In the cannabis industry, much of the attention is currently focused on North America, and rightly so. While Canada is the only major country at the moment to allow recreational cannabis nationwide, Mexico and the U.S. are expected to join their neighbour to the north by the end of 2021.
These are no doubt groundbreaking advancements, but in an emerging industry in its infancy, it’s just the beginning. As the push for legalization in the U.S., Mexico, Latin America, Europe, the Middle East and Asia-Pacific intensifies, Cannabis is ultimately going global.
The majority of publicly-traded cannabis companies have little to no interest in these regions, leaving them ripe for companies to establish lucrative operations. One publicly traded company that is focused on exploring these international opportunities is Creso Pharma (ASX: CPH) (OTC: COPHF) (FRA: 1X8). The company is based in Australia and has the management team, products and business strategy to become a major player in global cannabis.
Canadian Operations
Creso Pharma‘s flagship cannabis facility is its cultivation and processing facility in Nova Scotia, Canada. The facility is operated by Creso’s wholly-owned subsidiary, Mernova Medical. The managing director of Mernova Medical is Jack Yu, who has 25 years of experience in the cannabis industry and previously served as Production Manager with Canopy Growth (TSX: WEED) (NYSE: CGC) (FRA: 11L1). The processing facility was built to be EU GMP compliant, and products are currently being sold throughout Canada and exported to Europe. The facility produces a variety of cannabis products, including premium flower, pre-rolls and hashish.
Mernova recently received multiple purchase orders from the Ontario Cannabis Store, marking Creso’s entrance into Canada’s largest province. The company also received repeat purchase orders from New Brunswick and Nova Scotia. These repeat purchase orders show the strong demand for Mernova’s products while establishing a reliable and growing revenue source. To meet this growing demand and export medical cannabis to Europe, management plans to expand the current facility by up to ten times its current footprint.
U.S. Operations, Coming Soon
On March 1, 2021, Creso Pharma announced the signing of a non-binding LOI with CERES Natural Remedies, a leading CBD and plant-based remedies provider, to sell and distribute the company’s hemp CBD animal health products in the United States.
The American cannabis market is a major growth opportunity for Creso, and its planned deal with CERES will help the company establish a strong U.S. presence ahead of likely federal reforms in 2021.
CERES Natural Remedies is a subsidiary of High Fidelity, Vermont’s largest independent cannabis company. High Fidelity currently operates two of Vermont’s five vertically integrated cannabis licences and services 70% of the state’s registered patients. High Fidelity has generated over USD $35 million in sales since 2013.
“Entering the US market with a high calibre partner such as CERES is a major achievement for Creso Pharma, and we look forward to working with the group to outline a progress of the launch of anibidiol® across the country. Importantly, CERES has an established distribution footprint and relationships with over 50,000 stores across the country, as well as a track record of scaling up its own branded products and international offerings. To this end, we are very confident that our animal health products will be well received,” commented Adam Blumenthal, Creso Pharma’s non-executive Chairman.
Global Cannabis Products
Creso has an extensive portfolio of products available for sale throughout Europe, the Middle East, and the Asia-Pacific region. To maximize efficacy, the products are focused on delivery methods with the highest bioavailability, namely absorbed in the mouth, under the tongue or through the skin.
The products are primarily manufactured at the company’s state of the art, GMP-certified facility in Switzerland. These products are divided into four categories: therapeutics, nutraceuticals, animal health and cosmetics. The company’s flagship brand, cannaQIX, spans multiple product verticals.
Source: Shutterstock
Therapeutics
Creso’s therapeutic products are those targeted at treating specific ailments. Since they are being used as medicine, these products require a prescription from a doctor. The company’s leading therapeutic is cannaQIX 50, a lozenge containing broad-spectrum CBD oil being prescribed for chronic pain. The company also offers a traditional CBD tincture for prescription in Australia.
Nutraceuticals
The global nutraceuticals industry is estimated to be over $200 billion. Especially during a global pandemic, health and wellness are at the forefront of people’s minds. As the research comes in, the health benefits of CBD as a dietary supplement are becoming more and more clear. Creso has entered this segment of the industry in a big way with their cannaQIX brand. All of the products sold under the nutraceutical vertical do not require a prescription and are sold over the counter. Creso offers a food supplement throughout Europe and South Africa called cannaQIX 10. cannaQIX 10 is meant to improve psychological balance by reducing stress and enhancing the nervous system.
The company also offers a stronger version known as cannaQIX 25 and a sleep-aid version called cannaQIX NITE, as well as tea-based versions under cannaQIX Hemp Tea, cannaQIX Immunity Hemp Tea and cannaQIX NITE Hemp Tea. Creso also markets another nutraceutical brand called cannAPEAL that’s CBD-free and is available in countries where CBD is not yet legal.
Animal Health
Creso’s management believes that cannabis can be just as beneficial to animals as it is to humans. Like humans, CBD has been shown to help treat stress, anxiety and age-related ailments in animals. Creso’s animal health brand is known as anibidol and is targeted at the most prominent many of the same ailments as their human products. Their lineup includes anibidol 2.5 Relax and anibidol 8 Plus, meant to treat stress and chronic pain, respectively. A tincture version of the product is available as anibidol Oil 500, while a version targeted at horses is called anibidol EQUI. The anibidol brand is available throughout Europe, and as previously mentioned, Creso just signed a deal to make anibidol available in the U.S. market.
Cosmetics
The wonders of CBD are also proving to be very effective in the skincare industry. Creso’s topical cannaDOL cream contains CBD and essential oils that are targeted at muscle pain and arthritis. The company also offers its cannaQIX ORAL CARE in lozenge format to support healthy oral bacteria and inflammation reduction.
Global Expansion
In mid-February, Creso announced a $2.5 million deal to enter the massive Asian markets of Pakistan and the Philippines, which combined, have a population of approximately 325 million. Initial terms of the deal with Pakistan-based Route2 Pharm are for the distribution of cannaQIX 10, cannaQIX 50 and cannaDOL. The deal is expected to bring in AUD $2.48 million in the first year, and if all goes well, Route2 intends to sign Creso to distribution deals for additional Asian countries, with a total addressable market of approximately 750 million people. Those countries include Cambodia, Afghanistan, Azerbaijan, Bangladesh, Georgia, the Maldives, Myanmar, Tajikistan, Turkmenistan, Uzbekistan, and Vietnam.
Conclusion
While Canada and the United States currently occupy much of the sector’s spotlight, cannabis is quickly becoming a global industry. The opportunity in under-supplied countries around the world is immense, to say the least. Equally large is the growing demand in industry subsectors such as Therapeutics, Nutraceuticals, Animal Health and Cosmetics.
Creso Pharma’s management has built an excellent foundation for the company to expand its diversified operations globally and, in the process, establishing Creso as one of the few true global cannabis companies.
As with all emerging growth sectors, cannabis will ultimately become a global industry in the long run. Creso Pharma’s actions now are separating it from its peers and showing investors that the company is not only poised to become a leader in Canada and the United States but the rest of the world as well.
Source: Barchart
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United States | OTC: COPHF
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