As the Cannabis Industry Grows, So Do Challenges of Supply and Distribution
New York NY – November 6, 2018 – The cannabis industry is seeing repeated waves of growth, creating challenges for supply and distribution.
- Currently worth over $7 billion, the cannabis industry is expected to exceed $65 billion in the next five years.
- This growth is creating challenges for supply and distribution, as companies struggle to meet surging demand.
- The passing of the 2018 U.S. Farm Bill will allow for further growth, adding to the cannabidiol (CBD) supply.
SinglePoint, Inc. (OTC:SING) (SING Profile) is one of the companies tackling distribution problems through the establishment of an online store selling CBD products. Tetra Bio-Pharma, Inc. (TSXV:TBP) (OTC:TBPMF), a medical cannabis company, is expanding into the leisure market with a hemp-based energy drink. Luxury consumer products company American Premium Water Corp. (OTC:HIPH) is tapping into a similar market with CBD-infused water. The Supreme Cannabis Company (TSXV: FIRE) (OTC: SPRWF) (FIRE Profile) just launched 7ACRES, an exclusive brand of high-end cannabis flower. And through its focus on research, Insys Therapeutics, Inc. (NASDAQ:INSY) is exploring the use of cannabis to tackle anxiety, autism, and early psychosis.
To view an infographic of this editorial, click here.
Can Cannabis Live Up to Expectations?
After decades exiled to the criminal economy, cannabis is finally finding a place in mainstream business. Liberalizing attitudes, especially in North America, are driving a change in the plant’s legal status. First as a medical drug, then as a recreational one, and finally as a wide range of derivative products, cannabis is turning into big business.
For cannabis users and patients hoping to benefit from it, this is an historic moment. As celebrations around recreational legalization in Canada showed, there’s huge excitement about what the future brings for cannabis fans. Those high hopes come with high expectations, with consumers queueing up to buy their first legal weed, and many expecting to have access to a regular supply from the moment legalization reaches their country or state. But the reality is more complicated, and if the legal industry is to succeed in drawing business away from criminal dealers then it will need to rise to the challenge of meeting uncertain and possibly unrealistic demand.
Cannabis Comes Out of the Shadows
Right now, cannabis is big business. Companies such as SinglePoint, Inc. (OTCQB:SING) are building entire strategies around selling hemp-derived CBD, derivative products, and the support systems needed by cannabis retailers. It seems extraordinary that, only 22 years ago, there was no legal cannabis industry.
Starting in 1996, individual American states began legalizing the use of cannabis for medical purposes. At the time, this was a rare and controversial novelty, tied to the plant’s potential to tackle both pain relief and the high-profile problem of nausea from cancer treatment. In less than a generation, that first drop in the ocean has become a rising tide that looks set to wash away cannabis’s illegality. Thirty-one U.S. states now allow the sale of cannabis for medical purposes. Nine of those states, along with Uruguay and Canada, allow the sale and consumption of cannabis for recreational purposes. Other countries are taking steps towards joining them.
The market isn’t just about straightforward cannabis. Industrial hemp, a form of cannabis that doesn’t get users high, is being used to produce products containing cannabidiol (CBD). Outlets such as SinglePoint’s SingleSeed.com are selling everything from muscle salves to beard oils infused with CBD. CBD is reaching places that more familiar cannabis products can’t.
As a result, SinglePoint’s products are now part of an industry worth billions of dollars. The global market for legal cannabis was worth $7.7 billion in 2016, and it keeps growing, with analysts predicting a value of $65 billion by 2023.
The Challenge of Distribution
This astounding forecast presents a great opportunity for cannabis companies, but it’s not without its problems. Given that there was no cannabis industry two decades ago, there has been an impressive rush to create infrastructure from scratch. Each new burst of growth generates demand for swift innovation, including the establishment of fresh supplies and distribution systems, an area in which SinglePoint specializes.
The challenges of this were well demonstrated when Canada legalized recreational cannabis on October 17. Some licensed shops were unable to obtain supplies of cannabis for days on end and had to turn away customers. In Ontario, no licensed dispensaries are expected until April, and the government store faced more demand than it could possibly handle. Even big companies faced supply chain issues and an uncomfortable few weeks of business. Unable to obtain the cannabis they had been told would be theirs, customers headed back to the black market.
With demand for both cannabis and CBD products rising, but patterns of demand still uncertain, companies are looking for flexible ways to reach their customers. Approaches such as SinglePoint’s online SingleSeed store offer a way to quickly reach a large number of customers, without the geographical limitations of brick and mortar stores. The company has been negotiating additional distribution contracts, as the industry rushes to catch up with customer demand.
Innovative use of technology will be crucial in creating smoothly running, adaptable supply channels. While also applicable to other sectors, SinglePoint’s LastMile delivery platform and SingleCoin digital wallet offer the types of solutions that could make the process of selling cannabis and CBD simpler. With access to an innovative electronic payment system and a delivery product targeted at small and medium businesses, retailers will be able to get started more quickly, serving customers in under-served markets. Technology won’t magically make the sector’s problems go away, but it will make it easier to face them.
More Growing Pain to Come
It’s important for the industry to get solutions such as LastMile into place now, because there are signs that another growth spurt is coming.
Throughout the summer, U.S. politicians have been discussing the 2018 Farm Bill, a wide-ranging bill that will establish U.S. agricultural policy for the next few years. The bill includes a measure that would legalize the growing of hemp, which federal authorities currently only allow in research and test crops. This could lead to potentially huge growth in the production of CBD, tackling some of the supply and demand issues. Though the Farm Bill is currently stalled, it will be a high priority for many politicians after the mid-term elections. And while there is dispute between Republicans and Democrats over other parts of the bill, there is cross-party agreement on the hemp measure.
The passage of this legislation will be good news for SinglePoint and other sellers of CBD products. Researchers at Brightfield Group predicted a doubling in the size of the CBD market to $1 billion from 2017 to 2022, and farmers are eager to grow hemp as a high-value cash crop. Though it will take time to ramp up production, companies that already have distribution infrastructure will be well-positioned to make the most of this growth.
Seizing the Potential of CBD
With the cannabis and CBD market growing, companies are moving fast to create a range of products for the health, well-being, and recreational markets.
Tetra Bio-Pharma, Inc. (OTC:TBPMF) is primarily working in medical cannabis. The company is working with drug regulators on pharmaceutical trials to better understand the effects of cannabis and its medical use. In particular, it is working on the use of cannabis to manage chronic pain as a healthier alternative to the opioids currently causing health problems across the United States. Tetra is also using its cannabis expertise to move into the broader CBD sector, offering products such as a hemp-based energy drink, for which it has recently signed a major distribution deal for both U.S. and Canadian markets.
A diversified luxury consumer products company, American Premium Water Corp. (OTC:HIPH) is developing health and beauty products using biotech. American Premiums is using this technology to help the body absorb CBD, courtesy of its Lalpina CBD water. This puts the company at the forefront of development of cannabis-based drinks, which are set to become an important part of the industry. Allowing consumers a more sociable way of consuming cannabinoids, food and drink have the potential to make cannabis and CBD as mainstream as alcohol.
The Supreme Cannabis Company (TSXV: FIRE) (OTCQX: SPRWF) established 7ACRES as the first licensed producer focused on growing high-quality cannabis in high quantities. Last month, Supreme announced that its initial 7ACRES product was available exclusively online through Canada’s provincially regulated adult-use channels. The full line of 7ACRES products will be available soon both online and in brick-and-mortar stores.
A specialty pharmaceutical company focused on cannabinoids and novel drug delivery systems, Insys Therapeutics, Inc. (NASDAQ:INSY) is involved in several studies with the University of California San Diego School of Medicine. Covering issues such as anxiety, autism and early psychosis, these studies are exploring the untapped potential of CBD. If they prove successful, then the market could see it used in treating a wide range of health problems.
Many companies are working in the cannabis sector and so are now relying on suppliers to tackle problems of distribution and supply. Fortunately, other companies are rising to the challenge, allowing this new industry to sustain its extraordinary growth.
For more information about SinglePoint, please visit SinglePoint, Inc. (OTCQB:SING).
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