- Canadian cannabis market set for CAGR of 77.9 percent to 2021
- Icon’s Vertical integration strategy could capture high margins
- Company will have operations in cultivation, extraction and retail
The legalization of recreational cannabis in Canada has made analysts project rapid growth for the industry. Spending on adult-use marijuana (http://nnw.fm/l1fIX) is “estimated to reach over $3 billion in 2021, driving a CAGR of 77.9 percent from 2018-2021.” Eventually, Canada’s legal cannabis market will likely be comparable in size to the hard liquor or wine market. Growing organically, some sectors will be profitable (others, perhaps, less so), but telling which may not be so easy. Consequently, the vertical integration strategy that Icon Exploration Inc. (TSX.V: IEX.H) is employing, by straddling the value chain, seems best for capturing the highest margins. The company will have a finger in many pies. It has been stocking up on talent as it prepares to commence operations in cannabis cultivation, refining and extraction and retail.
Even before the legalization of recreational cannabis on October 17, 2018, the cannabis market in Canada had been growing at a healthy clip. The number of medical marijuana patients has been increasing by 10 percent monthly, sales of dried cannabis have risen at six percent monthly and the sale of cannabis oil has increased by 16 percent monthly. In 2017, about 4.9 million Canadians aged 15 to 64 spent an estimated $5.7 billion on cannabis for medical and non-medical purposes. This is equivalent to about $1,200 per cannabis consumer. In this lucrative market, Icon’s primary objective is to create a well-diversified company focused on assessing and potentially acquiring targets in the cannabis industry.
The company is close to completing its acquisition of City View Green (CVG), a vertically integrated cannabis company. CVG has submitted an application to Health Canada for an Access to Cannabis for Medical Purposes Regulations (ACMPR) license, which is now at the in-depth review stage of the licensing process. CVG plans to develop a 40,000-square-foot growing facility near Toronto, about half of which will be converted into a modern greenhouse. The facility will have state-of-the-art LED lighting, HVAC and dehumidification systems and automation technologies designed to optimize the quality, safety and consistency of cannabis production.
A further 4,000 square feet will be used to house an extraction laboratory featuring an ultra-efficient CO2 supercritical extraction process, with plans to include ethanol extraction technology in the future. Another 4.3 acres remain available for future construction of up to 125,000 square feet of grow and extraction space. Production plans include producing high quality edible products, distillates and water-soluble products for the rapidly expanding CBD-infused (cannabidiol) beverage market.
Icon has been acquiring top talent, as well. Its management team now includes a master grower with cannabis-industry experience to manage indoor grow operations, as well as an extraction expert whose expertise in developing and launching new products was honed while working in Washington state’s cannabis sector. In addition, negotiations are currently in progress with a private company that is seeking 37 retail cannabis licenses in Alberta, Canada, and discussions with various entities in Europe are also underway to arrange an off-take agreement for CBD oils and extracts.
For more information, visit the company’s website at www.IconExploration.net
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