So it\u2019s been a dark few years for the brave new world which was cannabis investing.<\/p>\n
That\u2019s changed suddenly, powerfully with the alignment of two unlikely stars.<\/p>\n
The first is this:<\/strong><\/p>\n\n \u00a0<\/p>\n And the second \u2013 even more unlikely, is this:<\/strong><\/p>\n \u00a0<\/p>\n\n That\u2019s a can of MELO.<\/p>\n This particular THC Seltzer \u2013 on the shelves now in North America \u2013 is of the grapefruit variety and its very active ingredient is made by the Aussie-listed Althea Group (ASX:AGH).<\/strong><\/a><\/p>\n On Friday in Florida, Althea\u2019s wholly-owned subsidiary \u2013 Peak Processing Solutions \u2013 signed a binding term sheet with the creator of this luscious beverage, the Nasdaq-listed Flora Growth Corporation (FLGC).<\/p>\n Althea Group CEO and managing director Joshua Fegan told Stockhead<\/em>, Peak and Flora have already developed five cannabis drinks: two seltzers and three sodas.<\/p>\n \u201cThere\u2019s Melo \u2013 that\u2019s the JV\u2019s seltzer brand (which contains 5mg of THC) \u2013 and it comes in Wild Berry and Grapefruit.<\/p>\n \u201cThen there\u2019s Cloud Cola, the JV\u2019s soda brand, which comes in Classic Cola, Root Beer, and \u2013 wait for it \u2013 Orange Creamsicle.\u201d<\/p>\n According to Joshua, Peak brings the production and quality expertise, while Flora brings a kind of genius for sales and experience marketing to the uniquely dynamic US lifestyle cannabis audience.<\/p>\n \u201cWith our combined expertise and shared vision, we\u2019re committed to utilising a capital-lite model across mature distribution networks \u2013 and everyone involved in the joint venture is ready and excited to drive real success and create genuine, sustainable value for our shareholders. And of course, delighting our customers.\u201d<\/p>\n Josh says that\u2019s because the JV\u2019s delta-9-THC cannabis bevvies have been infused with Peak\u2019s proprietary cannabis emulsion (Envision).<\/p>\n And Envision, he reckons, guarantees a few important things for a serious maker of cannabis-rich beverages:<\/p>\n Quality, enriched (proprietary) THC potency Via Althea<\/em><\/p>\n \u00a0<\/p>\n But maybe the best thing about today\u2019s announcement for beleaguered cannabis stock investors \u2013 Melo and Cloud Cola and friends are headed for an extraordinary breadth of US distribution.<\/p>\n Not just in those unnerving US cannabis specialty stores, but in standard US bottle shops.<\/p>\n That means your wine and liquor stores on every corner across the US of A.<\/p>\n Not to mention via Flora\u2019s thriving e-commerce platform, already attracting hundreds of thousands of registered users.<\/p>\n \u201cToday\u2019s a good day. (The binding JV term sheet with Flora) is a testament to some of unmatched talent and expertise we\u2019ve attracted across Peak. It\u2019s not a mainstream science nor a typical career \u2013 the cannabis beverage space \u2013 and we\u2019ve got at Peak and Althea amazing people who\u2019ve shown relentless dedication to innovation and growth.<\/p>\n Josh says the broader launch date target and first sales have been set down for late July.<\/p>\n And in a nicely delivered plug over Whatsapp, which I reckon he may\u2019ve practised:<\/p>\n \u201cAs we embark on this strategic venture, we are unwavering in our commitment to delivering excellence in the rapidly evolving cannabis beverages market in the USA.\u201d<\/p>\n \u00a0<\/p>\n There might not be a better time to enter the bustling legal hemp derived delta-9-THC cannabis-infused beverages (or maybe just cannabis beverages) market.<\/p>\n The DEA is planning to reschedule cannabis from Schedule 1 to Schedule 3 and while Joshua says that it\u2019s not a done deal yet, this is a big step forward and would eliminate the evil 280E taxation, which would be a whole new sport-changer.<\/p>\n \u201cCannabis policy here has had its little excitements over the last few years but this is likely the biggest leap forward in US federal policy in over half a century\u201d<\/p>\n The Attoney General Merrick Garland the US Justice Department (DOJ) \u2013 on the back of scientific and medical advice from the US Dept of Health (DOH) \u2013 came to the conclusion on Monday that:<\/p>\n \u201cThere is, at present, substantial evidence that marijuana does not warrant control under schedule I of the CSA.\u201d<\/em><\/p>\n The US President Joe Biden also got very tweety about it, calling the decision \u201can important move toward reversing longstanding inequities\u201d.<\/p>\n \u00a0<\/p>\n Today, my administration took a major step to reclassify marijuana from a Schedule I drug to a Schedule III drug.<\/p>\n It\u2019s an important move toward reversing longstanding inequities. pic.twitter.com\/mxNQqQg1s7<\/a><\/p>\n \u2014 Joe Biden (@JoeBiden) May 16, 2024<\/a><\/p>\n\n \u00a0<\/p>\n After years of stop, start cannabis stock prices \u2013 all of which have taken an absolute pounding over the last few years \u2013\u00a0 it\u2019s not unheard of for a stock to get a handy leg up whenever there\u2019s a decent announcement alluding to some kind of regulatory inch forward.<\/p>\n Take some of the bigger US cannabis ETFs like Amplify\u2019s US Alternative Harvest ETF (ARCX) or Advisor Shares Pure US Cannabis ETF (MSOS), both of which track publicly held US pot stocks.<\/p>\n And while both ETFs jumped by a full 25% after Associated Press first reported the announcement to reclassify marijuana, it\u2019s probably fair to say that the original enthusiasm for cannabis stocks has somewhat \u2026diminished.<\/p>\n These popular ETFs tell a story.<\/p>\n Via Google<\/em><\/p>\n \u00a0<\/p>\n The DOJ\u2019s submission would take cannabis out of the same category as stuff like cocaine and put it down with your codeines and anabolic steroids.<\/p>\n Garden variety marijuana\u2019s been classified a Schedule 1 drug alongside heroin and fentanyl since 1970, Josh says.<\/p>\n Cannabis is now legal in 37 US states \u2013 for medical use \u2013 and fully legal across 24 others. However, on the federal level, its status hasn\u2019t budged since John Wayne won best actor at the 42nd Academy Awards.<\/p>\n It\u2019s what makes last week\u2019s DOJ move so quietly thrilling for pot stock fans and so many others.<\/p>\n \u201cMaybe the biggest outcome (of cannabis being dropped from Schedule 1 drug to a Schedule 3) would be the elimination of this 280E tax I mentioned \u2013 and that\u2019d mean a huge boost to cash flow for companies which process, distribute and sell in the US,\u201d Josh says.<\/p>\n \u201cSchedule I substances are bound by three tax provisions under a rule called 280E, which prevents companies from taking up standard business tax deductions.\u201d<\/p>\n Last week the listed US cannabis company Curaleaf Holdings Inc (CURLF) said it\u2019d save more than US$150 million in 2024 taxes if 280E is dropped.<\/p>\n So that ball is rolling.<\/p>\n \u00a0<\/p>\n \u201cWe operate three distinct strategic business units: Peak Processing Solutions (Peak), Althea & MyAccess Clinics,\u201d Josh told Stockhead.<\/em><\/p>\n \u201cMyAccess are among the best medicinal cannabis clinics in the EU, Althea (just Althea) are the Mother Ship and handle all the process, sales and distribution, while Peak \u2013 the inspiration of today\u2019s news \u2013 partners with consumer-packaged goods (CPG) companies to develop, manufacture and launch (in this case) entirely recreational cannabis products.\u201d<\/p>\n \u201cAnd Peak is a recognised market leader in the contract development and manufacturing (CDMO) of cannabis-of cannabis-based medicines, with an unrivalled 40% market share in Canada,\u201d Josh says.<\/p>\n They\u2019re the fun side of a business which has had its serious face on for the last few years.<\/p>\n For example:<\/p>\n\n Or what about\u2026<\/p>\n Screenshot via Melo<\/p>\n \u00a0<\/p>\n But the serious side is never far, and it\u2019s very serious when there are numbers like the ones Althea are looking at.<\/p>\n Josh says Peak USA will replicate the successful business model of Peak Canada.<\/p>\n \u201cUsing our proprietary emulsion Envision to produce hemp-derived cannabis-infused beverages, hemp-derived THC cannabis beverages are legal in the USA and anticipated to represent a $19bn market by 2028.\u201d<\/p>\n\n \u00a0<\/p>\n Peak\u2019s expansion into the US via the JV with Flora looks like being fast, frictionless and capital-lite.<\/p>\n Flora\u2019s status as a prominent cannabis wellness company with established and extensive sales\/distribution networks includes the company\u2019s existing successful e-commerce platform with over 350,000 registered customers.<\/p>\n That\u2019s where the first range of MELO Seltzers are already being launched, via its online portal.<\/p>\n \u201cThe opportunity,\u201d Josh says, \u201cis significant.\u201d<\/p>\n \u00a0<\/p>\n\n \u00a0<\/p>\n The cannabis beverages containing hemp derived delta-9-THC are legal country wide in the US, with significant opportunities for market expansion, Josh says.<\/p>\n \u201cThis year it\u2019s valued at USD$966.9 million\u2026 but the market is projected to grow at a CAGR of more than 54% to US$19 billion by 2028.<\/p>\n \u201cThe JV will be strategically positioned to establish cannabis beverages distribution in the US because we\u2019ve got the partners in place handling regulations and facilitating market access via the CPG channels \u2013 like wine and liquor stores \u2013 rather than state-licensed recreational cannabis dispensaries.<\/p>\n \u201cThis is the right approach. It enhances accessibility and broadens consumer reach, maximising market penetration and growth potential.\u201d<\/p>\n The latest worldwide industry forecasts for cannabis, via US market research firm BDSA, predicts the global legal marijuana industry will collect US$58bn in sales in 2028, and much of that will be fuelled by recretaional sales in the US.<\/p>\n The firm says sales in the USA alone this year will hit $32.4bn up from $29.5bn in 2023.<\/p>\n On its own by 2028, the US should hit $46bn with the fastest growth in the emerging adult-use US markets, which include Connecticut, New Jersey, New York and Illinois.<\/p>\n \u00a0<\/p>\n After running the shop for a few years now, Joshua says Althea is starting to hit its straps in the bum-tightening business department as well. He no longer feels the cash burn of setting up a global operation. And he knows the language of lean manufacturing and distribution.<\/p>\n \u201cWe\u2019ve identified operational overhead cost savings, and in the coming months have a tightly structured cost cutting plan ready for implementation.\u201d<\/p>\n There\u2019s already been $1.8mn in salary reductions.<\/p>\n \u201cPeak is now onboarding more part-time staff which will nix external labour costs, the maturing supply chain is delivering further efficiencies and the overall restructure is expected to deliver $2.5m in annualised cost savings starting this month.\u201d<\/p>\n Peak, he says intends to replicate its Canadian success, (yes, where it has a 40% market share), by manufacturing Envision in the States from locally sourced hemp, which will become the active ingredient in Melo and whatever comes next.<\/p>\n \u201cPeak\u2019s model for this venture is low risk and capital light with production that is co-located within Flora\u2019s existing manufacturing facility, whilst formulation and canning is to be outsourced to a leading third-party co-packer.<\/p>\n \u201cExperienced reps from Peak\u2019s Canadian operation will manage and supervise all aspects of the US operations, ensuring everything adheres to some very strict product quality and taste standards.\u201d<\/p>\n \u00a0<\/p>\n The millennials LOVE them, Josh tells Stockhead<\/em>.<\/p>\n \u201cSo they\u2019re a healthy, safer option than a glass of wine or some other alcohol after a long day.<\/p>\n \u201cTHC-infused drinks are low-calorie \u2013 Melo\u2019s only 50 calories a drink and the effect, other than bloody refreshing, is a gentle buzz\u2026 which is why these cannabis-based drinks are becoming a huge favourite among anyone looking for healthier alternatives.<\/p>\n Ah.<\/p>\n \u201cYep. Millennials are showing a growing interest in cannabis-infused beverages because they offer a whole buuch of health and wellness benefits. In contrast to alcohol, cannabis is non-toxic, non-addictive, and does not cause hangovers.\u201d<\/p>\n The social acceptance of cannabis also plays a crucial role in this shift\u2026 Josh says.<\/p>\n \u201cBut that\u2019s right. It\u2019s all about healthier lifestyle choices.<\/p>\n \u201c\u2026So A 5mg THC beverage provides an experience distinct from that of alcohol, with more mental than physical effects.<\/p>\n \u201cYour preference, the kind of experience you\u2019re after, and legalities play a role in choosing between them. Typically, you\u2019ll start to feel the effects within 15-30 minutes, which can last up to two hours.<\/p>\n \u201cIf you\u2019re new to THC, enjoying it perhaps once or twice a year, start with half a can and wait 30 minutes before deciding if you want more. This cautious approach helps gauge your tolerance and the beverage\u2019s impact.<\/p>\n \u201cFor those who partake in THC casually, use THC once or twice a month, one to two cans should suffice to reach the desired state.\u201d<\/p>\n Josh says frequent users \u2013 so obviously no one reading this Stockhead article<\/em> \u2013 indulging three to five times a week, might need three to five cans to achieve their preferred effects, reflecting higher tolerance levels.<\/p>\n \u00a0<\/p>\n <\/span><\/p>\n The post Will this can of cannabis change how Americans drink about marijuana?<\/a> appeared first on Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"
\nNo weird, gross or distracting cannabis-flavoured\/bong water tastes
\nStability \u2013 with a very long 12 month shelf life \u2013 where the active THC doesn\u2019t fizzle out or collect at the bottom of the can
\nSafe, reliable and affordable
\nAnd made from natural, ethically sourced local hemp<\/p>\nLeverage on the beverage<\/h2>\n
Boom. Joe. Boom<\/h2>\n
Yes, we Cannabis<\/h2>\n
Althea Group (ASX:AGH)<\/strong><\/a><\/h2>\n
Peak USA<\/h2>\n
A very, very<\/em> large addressable market<\/h2>\n
Peak Althea<\/h2>\n
So\u2026 what are they like?!<\/h2>\n
The California Sober Lifestyle.<\/strong><\/h2>\n
What? No Hangovers?<\/strong><\/h2>\n