- Canadian lawmakers are scheduled to assemble during Q4 to assess past, current, future state of legal cannabis market
- Pac Roots Cannabis has quietly positioned itself as an integrated producer of premium cannabis and hemp
- Pac Roots is generating revenue through a hemp JV, has access to exclusive cultivars, is completing a production facility, has an agreement for more land and recently bought an established cannabis lifestyle brand
The Canadian government has taken a measured approach to legalization of marijuana, but now nearly three years in, advocates will be looking at meaningful progress with regards to regulations to support the industry when a review is expected later this year. As the market has been maturing, Vancouver-based Pac Roots Cannabis (CSE: PACR) (OTCQB: PACRF) (FSE: 4XM) has been steadily building a formidable asset base, including constructing a new production facility, forging a key joint venture and penning an agreement to acquire prime agricultural land as it emerges as a premium provider of cannabis and hemp products with its genetics-focused approach.
While the legal cannabis market didn’t get off to the blistering pace some analysts envisioned, it has grown quite briskly and there are signs that the market has reached an inflection point. Deal flow is strong, including Quebec-based Hexo (TSX: HEXO) (NYSE: HEXO) recently agreeing to pay C$925 million for family-owned Redecan, the biggest private Canadian cannabis company by revenue. On June 3, High Tide (NASDAQ: HITI) (TSX.V: HITI) became the first major cannabis retailer to go public on the NASDAQ.
Furthermore, the sales scale finally seems to be balancing. In September, it was reported that legal sales in Canada finally exceeded black market marijuana sales for the first time. To help tip the scales in favor of legal sales, Ottawa will need to make some changes – or at least be open to discussions – when it conducts a three-year review. It’s arguable that highly restrictive marketing, production, sales and consumption rules have hamstrung consumer adoption.
Pac Roots isn’t looking to get into a pricing war with low-quality suppliers, methodically positioning itself as a premier brand since it came public last year. The company has partnered with Phenome One, one of the largest live genetic libraries in Canada composed of over 350 live cultivars and formed a JV with Rock Creek Farms and Speakeasy Cannabis Club leveraging existing infrastructure, equipment and access to land on a 100-acre hemp project. Despite the coronavirus pandemic and some unseasonable weather conditions, the initial pilot run from the JV resulted in the profitable sale of 105,000 pounds of industrial hemp.
The company is wrapping up work on a 20,000-square foot facility in Lake Country, British Columbia. The facility will include about 7,600 square feet of cultivation space supported by a cultivation license expected to be in hand by the fourth quarter of 2021. The plan is to start cycling through the Phenome One cultivars once the license is received.
Elsewhere in B.C., Pac Roots completed an agreement to acquire all issued and outstanding shares of a firm holding 250 acres of land in the Fraser Valley Region, a region famous for its fertile soil and agriculture heritage.
The company also recently completed the acquisition of Lords of Grasstown Holdings Ltd., a well-established Cannabis Motorcycle lifestyle brand with a tremendous following and acumen that spawned from the vision of Tyler Hazelwood, founder and director of Lords of Gastown. The popularity of the brand on the West Coast affords Pac Roots an easy entry into vaunted California markets. Interestingly enough, political posturing between Republicans and Democrats about the southern border has illicit drug trafficking in California back in the spotlight, including a massive bust June 8 of over $50 million in marijuana and subsequent bulldozing of 10+ acres of illegal greenhouses that were stealing water for their growing needs.
Like Canada, recreational marijuana was made legal in California in 2018. Three years into legalization, both markets are much better understood, as are the tens of billions of dollars legal cannabis contributes to economies. With politicians starting to look ahead to elections in both the U.S. and Canada, it sure will be interesting to see what sort of changes in cannabis just may make it to the campaign trail.
For more information, visit the company’s website at www.PacRoots.ca.
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