Cannabis Cultivators Aim to Meet the Vast Consumer Demand

NEW YORK, June 4, 2019 /PRNewswire/ -- With the "green rush" intensifying, cultivators are tasked with the challenge of meeting consumer demands. As such, cultivators around the world are building large scale facilities in order to produce tons of cannabis. For instance, U.S. states such as Arizona, Colorado, California, and Oregon are creating greenhouses that yield upwards of 50,000 pounds of flower. Similarly, Canadian producers are building mega greenhouses in regions such as Europe and Australia, as their respective markets begin to grow. However, obtaining licensing in order to operate a grow facility is highly competitive. The Government of Canada reported that there were 179 companies that obtained licenses from Health Canada for cultivation, distribution, and production. The number of applicants also sharply rose when Canada fully legalized cannabis back in October 2018. Health Canada has been steadily approving licenses, yet, companies are still challenged with meeting a consumer base of millions. According to Statistics Canada, by the end of the first quarter of 2019, there were reportedly 5.3 million or 18% of Canadians aged 15 years and older who smoked cannabis in the prior 3 months. Among the group, 646,000 users reported that they were trying cannabis for the first time, nearly double the estimated number of 327,000 a year ago. Moreover, almost half of Canadian cannabis users reported that they obtained their products from a legal source compared to just 23% back in 2018. The staggering change highlights just how swiftly the legalization of cannabis has impacted Canada. So far, the Canadian government has limited many companies in terms of their grow house sizes and the quantity of cannabis they can produce. The strictly enforced regulations ultimately led to major shortages across Canada shortly after legalizing cannabis. Nonetheless, more and more companies are gradually obtaining licenses and agreements in order to produce cannabis to meet the accelerating demand. According to data compiled by Verified Market Research, the global marijuana market was valued at USD 42.20 Billion in 2016. By 2025, the market is expected to reach USD 466.81 Billion while registering a CAGR of 35.3% from 2018 to 2025. WeedMD Inc. WDDMF WMD, Acreage Holdings Inc. ACRGF ACRG, Neptune Wellness Solutions Inc. NEPT NEPT, MariMed Inc. MRMD, Emerald Health Therapeutics Inc. EMHTF EMH

Generally, most cultivators operate indoor and greenhouse facilities because they can control the entire growing process of the plant. However, indoor and greenhouse facilities are significantly more expensive as opposed to an outdoor facility. According to Cannabis Business Plan, the average initial cost of an indoor 7,700 sq. ft. warehouse for approximately 1,000 plants is roughly around USD 830,000. Typically, 1,000 plants will net the grower about 350 pounds of flower total. Indoor cultivators have higher expenses due to costly equipment such as temperature and humidity control systems. As a result, wholesale indoor grow houses typically cost about USD 75 per sq. ft., according to Marijuana Business Factbook 2017. On the other hand, outdoor facilities are exponentially cheaper because growers harness sunlight to produce a more natural product. The average cost per square foot of wholesale outdoor facilities cost is approximately USD 10. The expansive size of outdoor grow houses solely rely on natural soil, lighting, and favorable weather conditions, meaning they also have very few infrastructural needs. Moreover, outdoor plants that are well cared for can normally produce three to four times more qualitative final product when compared to those grown indoors, according to Cannaporium. Furthermore, as legalization continues to spread, more outdoor facilities are expected to emerge in regions where favorable weather conditions are present. "Today the cannabis industry is defined by individual state markets, where no product can cross state lines due to laws prohibiting interstate commerce of a federally illegal product. But when prohibition eventually ends, then interstate commerce will open and businesses will be allowed to import their cannabis from any state in the country. When this happens, we can expect that large-scale outdoor and greenhouse production will dominate the market as cannabis commodifies," said Kris Krane, Co-Found and President of 4Front. "Many of the same environmental conditions that make northern California ideal for the production of grapes for wine will also make it ideal for large-scale commercial cannabis production."

WeedMD Inc. WDDMF WMD is also listed on the TSX Venture Exchange under the ticker WMD. Yesterday, the Company confirmed that, "following the receipt of Health Canada's licence for outdoor cultivation, WeedMD will begin planting more than 20,000 cannabis plants during the week of June 10, 2019 at its Strathroy, Ontario site. The Company expects to be the first licensed producer in Canada to start growing cannabis outdoors. Outdoor grow readiness video here (https://www.youtube.com/watch?v=TFwSvT7Uh7E&feature=youtu.be).

'We are leading the way and making history as the first Canadian LP expected to bring outdoor cultivation online,' said Keith Merker, CEO of WeedMD. 'We have a very experienced cultivation team led by our Chief Cannabis Officer Derek Pedro. This same team has successfully grown cannabis outdoors at scale for more than 10 years under Canada's medical program. The 27-acres is primed and ready for our proven high-CBD and THC outdoor strains, which are already rooted and waiting to be planted.'

WeedMD also recently announced the transition of its Aylmer, Ontario facility into a cannabis extraction and processing hub. Read extraction news here (https://www.weedmd.com/weedmd-to-convert-aylmer-facility-to-cannabis-extraction-and-processing-hub/). With the large volume of low-cost input material that the outdoor harvest will generate, the Company is positioned to process and market significant quantities of extracts and concentrates starting in Q4, 2019.

WeedMD Outdoor Cultivation:

Health Canada licence amendment secured on May 31, 2019
Phase I includes the first 27 of 100 available acres at its Strathroy property
Construction of fencing, security, irrigation and other required infrastructure is complete within a fully-funded $2 million budget
73 additional acres of production planned for Phase II in 2020 on the existing property
Municipal approval secured
Operational synergies with outdoor cultivation directly adjacent to WeedMD's existing propagation operations within its licenced greenhouse facility
All infrastructure and staffing resources exist onsite with a proven team dedicated to the outdoor grow
WeedMD's cultivation team brings significant experience growing cannabis outdoors locally
Selected strains proven to excel outdoors in southwestern Ontario
More than 20,000 plants already rooted in organic material and ready to be planted
Growing from rooted plants allows for higher yields, survival rates and consistency when compared to starting from seed

WeedMD Extraction Hub:

WeedMD is building on its experience in extract production, having processed oils onsite in Aylmer since June 2017
Aylmer site is fully licensed for cannabis oil production and sale
plans include four extraction lines in operation with the ability to process over 200,000 kgs of biomass annually
WeedMD will utilize various extraction methods in order to meet the demands of the market
Aylmer facility is being built to GxP* standards to support compliance for both domestic and international markets
WeedMD will provide formulation capabilities for wholesale and white label manufacturing
existing fully-licensed 26,000 sq. ft. facility is located on an expandable four-acre site wholly-owned by WeedMD
WeedMD will supply a sizeable quantity of input material for cannabis extraction from its large-scale greenhouse and also from its 27-acres of outdoor production from its Strathroy site

*GxP encompasses a broad range of compliance-related activities such as Good Laboratory Practices, Good Clinical Practices and Good Manufacturing Practices.

With a combined indoor and outdoor production footprint of over 5.2M sq. ft. and projected total annual output of 150,000 kgs of cannabis in 2020, the Company is well-positioned to become one of Canada's largest cannabis producers.

For more information, access WeedMD's investor presentation here (https://www.weedmd.com/investing-in-weedmd/) and recently updated corporate video here (https://www.youtube.com/watch?v=ktgJ_BQtBCs&feature=youtu.be).

About WeedMD Inc: WeedMD Inc. is the publicly-traded parent company of WeedMD Rx Inc., a federally-licensed producer and distributor of cannabis products for both the medical and adult-use markets. The Company owns and operates two facilities: a 26,000 sq. ft. facility in Aylmer, Ontario and a 158-acre state-of-the-art greenhouse and outdoor facility located in Strathroy, Ontario. The Company currently has 136,000 square feet of licensed indoor and greenhouse production space across its facilities and is expected to have a total footprint of more than 550,000 square feet of indoor and greenhouse production space online in 2019. In addition, 27 acres of outdoor cultivation has now been approved for cultivation with first harvest expected in the fall of 2019. WeedMD has a multi-channeled distribution strategy that includes selling directly to medical patients, strategic relationships across the seniors' market and supply agreements with Shoppers Drug Mart as well as six provincial distribution agencies.

For our latest "Buzz on the Street" Show featuring WeedMD Inc. recent corporate news, please head over to: https://www.youtube.com/watch?v=ktgJ_BQtBCs&feature=youtu.be

Acreage Holdings Inc. ACRGF ACRG, headquartered in New York City, is the largest vertically integrated, multi-state owner of cannabis licenses and assets in the U.S. with respect to the number of states with cannabis related licenses, according to the publicly available information. Acreage Holdings, Inc. recently announced that on April 17, its subsidiary, High Street Capital Partners, LLC had entered into an agreement to acquire 100% of Deep Roots Medical LLC, a vertically integrated cannabis operator in Nevada, for a total deal value of USD 120 Million to be paid in common units and cash. Deep Roots marks Acreage's entry into Nevada, increasing the company's total state footprint to 20 (including pending acquisitions) - the largest in the US cannabis industry. With a population of three million, and tourism that attracts 43 million visitors per year, Nevada is estimated to generate nearly USD 800 Million in legal cannabis sales by 2022, according to ArcView Market Research. Deep Roots' vertically integrated operations include cultivation, manufacturing & processing, a wholesale and distribution business, and seven retail dispensary licenses. Kevin Murphy, Founder, Chairman, and Chief Executive Officer of Acreage Holdings, Inc., commented, "We continue to deliver on our shareholder commitments to aggressively expand our presence in the West. We could not be more excited for what we believe will become a leading operation in the state of Nevada, one of the most important states in the cannabis industry."

Neptune Wellness Solutions Inc. NEPT NEPT specializes in the extraction, purification and formulation of health and wellness products. – Neptune Wellness Solutions Inc. recently announced that it had received its license to process cannabis from Health Canada. The Health Canada license enables Neptune to handle dried cannabis, to manufacture and purify cannabis extracts and cannabis oil, and to sell its services to other license holders. With production activities anticipated to commence shortly at Neptune's 50,000 sq. ft. good manufacturing practice (GMP)-certified facility in Sherbrooke, Quebec, the Company expects to be able to generate revenues from existing supply agreements and conclude additional agreements shortly. "This is a thrilling moment for Neptune as our ambition to redeploy our core competencies to exciting consumer product categories by creating and delivering differentiated formulations for the burgeoning cannabis market becomes a reality. Neptune's long-standing scientific expertise in the formulation of natural health products supports our ability to deliver exceptional quality formulations for our business customers. The processing license granted by the agency puts us on a new growth trajectory, positioning Neptune as a provider of extracted cannabis products in this large, growing global market segment," said Jim Hamilton, President & Chief Executive Officer of Neptune.

MariMed Inc. MRMD is a multi-state cannabis company that develops, owns and operates licensed cannabis facilities and develops and distributes branded cannabis and hemp product lines. MariMed Inc. recently announced the formation of MariMed Hemp, Inc., a wholly-owned subsidiary to be entirely focused on hemp-derived CBD products. MariMed Hemp will have a dedicated executive team, proprietary brand and product lines, and distribution and marketing relationships, all separate from MariMed's core cannabis business. The subsidiary builds on MariMed's recent investment in GenCanna Global, a leader in high-quality, fully compliant hemp cultivation and processing which is acclaimed for its genetics, proprietary cultivation practices and best in class processing procedures that produce world-class, GMP, quality CBD isolates and oils. GenCanna anticipates planting and processing over 10,000 acres of hemp in 2019, making it one of the nation's largest hemp producers and the key supplier of hemp CBD oil to MariMed Hemp. "With the recent signing of the U.S. Farm Bill that declared hemp fully legal at the federal level, we believe the hemp CBD industry may grow even faster than the cannabis industry," said Robert Fireman, Chief Executive Officer of MariMed. "Consumers and retailers alike seek the highest quality, trustworthy products. While many niche players may try to compete, the reality is that only a handful of suppliers can reliably deliver top-quality CBD products at scale that can serve the needs of major retailers."

Emerald Health Therapeutics Inc. EMHTF EMH is a Canadian licensed producer of cannabis. Emerald Health Therapeutics, Inc. recently received its first purchase order from Société Québécoise du Cannabis (SQDC) to supply its cannabis products to the Quebec recreational cannabis market. Emerald is scheduled to fulfill its first shipment the week of June 3rd. Emerald is currently delivering cannabis to the Ontario Cannabis Retail Corporation, Cannabis Retail Store, the British Columbia Liquor Distribution Board, the Newfoundland Labrador Liquor Corporation, PEI Cannabis, the Yukon Liquor Corporation and to licensed private retailers in Saskatchewan. Emerald has also been authorized by the Manitoba Liquor & Lotteries Corporation to supply cannabis to Manitoba and signed a sales agreement with the Alberta Gaming, Liquor and Cannabis to supply cannabis to Alberta. "We are pleased to have the opportunity to supply Quebec with our Emerald-branded cannabis products," said Dr. Avtar Dhillon, President and Executive Chairman of Emerald. "With USD 71 Million in sales during the first six months of legalized recreational cannabis, the SQDC recorded the second highest provincial sales in Canada, making it a significant market for Emerald to now offer our recreational cannabis products as well as introduce our locally-produced Verdélite-branded products in the months ahead."

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