Creso Pharma – Entering a brand-new booming market as it rides the second green wave
CRESO PHARMA ASX:CPH | OTC:COPHF | FFT:1X8
Cannabis and CBD are booming right now.
The reason why is simple enough – legalization.
More and more US states and countries are legalizing marijuana along with its most well-known compound cannabidiol- also known as CBD.
These areas are following in the footsteps of nations like Canada, which have already taken great steps to end the long era of illegality surrounding this amazing product.
As a result, being a cannabis company right now is akin to being a brewer at the end of prohibition; almost everyone wants what they’re selling.
One of the most interesting names in this growing space is Creso Pharma (ASX:CPH)
Right now, this firm is diversified across a variety of areas in the cannabis/CBD world, and is firing on all cylinders in each of them.
But there’s more.
In a well-planned move, Creso has extended its upside potential even further by entering the psychedelics sector – a fresh and growing space with plenty of science to back up its extraordinary medical potential.
With so much on offer, let’s take a look at each of the company’s fast-growing divisions…
CREAM OF THE CROP – FLOURISHING RECREATIONAL CANNABIS UNIT MERNOVA
Creso’s first arm is Mernova, its recreational cannabis operation.
Mernova is already fully licensed in several areas of Canada not only to cultivate cannabis but also to process and sell it.
And now, the Ontario Cannabis Retail Corporation has even recognized the unit as a supplier. This is huge news, since Ontario is Canada’s biggest recreational cannabis market.
Mernova’s retail sales in Canada kicked off back in 2020 and have gone from strength to strength since.
In March, for example, it announced more than C$177,000 of purchase orders, including one worth more than C$70,500 for its new Ritual Sticks Pre-roll Joints. Mernova then revealed further purchase orders worth over C$145,000 shortly afterward in April, including more orders for Ritual Sticks.
Perhaps most significantly, given Ontario’s status in recreational cannabis, Mernova’s Ritual Green cannabis products were awarded Craft Designation in May by the Ontario Cannabis Store (“OCS”).
This is a game-changer since the OCS is a crown agency in Ontario as well as being the province’s only legal cannabis products retailer and wholesaler. It’s not as though Ontario just hands out the designation to anyone, either. Indeed, only a select few craft cannabis products meet its quality standards.
Of course, Mernova is far from Creso’s only successful business…
TAKING THE WORLD BY STORM – EXPANDING CBD BUSINESS CRESO NUTRACEUTICALS
Thesecond arm of Creso’s business, Creso Nutraceuticals, focuses on CBD products.
CBD is a non-psychoactive cannabinoid, meaning it does not get people ‘high’. Rather, the compound reacts with the endocannabinoid system – receptors in the body that regulate areas like mood, appetite, and sleep.
In the past, restrictive policies have held back CBD research.
However, the falling walls of regulation are now allowing more work to be done, and the findings so far have been extremely encouraging. For example, studies have found that CBD can help in the treatment of anxiety, epilepsy, and many other conditions.
And as these potential benefits continue to stack up, consumer interest is soaring—it is expected that CBD sales in the US alone could top $20 billion by 2024, just three years from now.
Creso Nutraceuticals is based over in Switzerland, Creso’s home in Europe, and takes an innovative approach to the CBD market.
The division has developed a wide range of unique CBD creations such as lozenges and teas. These include its cannaQIX brand, which recently launched three new CBD-based tea products under the names cannaQIX tea, cannaQIX NITE tea, and cannaQIX Immunity tea.
This development came after Germany’s Federal Court of Justice ruled to annul charges against tea sellers, which opened up the country’s market for food products based on hemp flowers.
But Europe is far from the only place where Creso is seeing CBD success thanks to legalization.
A commercial agreement with Cannabis Queen in South Africa was announced in April and strengthened the firm’s presence in the world’s second-largest continent. The agreement will see Cannabis Queen market and distribute the company’s topical and CBD tea products across Africa.
Cannabis Queen was established May 2019 after South Africa’s Department of Health opted to make CBD available for consumer use in the country.
Clearly, the world is changing. And Creso is making the most of that change by seizing opportunities in all CBD markets – and that doesn’t stop with the ones for people, either…
MAN’S BEST FRIEND – INNOVATIONS IN CBD WITH CRESO ANIMAL HEALTH
A third and very important arm of Creso is its animal health division, which seeks to bring the benefits of CBD to both pets and livestock.
This stands to be a huge commercial opportunity, given that as much as 5% of US CBD sales are expected to come from pet products by 2025. After all, many animals have an endocannabinoid system, too, and can experience the same benefits from CBD as people do.
Creso goes a step further than most pet CBD businesses, formulating its offerings specifically for animals rather than repackaging human CBD products.
May was an excellent month for this area of the firm.
First, it entered the Polish animal health market thanks to a signed letter of intent with Polvet Healthcare Teodorowski Spóu0142ka Jawna Polvet is set to market and distribute Creso’s anibidiol product lines, which were created with the goal of managing stress and improving pet and livestock wellbeing.
This is great news, as Poland is among the Central-Eastern European region’s largest pet markets, with 7.7 million dogs and 6.6 million cats, as well as 11 million pigs.
And it is this last category that benefits in particular from Creso Animal Health’s new offering, antibidiol swine.
Antibidiol swine is a hemp flour and oat bran complimentary feedstock for pigs. The product was developed to reduce stress and discomfort among pig herds as well as tail biting – a problem that can hurt the commercial value of the animals.
With antibidiol swine, Creso now has a presence in the lucrative livestock market, consisting of around 700 million pigs worldwide with 150 million in Europe.
But as mentioned earlier, cannabis and CBD aren’t the only spaces where Creso is making progress.
Now, the company is making strides in psychedelics too…
Changing minds – transformational psychedelic therapies from Halucenex
CRESO PHARMA ASX:CPH | OTC:COPHF | FFT:1X8
Beyond its diversified approach to cannabis, Creso is now making a name for itself in the world of psychedelics with its planned acquisition of Canada’s Halucenex Life Sciences.
Halucenex offers psychedelic-assisted psychotherapy, focusing on commercializing, researching, and developing novel psychedelic molecules such as psilocybin – the hallucinogen found in magic mushrooms.
These molecules are intended to treat often debilitating mental illnesses such as post-traumatic stress disorder (“PTSD”) and depression.
Thanks to its supply agreements, Halucenex is among the largest holders of pharmaceutical-grade synthetic psilocybin in the entirety of Canada. This could prove to be a smart move, given the growing interest in medical psychedelics has already created a supply chain bottleneck.
Additionally, once it receives approval for its Controlled Drugs and Substances Dealer’s License, Halucenex will apply to start a Phase II clinical trial, likely in the third quarter. This work will research the efficacy of psilocybin in the treatment of Treatment-Resistant PTSD.
Beyond this, Halucenex announced in April a strategic decision to expand research and development beyond psilocybin and into compounds like LSD, MDMA, and ketamine.
These drugs have also shown incredible clinical potential in some of the most hard-to-treat mental illnesses. For example, in a recent ground-breaking study, 67% of study participants who were given MDMA (also known as ecstasy) plus therapy no longer fit the diagnostic criteria for PTSD.
Using psychedelics to disrupt the PTSD treatment market could prove to be extremely valuable to Halucenex, and, in turn, Creso.
Indeed, the value of this space is set to hit US$10.5 billion by 2025.
What’s more, on top of PTSD specifically, mental illnesses in Canada collectively carry a C$51 billion a year economic burden. This brings huge value to new treatments, like psychedelics, that could be much more effective than what’s currently on offer.
Legalization plays a big role here, too, with Halucenex recently welcoming a decision by California senators.
The senators approved a bill decriminalizing the possession and use of psychedelic substances throughout the state for all adults over 21, suggesting a sea change in the recreational and medicinal worlds. If the bill becomes law, Creso will work on progressing opportunities in the Golden State.
California would be joining the likes of Oregon, which legalized magic mushrooms back in November. So, with this wave of psychedelic legalization building, it seems like Creso and Halucenex have the world at their feet…
ENDLESS POSSIBILITIES – CRESO SEIZES THE OPPORTUNITIES IT FINDS
With increasing legalization efforts around cannabis, including a much more open approach to the substance from the Biden administration, opportunities just keep emerging for Creso.
And critically, the company is there to make the most of them. Especially with a recent A$18 million fundraise giving it the financial firepower needed to cement as strong a position as possible in its growing markets.
The potential for vast upside across the company is very significant, especially with science continuing to support the use of psychedelics, cannabis, and CBD as medicines.
So, given this ever-expanding horizon and highly diversified approach…
The case for investing in Creso Pharma today as its firm foundations become increasingly profitable over the coming months and years is very strong.
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