U.S.) and near-rare (affecting fewer than one million people in the U.S.) neurological and psychiatric disorders with high unmet medical needs. In 2018, the Company intends to develop ZYN002 in a pivotal Phase 2/3 program in Fragile X syndrome (FXS) and in Phase 2 programs in refractory epilepsies, including adult refractory focal epilepsy and developmental and epileptic encephalopathies (DEE) in pediatric and adolescent patients. Additionally, the Company plans to initiate Phase 2 development of ZYN001 in Tourette Syndrome by year end 2018. Zynerba is currently developing ZYN002, the first and only patent-protected, pharmaceutically-produced CBD that is formulated as a permeation-enhanced gel for transdermal delivery.
Innovative Industrial Properties, Inc. (NYSE: IIPR) is a self-advised Maryland corporation focused on the acquisition, ownership and management of specialized industrial properties leased to experienced, state-licensed operators for their regulated medical-use cannabis facilities. On December 18, 2017, the company announced that it closed on the previously announced acquisition of the property located at 5900 West Greenhouse Drive in Willcox, Arizona, which comprises approximately 358,000 square feet of greenhouse and industrial space. Concurrent with the closing of the purchase, the Company entered into a long-term, triple-net lease agreement with a subsidiary of The Pharm, which intends to continue to operate the property as a medical-use cannabis cultivation and processing facility in accordance with Arizona medical-use cannabis regulations.
General Cannabis Corp. (OTCQB: CANN) is the comprehensive national resource for the highest quality service providers available to the regulated cannabis industry. On February 20, 2018, the company announced revenue results for the quarter ended December 31, 2017. For the three months ended December 31, 2017, the company reported our highest quarterly revenues on record of approximately $990,000, representing an increase of 27% in total revenues when compared to the three months ended December 31, 2016. These increases were driven by record revenues in our Operations segment, Next Big Crop, which had increased revenues of 323% and 193%, respectively, for the three and twelve months ended December 31, 2017, compared to the same periods for 2016. As the number of states with regulated marijuana markets has increased, Next Big Crop has found a steady increase in demand for its services.
Aphria Inc. (OTCQB: APHQF), one of Canada's lowest cost producers, produces, supplies and sells medical cannabis. Located in Leamington, Ontario, the greenhouse capital of Canada. On February 14, 2018, the company announced that it has signed a Letter of Intent with the Société des alcools du Québec to guarantee a supply of high-quality, safe and clean cannabis products for sale in the Quebec adult-use market through their retail outlets and e-commerce platform. Under the terms of the agreement, the Company will supply the Quebec market with up to 12,000 kg of branded cannabis products in the first year of the agreement, including cannabis oils and other derivative products and several strains of high-quality Ontario- and B.C.-grown dried cannabis flower.
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