Market Overview

Continued Legalization Efforts Aid the Cannabis Market's Global Expansion

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NEW YORK, June 25, 2019 /PRNewswire/ -- Cannabis has emerged as a global and disruptive market over recent year due to a group of the countries moving towards legalization. Notably, Canada's legalization of adult-use marked a historic milestone within the cannabis industry as it became just the second country and the first G-7 nation to fully legalize cannabis. However, most analysts have diverted their attention towards the U.S. because of the opportunities available within the region. The U.S. has not federally legalized cannabis as of yet but has granted states their own jurisdiction whether to legalize cannabis or not. Now, more than half of the U.S. has legalized cannabis for medicinal applications, while a little over a fifth have legalized its recreational use. While the U.S. has not federally legalized either medical or recreational cannabis, it is still the largest market within the global market space. The U.S. remains as the global cannabis industry driver because of its early adoption, dating back to 1996 when California became the first state to legalize medical cannabis. Moreover, Colorado and Washington made remarkable progress when the two states became the first to ever legalize recreational cannabis in 2014. Since then, the two states have collectively delivered billions of dollars annually off of cannabis sales. Recently, Illinois became the 11th state to legalize cannabis, joining states such as California, Vermont and Michigan in a cohort growing partnership. With Illinois' passage, more states, including New Jersey and New York, are expected to follow in the near future. Barclays analysts have speculated that if the U.S. cannabis market was legalized today, it could be worth roughly USD 28 Billion. Furthermore, Barclays predicts that the market will grow to USD 41 Billion by 2028 on a pre-tax basis. Barclays compiled the data from a 2017 survey that indicated that approximately 26 million Americans above the age of 12 "were users of marijuana," or nearly 10% of the total U.S. population. MediPharm Labs Corp. (OTCQX:MEDIF) (TSXV:LABS), GW Pharmaceuticals plc (NASDAQ:GWPH), Cronos Group Inc. (NASDAQ:CRON) (TSX:CRON), Zynerba Pharmaceuticals, Inc. (NASDAQ:ZYNE), Sorrento Therapeutics, Inc. (NASDAQ:SRNE)

The U.S. cannabis market was primarily driven by the sharp rise in users among the ages of 18 to 25. However, other age groups have witnessed a steady increase, particularly among the older generation. Among the younger generation, many consumers may be using cannabis for recreational purposes, while on the other hand, the older generation may prefer cannabis for its therapeutic benefits. Nevertheless, both demographics are seeing a large demand for newer products. For instance, concentrates have become increasingly popular due to their potency and immediate effectiveness. Colorado has witnessed its flower sales substantially fall since it legalized adult-use back in 2014. During its first year, flower sales dominated 67% of Colorado's total cannabis sales. However, in 2018, flower sales declined to 44% while the concentrates market filled the gap, growing from 15% to 31%. Concentrates are products made from the cannabis plant itself, but which have been thoroughly processed in order to isolate the potent and desirable parts of the plant. Predominantly, oils have grown to become one of the most popular methods of cannabis consumption as they can come in various forms such as CBD oil, THC oil, vaporizer cartridges, and consumable oils. Many consumers are beginning to prefer oils because of their potency as well as versatility. Primarily, frequent and medical users are mainly attracted to stronger products and while cannabis bud potency can usually range from 10% to 25% THC levels, concentrates are typically made to range from 50% to 80%, with some exceeding limits of 90% THC. "Legalization brings a lot of opportunities, including many that are unexpected. One of the biggest areas for expansion is cannabis oil," according to Scott McGovern, Founder of Blocklr & Growth Nuts. "Despite the rising popularity of cannabis oil, it's still a relatively undeveloped market because of how it's produced. Technically, cannabis oil is what you get when you extract a concentrated oil from the marijuana or hemp plant. THC and CBD oil are technically in the same category because they're produced with the same type of equipment."

MediPharm Labs Corp. (OTCQX:MEDIF) (TSXV:LABS) is also listed on the TSX Venture Exchange under the ticker (TSXV:LABS). Yesterday, the Company announced breaking news that, "it successfully completed its first export shipment of medical cannabis concentrate into Australia to AusCann Group Holdings Ltd. Through its wholly owned subsidiary, MediPharm Labs Inc., the Company has become the first Canadian extraction-only company to publicly announce that it has received an export permit from Health Canada for the shipment of cannabis solid concentrate, under the new regulations, from Canada to Australia. Prior to the shipment, the Australian Government's Office of Drug Control Section also issued an import permit.

'As we look to remain a global leader in cannabinoid extraction, we are proud to have completed our first international shipment of MediPharm Labs' cannabis concentrates to Australia,' said Pat McCutcheon, Chief Executive Officer, MediPharm Labs. 'We expect to see international demand, including in Europe and Australia, for MediPharm Labs' cannabis concentrates continue to grow as our team has built a strong reputation for producing high quality, pharmaceutical like concentrates at commercial scale and proven our ability to ensure a global supply chain. We are excited to be completing our EU GMP certification which will enable us to export to Europe and tap into these additional sources of demand.'

About MediPharm Labs Corp: Founded in 2015, MediPharm Labs Inc. has the distinction of being the first company in Canada to become a licensed producer for cannabis oil production under the ACMPR without first receiving a cannabis cultivation license. This expert focus on cannabis concentrates begins in its purpose-built laboratory designed to incorporate EUGMP (European Good Manufacturing Practices) workflow and ISO standard-built clean rooms and critical environments, allowing MediPharm Labs to produce purified, pharmaceutical-like cannabis oil and concentrates for advanced derivative products. MediPharm Labs has invested in an expert, research-driven team, state-of-the-art technology, downstream extraction methodologies and purpose-built facilities to deliver pure, safe and precisely-dosed cannabis products to patients and consumers. MediPharm Labs' private label program is a high margin business for the company, whereby it opportunistically procures dry cannabis flower and trim from its numerous product supply partners, to produce cannabis oil concentrate products for resale globally on a private label basis."

For our latest "Buzz on the Street" Show featuring MediPharm Labs Corp. recent corporate news, please head over to: https://www.youtube.com/watch?v=a7ItkgI-W3s

GW Pharmaceuticals plc (NASDAQ:GWPH), founded in 1998, is a biopharmaceutical company focused on discovering, developing and commercializing novel therapeutics from its proprietary cannabinoid product platform in a broad range of disease areas. GW Pharmaceuticals plc and its U.S. subsidiary Greenwich Biosciences Inc. recently announced positive top-line results of a randomized, double-blind, placebo-controlled Phase 3 clinical trial of EPIDIOLEX® (cannabidiol or CBD) CV in the treatment of seizures associated with Tuberous Sclerosis Complex (TSC), a rare and severe form of childhood-onset epilepsy. In this trial, EPIDIOLEX met its primary endpoint, which was the reduction in seizure frequency compared to baseline of the Epidiolex 25 mg/kg/day dose group vs placebo (p=0.0009). Results for both the 25 and 50 mg/kg/day dose groups were similar, with seizure reductions of 48.6% and 47.5% from baseline respectively, vs 26.5% for placebo (50 mg/kg/day vs placebo, p=0.0018). All key secondary endpoints were supportive of the effects on the primary endpoint. The safety profile observed is consistent with findings from previous studies, with no new safety risks identified. "The positive results from this trial represent the fifth positive Phase 3 trial for EPIDIOLEX and follows the recent U.S. launch of EPIDIOLEX for the treatment of seizures associated with Lennox-Gastaut syndrome and Dravet syndrome. These new data show EPIDIOLEX reduced TSC-associated seizures, which include both focal and generalized seizures types, expanding the body of reliable science supporting the use of EPIDIOLEX," stated Justin Gover, GW's Chief Executive Officer. "With these data, we look forward to submitting an sNDA to the FDA in the fourth quarter with the goal of expanding the product label in 2020 to help the lives of patients suffering with TSC."

Cronos Group Inc. (NASDAQ:CRON) (TSX:CRON) is an innovative global cannabinoid company with international production and distribution across five continents. Cronos Group Inc. recently announced that it has entered into a multi-year supply agreement with MediPharm Labs Corp. (TSXV:LABS) (OTCQX:MEDIF). MediPharm Labs will supply Cronos Group with approximately USD 30 Million of high-quality private label cannabis concentrate over 18-months, and, subject to certain renewal and purchase options, potentially up to USD 60 Million over 24-months. In addition, Cronos Group and MediPharm Labs have entered into a multi-year tolling agreement, where Cronos Group will supply bulk cannabis to MediPharm Labs' state of the art extraction facility in Barrie, Ontario, to fulfill certain additional processing needs of the Company. "As the industry develops and matures, we see opportunity to work with companies like MediPharm Labs that provide specialized, high-quality services and inputs for our products," said Mike Gorenstein, Chief Executive Officer of Cronos Group. "Along with our internal capabilities, we are pleased to be working with MediPharm Labs to bring great products to consumers in anticipation of the derivative market launching in Canada this fall."

Zynerba Pharmaceuticals, Inc. (NASDAQ:ZYNE) is the leader in pharmaceutically-produced transdermal cannabinoid therapies for rare and near-rare neuropsychiatric disorders. Zynerba Pharmaceuticals, Inc. recently announced that the U.S. Patent and Trademark Office has issued US Patent No. 10,314,792, titled "Treatment of Autism Spectrum Disorder with Cannabidiol" which includes claims directed to methods of treating autism spectrum disorder by administering a therapeutically effective amount of synthetic cannabidiol. This new patent, which expires in 2038, is part of an expanding intellectual property portfolio covering the Company's cannabidiol (CBD) product candidate, Zygel™ (ZYN002 transdermal CBD gel). This patent follows the previously announced issuance of US Patent No. 10,213,390, titled "Treatment of Fragile X Syndrome with Cannabidiol" which includes claims directed to methods of treating Fragile X Syndrome by administering a therapeutically effective amount of synthetic or purified cannabidiol. The issuance of this patent comes as enrollment progresses in the open label Phase 2 BRIGHT study evaluating the safety, tolerability and efficacy of Zygel for the treatment of children and adolescents with Autism Spectrum Disorder (ASD). The efficacy assessments include the Aberrant Behavior Checklist, Parent Rated Anxiety Scale – Autism Spectrum Disorder, Autism Impact Measure, and Clinical Global Impression – Severity and Improvement. The Company expects to report top line data in the first half of 2020.

Sorrento Therapeutics, Inc. (NASDAQ:SRNE) is a clinical stage, antibody-centric, biopharmaceutical company developing new therapies to turn malignant cancers into manageable and possibly curable diseases. Sorrento Therapeutics, Inc. recently announced that it has established a new business unit to focus on the market potential for its innovative water soluble cannabidiol (CBD) formulation technology. Cannabidiol (CBD) has been under consideration within the pharmaceutical side of Sorrento for its interesting pharmacological properties and potential clinical benefits in multiple central nervous system, autoimmune or inflammatory disease and pain related indications. "Without distracting from our pharmaceutical business, we have the ability to leverage another Sorrento innovative technology – this time from our formulation experts – and make it available to the broader consumer market" stated Dr. Henry Ji, Chief Executive Officer and Chairman of Sorrento Therapeutics. "Longer-term, we may consider spinning off our CBD consumer business into an independently operated company if appropriate, while our research and clinical development team continues to explore the potential pharmaceutical applications of cannabidiol (CBD) for the medical markets".

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