New Cannabis Trends for 2019: What’s Hot In The Marijuana Sector
This week’s Green Market Report and AxisWire released the 2019 Cannabis Trend Report. This is the third annual report detailing the major trends in the cannabis industry highlighted by the press releases and headlines published throughout the year. The report plunges into the worldwide industry’s hottest topics and looks at where the trends will lead over the next few years. This market insight helps investors, entrepreneurs and business operators navigate the marketplace. Here are the key points highlighted in the report:
The Cannabis Brands Sophistication and maturity
Cannabis consumers are increasingly becoming more aware and sophisticated, and brands are starting to wake up to this new reality. Companies like Green Thumb Industries (CNSX: GTII) are making major investments to acquire luxury brands like Beboe, coined “the Hermes of marijuana” by the New York Times and the luxury brands themselves have started to attract the interest of high net worth investors. As the U.S. gets closer to the legalization of cannabis at federal level, expect to see a major increase in the demand for luxury brands.
CBD will Take Center Stage Worldwide
Cannabidiol (commonly known as CBD) is currently a hotter commodity than legal cannabis. Thanks to the US legalization of hemp and CBD at the federal level, consumer demand for CBD has gone through the roof. According to BDS Analytics and Arcview Market Research, the market for CBD sales in the US alone will exceed $20 billion by 2024. As a result, Canadian licensed producers are making significant investments in the hemp sector.
At the beginning of 2019, Canadian cannabis company Tilray (NASDAQ: TLRY), acquired Manitoba Harvest, the world’s largest manufacturer of hemp food products, for over C$400 million. If the Food and Drug Administration choose to regulate CBD as a nutritional supplement (and treat it as Vitamin C, for example), as opposed to a pharmaceutical ingredient, the market can expect to see similar deals as the demand for CBD continues to soar.
Cannabis Media Outlets Consolidate
The cannabis media space is starting to consolidate. Over the last year, the cannabis publisher High Times has acquired other successful cannabis media outlets, such as Dope Magazine, Culture Magazine, and Green Rush Daily. While High Times is snatching marijuana media estate, the overall cannabis media market remains unexplored by investors. As the cannabis industry worldwide continues to evolve, and as the cultivation/manufacture/brands sectors become more saturated, we can expect to see major investments to start pouring into cannabis media.
Distribution is the Key
As the cannabis industry is becoming more specialized, well-funded business operators are starting to monopolize the cultivation and retail sector. As a result, discerning investors are looking to find success in spaces like distribution. In California, the number of distributors has grown to over 150. One of the largest and most respected companies in California, Nabis Distribution, will take their platform to additional markets in the coming years. The sector has the potential to grow enormously over the next few years as states like Oregon consider laws that would allow them to trade cannabis distribution inter-state.
Multi-State Business Operators in the Rise
US states are taking big steps forward to legalize cannabis on an individual basis. This legalization model has seen the rise of “multi-state operators,” which are cannabis operators with the funds and resources to compete in an increasingly challenging regulatory environment across many US states. Currently, the three biggest multi-state operators are: Green Thumb Industries (CNSX: GTII), Acreage Holdings (CNSX: ACRG.U), and MedMen Enterprises (CSE: MMEN). Given that a unified federal legalization is unlikely in the next few years, it is highly likely that the companies with the capital to operate in multiple states will continue to grow and absorb smaller competitors, continuing to consolidate their market position.
Wall Street Is Making Moves
While the cannabis legalization is still an open question mark at the federal level in the US, savvy investors are making big moves on legalized cannabis. Encouraged by Canada’s 2018 legalization of recreational cannabis, companies like Black Rock, Navy Capital, Ackrell Capital, and Canaccord Genuity Group Inc. are investing billions of dollars in cannabis. Over the last five years, Canaccord alone has acted as an underwriter or lead bookrunner for over a dozen different leading cannabis companies; including Canopy Growth, MedMen Enterprise, Acreage Holdings. It is anticipated that this trend will continue incessantly.
Manufacturing Infrastructures Are Booming
As seen in recent years, cannabis consumers are becoming more sophisticated, so the products must also evolve. There is a growing need for companies that can manufacture vape products, infused products, pre-rolls, etc… so multi-state business operators are pouring big money in building up their infrastructure. In the state of California alone, there are almost 600 cannabis manufacturers. As there is a growing premium on sophisticated cannabis brand, expect to see similar growth in the value of cannabis manufacturers.
Consumption Events on the Rise
Social events, where attendees can consume cannabis, are on the rise. While consuming cannabis in public is not permitted in most states, some states like California do allow for special permits for consumption-based events. The Cannabis Cup, Hall of Flowers , The Emerald Cup, and by High Times are perfect examples. Attendees can purchase and consume cannabis on-site in specially designated areas. As the concerns around cannabis consumption are in decline, it is highly likely that consumption-based events will become very popular in North America.