Emerging Cannabis Stocks Brief

Cannabis 101: A Primer On What An Investor Needs To Know and Why to pay attention to the Cannabis Markets.

Which market has the bigger upside?

AMERICAN MARKET:  While sales in both markets are predicted to continue to rise over the next few years, it appears that in the American market that could CBD could come out on top. A recent article in The Rolling Stone stated:

“Exclusive: New Report Predicts CBD Market Will Hit $22 Billion by 2022″

Looking forward to relaxed hemp regulations, a new analysis estimates that the CBD market could jump — and outpace marijuana

For years, experts have predicted that if the cannabis industry expands at its current rate, the American market will reach $20 billion by 2020. But it turns out that one market is spinning off into a mega-industry of its own: according to a new estimate from cannabis industry analysts the Brightfield Group, the hemp-CBD market alone could hit $22 billion by 2022.

CBD, a non-psychoactive cannabinoid found in cannabis, has had a surge in popularity over the past couple of years. Unlike THC, the chemical compound that gives cannabis its signature effect, CBD has been shown to help with everything from PTSD and anxiety to MS and epilepsy — without getting you high.”

WORLD MARKET:

However, an article in FORBES quoting industry studies that worldwide, it will be the recreational market that will dominate.

“Legal Cannabis Industry Poised For Big Growth, In North America And Around The World”

North America’s cannabis market will go from $9.2 billion in 2017 to $47.3 billion in 2027.

Spending on legal cannabis worldwide is expected to hit $57 billion by 2027.

According to Arcview Market Research, over the next 10 years, the legal cannabis industry will see much progress around the globe. Spending on legal cannabis worldwide is expected to hit $57 billion by 2017. The adult-use (recreational) market will cover 67% of the spending; medical marijuana will take up the remaining 33%.

The largest group of cannabis buyers will be in North America, going from $9.2 billion in 2017 to $47.3 billion a decade later. The largest growth spread, however, is predicted within the rest-of-world markets, from $52 million spent in 2017 to a projected $2.5 billion in 2027.

Still, the main difference between the U.S. and European cannabis markets is that in the U.S., recreational use will dominate sales. With a budget of $1.3 trillion in health care spending, European government-subsidized health care systems will bring the medical cannabis market to dominate Europe and become the largest medical marijuana market in the world.”

Bloomberg also chimed in on the U.S. infused beverage market:

Cannabis-Laced Drinks Could Be a $600 Million Market in U.S. by 2022

Drinks infused with marijuana-derived compounds could swell to become a $600 million market in the U.S. within the next four years, outpacing the growth of other categories of retail cannabis products, according to analysts at Canaccord Genuity

Canaccord sees the demand for beverages featuring CBD, or cannabidiol, the non-psychoactive compound in marijuana, reaching $260 million by 2022, up from the “negligible revenue” the limited number of drinks contributes now, while THC-based drinks could reach $340 million, up from $106 million expected this year.

What will the long-term cannabis market look like?

Mergers and acquisitions?

FORBES expects mergers and acquisitions as the big players in the cannabis markets start to align with existing big brand conglomerates, possible alcohol and tobacco producers:

“First of all, we have always viewed the cannabis space as one that would eventually be dominated by large alcohol and tobacco producers.  Companies with deep pockets to grow new brands, experience to navigate legal restrictions in distribution, and the operational excellence to squeeze profitability from highly competitive marketplaces. Sure, we expect there to be smaller “artisanal” farms that cater to connoisseurs or consumers looking for something a little different – our view is something akin to the way the beer market looks today with large producers dominating sales and new craft brewers popping up every day. But in cannabis, we believe the majority of supply will be acquired and delivered by large alcohol and tobacco producers because the opportunity is so enormous and compelling for them. Tobacco and alcohol companies should want to participate in the first major consumer drug product to be legalized since maybe the end of alcohol prohibition in 1933. Whether you think the global opportunity is $75 billion or $250 billion, that is a huge new market and companies like Constellation Brands, Phillip Morris, Molson Coors, and others will be compelled to participate by the possibilities of this new global market.