Not all strains of cannabis are created equal—And with the care of expert growers, the value of what’s known as “craft cannabis” has skyrocketed as of late, commanding acquisition price tags into the hundreds of millions.
The effect of the boom of craft cannabis operations is going to greatly affect the values of producers large and small, including Aphria Inc. (TSX: APH) (OTC: APHQF), Aurora Cannabis (TSX: ACB) (OTC: ACBFF), Canopy Growth Inc. (TSX: WEED) (OTC: TWMJF), Emerald Health Therapeutics, Inc. (TSX.V: EMH) (OTC: EMHTF), and Lifestyle Delivery Systems Inc (CSE: LDS) (OTC: LDSYF).
The recent acquisition by Aphria Inc. (TSX: APH) (OTC: APHQF) of cannabis grower Broken Coast sent shockwaves among the craft cannabis industry—through a mega-deal worth $230 million in cash and shares.
“The sale itself wasn't much of a surprise but the amount the local grower was bought for was a shock,” said Travis Lane, the director of B.C.'s Independent Cannabis Association to the CBC. "They were actually relatively small, so for them to get such a huge windfall as private owners is indicative of where the cannabis market is at."
High-quality products and strains are becoming very hot commodities on a market driven by a handful of multi-billion-dollar cannabis giants positioning themselves for dominance in the coming legalized environment.
CRAFTY ACQUISITIONS
Before Canopy Growth Inc. (TSX: WEED) (OTC: TWMJF) truly became the monolith that it is today, the company took on the popular Tweed brand, which is still the company’s leading product line.
It’s in that business model that likely led to Aphria’s generous offer to buy out the popular Broken Coast line.
In fact, Broken Coast wasn’t the only product positioning that Aphria has been up to as of late—Just recently, the Ontario-based company also played matchmaker in the pairing up of DOJA Cannabis Company Limited (CSE: DOJA) (OTC: DJACF) with popular brand “Tokyo Smoke” owned by private TS Brandco Holdings Inc. to the tune of a conservative $10 million equity investment on the sidelines.
But by far, the largest acquisition of the year so far was that of Aurora Cannabis (TSX: ACB) (OTC: ACBFF) taking over CanniMed Therapeutics Inc. (TSX: CMED) (OTC: CMMDF) for a cool $1.1 billion at a value of $43 per share.
The deal left another craft cannabis firm, Newstrike Resources Ltd. (TSX.V: HIP) (OTC: NWKRF) open to make a deal another day—As it had been in talks with CanniMed prior to the takeover, getting left with a $9.5 million break free for its troubles.
Emerald Health Therapeutics, Inc. (TSX.V: EMH) (OTC: EMHTF) went outside of the cannabis sector, by enlisting one of the market’s best overall vegetable growers, in a deal with Village Farms International, Inc. (TSX: VFF) (OTC: VFFIF). The hope is to employ the best botanists, with a world-class greenhouse facility to create craft cannabis strains of their own.
Each of these deals were built off the bought companies’ stellar reputations for quality products.
It’s through this high-quality craft cannabis strategy that Lifestyle Delivery Systems Inc (CSE: LDS) (OTC: LDSYF) has built its own portfolio up, since the company was founded in 2010.
Utilizing an intense level of scrutiny, and a method of seed selection called isogenics, Lifestyle Delivery Systems is poised to make its own impact on the market, with its high levels of quality through high-level cultivation.
QUALITY CONTROL THROUGH ISOGENICS
The term “isogenic” refers to using seeds with identical genes—Therefore the breeding method employed by Lifestyle Delivery Systems Inc (CSE: LDS) (OTC: LDSYF) starts with pure, organic, unaltered isogenic seeds.
By taking extreme care in their pollination (never cloning), LDS uses pollen seeds that are carefully planted in their scientifically-created negative vacuum sealed rooms, which prevents any contamination or compromise.
It may seem like overkill, but in a business where the purity of plant genes can mean the difference between being in the middle of the pack, or commanding a deal like that of Broken Coast with Aphria, the precautionary measures taken by LDS are absolutely called for.
LDS breeders then grow their groomed crops systematically until the mature seedling stage, after which the seedling harvest is meticulously transported to their fully-equipped indoor growing facility in Adelanto, California.
The facility itself is a feather in the cap of the Lifestyle Delivery Systems management team. After jumping through the hoops of California’s regulatory structure over a period of more than 18 months, LDS obtained both the necessary state and local permits to get their facility built.
“LDS is one of the very few companies and in fact one of the only companies in California that has gone through all the processes necessary to adhere to both the municipal and the state-level licensing,” said LDS President, Jim Pakulis in an interview with Inside Resources.
Pakulis reiterated that while medical marijuana has been allowed in California for years, it has only begun recently to develop and enforce regulations on cultivation and sale.
The methods used by LDS have afforded the company to extract THC at intense purity levels for their proprietary CannaStripsTM product—a breath-strip like sub-lingual oral product that administers a controlled dosage of a variety of concoctions, including a product with 99% pure THC.
The brain trust at Lifestyle Delivery Systems is so skilled in the art of cultivation, that the company offers a full spectrum of consulting services related to cannabis growing—including facility identification, nursery preparation, design and layout, equipment acquisition, and implementation.
While the company is built to grow out, through its unique positioning as a fully vertically integrated firm from grower to commercial products—LDS could also be a very enticing target for a major cannabis company like Aphria, Aurora, or Canopy looking to add a premium product line of craft cannabis to their own lines.
CRAFT CANNABIS PLAYERS
Aphria Inc. (TSX: APH) (OTC: APHQF)
Aphria is one of Canada’s lowest cost licensed cannabis producers, specializing in the production, suppy, and sale of medical cannabis. The company offers sativa, indica, and hybrid medical marijuana products, as well as cannabis oils. It also provides support services in the form of medical consultations, group therapies, and rehabilitation to veteran and first responders. The company sells its products through its online store or phones, as well as engages in the wholesale shipping of medical marijuana plant cuttings and dried buds to other licensed producers. Aphria Inc. is headquartered in Leamington, Canada.
Aurora Cannabis (TSX: ACB) (OTC: ACBFF)
Aurora Cannabis boasts the second highest square footage approved for cannabis production in Canada. Together with its subsidiaries, Aurora produces and distributes medical marijuana products in Canada. The company’s products consist of dried cannabis and cannabis oil.
Aurora is the only cannabis producer located in the province of Alberta, giving the company a cost advantage through its free use of fresh mountain-fed water used on site, and housed under the lowest corporate tax rates and power rates in Canada. Capitalizing on numerous farm credit programs provided by the province, Aurora has positioned itself as arguably the lowest cost-per-gram licensed producer in Canada. Aurora became a licensed producer in 2015, and is based in Edmonton, Alberta.
Canopy Growth Inc. (TSX: WEED) (OTC: TWMJF)
Formerly known as Tweed Marijuana Inc., Canopy Growth is a multi-licensed, geographically diverse marijuana producer, described as “one of the world’s — and Canada’s first — premier exporters of marijuana” by the Financial Post in 2016. Canopy is the parent company of licensed cannabis producers, Tweed Inc., Tweed Farms Inc., Bedrocan Canada Inc., as well as newly acquired Mettrum Health Corp. Canopy currently has a combined growing platform of over 665,000 sq. ft. of production space. It was also the first federally regulated, publicly traded cannabis producer in North America, and the first billion-dollar cannabis corporation. Canopy Growth was founded in 2014, and is based in Smith Falls, Ontario.
Emerald Health Therapeutics, Inc. (TSX.V: EMH) (OTC: EMHTF)
Emerald Health, together with its subsidiaries, produces and sells medical marihuana and cannabis oils in Canada. The company has a joint venture partnership with Village Farms for greenhouse space, and with Abattis Resources for their jointly-owned subsidiary, Northern Vine Labs. Emerald Health Therapeutics, Inc. is headquartered in Victoria, Canada and is a subsidiary of Emerald Health Sciences Inc.
For a more in-depth look into Lifestyle Delivery Systems, Inc. you can view the in-depth report at USA News Group: http://usanewsgroup.com/2018/01/19/seeking-the-next-big-winners-in-the-thriving-us-pot-market/
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