Industry Insiders Look Ahead To 2021

Most can agree that 2020 was a year we’d like to leave behind. Even for the ‘essential’ business of cannabis, it was a challenging year with store closures and social distancing in grow facilities. Here now are several leaders in the industry weighing in with their thoughts on 2021.

4Front Ventures  (CSE: FFNT) (OTCQX: FFNTF) is a national multi-state cannabis operator and retailer, with a market advantage in mass-produced, low-cost quality branded cannabis products. 4Front manufactures and distributes a portfolio of over 25 cannabis brands including Marmas, Crystal Clear, Funky Monkey, Pebbles, and the Pure Ratios wellness collection, distributed through retail outlets and their chain of strategically positioned Mission branded dispensaries.

Expert: Kris Krane, President

Thoughts: 

  • Cannabis is poised to be an even better market in 2021 for a variety of reasons.  New states like New Jersey and Arizona that legalized this November are poised to come online for adult use for the first time.  Newer markets like Illinois, Michigan, and Massachusetts are poised to expand and mature.  A Biden administration is likely to be friendlier towards this industry than the current administration. But most importantly, the larger companies in the space are now focused on operations and execution, resulting in better overall performance, revenue, and EBITDA.  I would expect that we will see more consolidation in 2021, as companies use some of their new profits to acquire businesses and market share.
  • 2021 will likely see a continued focus on operations and execution, separating out the major players from those that were always built on hype and smoke and mirrors.  We may see some name brands go under in 2021, but the cream will rise to the top and the likely eventual big winners in the market will start to emerge.

Clever Leaves 

A multi-national company with operations and investments in Canada, Colombia, Germany, Portugal, and the United States. The company is about to close a SPAC deal with Schulze Special Purpose Acquisition Corp. (NASDAQ: SAMA) to becoming publicly traded on NASDAQ this month.

Spokesperson: Kyle Detwiler, CEO

Thoughts: 

  • Expectations for the cannabis market in 2021: The market will increasingly perform well 
    •  As the pandemic lingers, we still see the medical cannabis market performing well. The resilience, professionalism, and creativity in times of setback, have been critical to the success of our team to navigate complex regulatory frameworks and to maintain our customer’s and investor’s support. While a great deal of cannabis companies are still strapped for cash, we were able to raise the necessary capital to withstand the market headwinds in these extremely challenging times and we believe this will help us achieve our ultimate goal of transforming the cannabis supply chain on an international scale.
    • With approximately $125 million raised to date, which includes institutional investors with a demonstrated track record in the cannabis sector, Clever Leaves has established significant competitive advantages and positioned itself to achieve global scale as we enter 2021 between its Colombian cultivation and extraction operations, its Portuguese cultivation facilities and its global distribution infrastructure in the EU, which is currently headquartered in Germany.
    • With a low-cost operating model, significant asset base and solid leadership, investors believe our company is well-positioned for substantial revenue and is expected to achieve positive free cash flow by the fourth quarter of 2021.
  • Defining theme for the cannabis market in 2021: M&A will play a huge role
    • M&A will be an ongoing theme as we enter the new year. As we are about to close our definitive agreement with Schultze Special Purpose Acquisition Corp. (SAMA) we will become a NASDAQ-listed public company and that will be a significant opportunity for strategic acquisitions. Clever Leaves’ global sales and distribution capabilities can be meaningfully expanded through strategic decision-making and thoughtful capital deployment, including through disciplined M&A.
    • Clever Leaves is expected to be one of a few cannabis companies listed on the NASDAQ thereby making this investment opportunity available to a substantially broader base of investors. Our business combination with SAMA will significantly strengthen our balance sheet and take us to the next level, enabling us to accelerate the commercialization of our high-quality products as well as expand our operations and distribution in attractive markets around the world.

NewLake Capital

A cannabis real-estate investment vehicle that has tenants across the supply chain in the U.S. including cultivation, manufacturing, and retail. The company owns 20 properties across 8 states that are operated by experienced, well-capitalized medical and adult-use operators like Columbia Care, Trulieve, Curaleaf, and PharmaCann.

Spokesperson: Anthony Coniglio, CEO

Thoughts: 

  • Expectations for the cannabis market in 2021:The Cannabis industry will continue maturing on all three fronts of financial performance, investor acceptance, and legalization.
    • We believe the Cannabis industry will continue maturing on all three fronts of financial performance, investor acceptance, and legalization.  Good 2020 financial performance will improve in 2021, more investors will support the industry and legislative action is only a matter of time.
    • The election sealed the fate for the cannabis industry declaring it a clear winner in the years to come. This success at the ballot box is a strong catalyst for the cannabis industry. Each state with ballot initiatives has moved forward to legalize cannabis for medicinal or adult-use, further solidifying the inevitability of federal legalization and positioning the industry for sustainable long-term growth in 2021.
  • Defining theme for the cannabis market in 2021: Approval of Adult-use sales in New Jersey will create a domino effect in the Northeast
    • We think approval of Adult-use sales in New Jersey will create a domino effect in the Northeast and result in over $1Billion of sales in NJ alone, during 2022.  We think approval by NJ voters will be a catalyst for coordination with New York, Connecticut and Pennsylvania creating an adult-use region with a population of nearly 45 million people.
    • Significant investments in real estate and related infrastructure – Similar to adult-use in Illinois, we will see increased demand for retail, cultivation and manufacturing properties in New Jersey and the surrounding states We could see over 5million square feet of real estate reallocated to the cannabis industry in the coming years.  NewLake is positioning to be a provider of choice for the real estate capital needs of the industry.
    • Success at the ballot box will be another strong catalyst for the cannabis industry –  Each state that legalizes cannabis for medicinal or adult-use, further solidifies the inevitability of federal legalization and positions the industry for sustainable long-term growth.  Over the next three years, we expect meaningful expansion of existing medical programs, new adult-use markets, and new states to legalize medical-use and adult-use cannabis sales.  By 2025, we expect legal sales in the US to exceed $35Billion.

The Valens Company 

A global leader in the end-to-end development and manufacturing of innovative, cannabinoid-based products. Valens (OTC: VLNCF) is focused on being the partner of choice for leading Canadian and international cannabis brands by providing best-in-class, proprietary services including extraction, analytical testing, formulation and product development and custom manufacturing. Valens is the largest third-party extraction company in Canada.

Spokesperson: Everett Knight, Executive Vice President, Corporate Development & Capital Markets

Thoughts: 

  • Cannabis 2.0 Products Will Dominate the Market in Canada with 3.0 Products Gaining Market Share: Similar to the US we will see 2.0 products take more market share and next generation products such as cannabis/CBD infused bath bombs, lip balms or CBD-infused honey will start to gain market share in 2021. We’ll also see an explosion of stores in Ontario and the beverage market in Quebec will gain massive steam compared to the rest of Canada because of the restrictions on other products.
  • The US Will See More Regulation: With many more legal markets in the States, the FDA will pass more regulations in 2021. The liability risks because of lack of regulations reminds regulators of the tobacco industry when it was unregulated in the past. Expect to see increased safety requirements and product recall processes instituted in the US market. US MSOs will have to transition to GMP and food safe regulations imposed on Canadian LPs.
  • International Market Expansion: A strong trend has emerged in the last couple of years across the world – medical legalization paves the way for adult-use – this will come through bigger and faster in 2021. Mexico and Israel are close to legalization. These markets will open up a landslide of opportunities for established companies in the US and Canada looking to capture global market share. Everyone has to remember the cannabis space is just getting started.

Fotmer Life Sciences is a global cannabis cultivator and extractor and one of the world’s largest Good Agricultural and Collection Practice (GACP) and Uruguayan GMP certified cannabis exporters. Fotmer is the first fully licensed company in Uruguay producing top medical-grade cannabis flower (also known as Flos), Pharmaceutical Ingredients (API), cannabis extracts and manufactured products for the international market.

Expert: Dr. Jordan Lewis

Thoughts: (Latin America)

  • 2021 will be the year companies pivot their focus to generating positive cash flow and exhibit a viable business model to investors. The market no longer rewards aggressive expansion but is now looking for material profitability. Companies who can articulate a near-term path to profitability will be able to witness an industry kick and have a higher probability of becoming highly profitable.
  • Watching the international markets develop at a rapid pace and to see cannabis normalized at an even greater pace than years prior.

o   Brazil appears have also become an attractive market as more companies are able to introduce their products and as local pharmaceutical companies develop and register more products.

o   Uruguay is gaining a new momentum as the government provides support to help develop and efficient industry, particularly in accelerating the export process. Uruguay’s latest milestones achieved by the industry have positioned the country as one of the largest exporters of dry flower in the world and a logistics hub.

o   Recently ranked as the most attractive country to invest, Uruguay is synonymous with trust, transparency and economic resilience and is positioned hand in hand with the most developed nations

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