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Green Rush: How Cannabis Legalization Will Impact California

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Across the United States, there’s a seemingly unstoppable movement gaining ground.

The legalization of cannabis for adult use – first passed in the states of Washington and Colorado in 2012 – is now approved in a total of nine states and the District of Columbia. By the end of the year, that total could be in the mid-teens as states vote on cannabis-related ballots in the upcoming mid-term elections.

California’s Green Rush

States are legalizing the adult use of cannabis for various reasons, but there’s no doubt that one of the primary ones is the potential impact on both the economy and government coffers.

Today’s infographic comes from cannabis royalty company FinCanna Capital, and it helps to contextualize the possible effects of cannabis legalization on the country’s largest state economy: California.

Green Rush: How Cannabis Legalization Will Impact California

Experts say the current cannabis market (including unregulated sales) in California is already worth about $8.5 billion, making cannabis quite the cash crop to start with. In fact, it’s an amount that’s bigger than the current three largest agricultural markets in the state: milk and cream ($6.1B), grapes ($5.6B), and almonds ($5.2B).

With the passing of Proposition 64 in November 2016 and legalization officially taking effect January 1, 2018, the state of California is now the world’s largest regulated cannabis market.

To take advantage of this growing opportunity, entrepreneurs are rushing to the Golden State from far and wide.

Sizing Up the Green Rush

In 2016, the regulated market for cannabis, which only included medical marijuana at the time, was worth $2.81 billion in California.

However, Arcview Market Research predicts that California will see regulated sales grow at a 23.1% annual pace between 2016-2020 as adult use sales come into play. By 2020, the total regulated industry will be worth $6.5 billion.

Meanwhile, it’s expected that the state government will be pocketing from the rush as well, picking up $1 billion or more per year from taxes. That includes a 15% levy on all cannabis sales, as well as cultivation taxes applied to buds and trimmings.

The Medical Component

As the largest legal market on the planet, California could see less expected green shoots, as well.

Because of its federal classification as a Schedule I substance, cannabis is extremely under-researched globally. With wider state acceptance of cannabis in California, it may be possible to foster an environment where more could be learned about the vast medical potential of the plant through the state’s powerful universities and institutions. This could lead to increased innovation, investment, and medical discoveries that could have an additional economic impact.

Such a track would follow in the footsteps of Israel, which is the world’s leader in marijuana research. In the country, there are 120 ongoing studies, $100 million in foreign and U.S. funds invested into patents, startups, and delivery devices, and ten-fold growth in investment expected between 2017-2019.

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Cannabis

Why Retail Cannabis Could Be the Next Big Investment Boom

Retail cannabis could flourish into a $47.3 billion industry by 2027. What makes this cannabis segment so enticing for investors and consumers alike?

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Imagine being an investor in Microsoft at the time of the company’s IPO in 1986. Or better yet, buying Amazon shares while it was still just an aspiring online book store in the late 1990s.

Chances to be an early adopter in the next billion-dollar industry are far and few in between – but it’s exactly what is happening today with the nascent cannabis market. After close to a century of prohibition, cannabis is back in the limelight as legalization rolls across the U.S. and Canada.

Visualizing the Retail Boom

Today’s infographic from Choom Holdings Inc demonstrates the consumer interest in retail cannabis, and the challenges and opportunities that come with this potential.

Retail Cannabis Investment Boom

Legal cannabis today is a lucrative modern market in the U.S. and Canada. In 2018, sales were $10.8 billion – and they are expected to grow to $47.3 billion by 2027.

Who’s driving this growth? A recent survey reveals that:

  • 58% of U.S. cannabis consumers use it at least once a week
  • 66% of these weekly users are millennials, aged 18 to 34
  • 46% of cannabis consumers who also drink, prefer it over alcohol
  • 74% of cannabis consumers who also drink, believe it to be safer than alcohol

With more people using cannabis frequently, the disruptive potential of retail cannabis becomes clear.

The Cannabis Supply Issue

Colorado, Washington, Nevada, and most recently California have been among the major U.S. states to legalize recreational cannabis in recent years.

Although cannabis sales across all states have soared, there’s one caveat to mention, which is clearly seen in the case of California. As the state began selling cannabis in stores on January 1st, it also simultaneously ran out of supply when the grey market came rushing up.

This trend of pent-up demand is clear across both mature and new markets – even Canada couldn’t escape the same supply crunch, subjecting customers to long lines and wait times on day one of legalization. For example, only one legal retail store was open in the entire province of British Columbia on October 17th.

It’s not surprising to see why cannabis is such a valuable retail product, though: dispensaries typically outsell Whole Foods and other similar retailers.

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(Source: Marijuana Business Daily)

The Value Play in Cannabis

Seizing an early adoption opportunity is a best-case scenario in the investing world.

Today, such an opportunity may come in the form of retail cannabis. The segment still faces specific hurdles, but these challenges have the potential to convert into golden opportunities as the market matures in North America:

1. Inherited demand
Legal retailers will reach new consumers as the grey market begins to come online.

2. Strong foundation
Retail cannabis is only legal in ten U.S. states, but it already shows strong promise.

3. Building bridges
Retail cannabis stores are just now opening in Canada, but licenses are hard to get.

Retail cannabis is a brave new world for consumers and investors alike – and early entrants to the industry with access to capital and a large retail footprint will likely lead the charge.

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The Science Behind the $13 Billion Medical Cannabis Industry

A deep-dive into the science behind the medical cannabis industry can provide some investor insight into what makes it a multi-billion dollar market.

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The Science Behind the Medical Cannabis Industry

There’s nothing quite like cannabis in the plant kingdom. Beneath its humble surface, over 750 unique compounds exist within – all of which have helped propel the cannabis industry into the multi-billion dollar market it is today.

Today’s infographic from The Green Organic Dutchman takes a deep dive into the cannabis components which contribute to its therapeutic potential, how it interacts with the human body, and the ways it can be consumed.

The Chemical Effects of Cannabis

While many people would be familiar with THC and CBD as the two major cannabinoids, there are a few lesser-known cannabinoids which also play important roles: Cannabichromene (CBC), Cannabigerol (CBG), Cannabinol (CBN), Tetrahydrocannbivarin (THCv), and Tetrahydrocannabinolic acid (THCa).

In different combinations, they work together with terpenes – aromatic oils that are present in most plants – to provide relief for a variety of ailments.

CategoryCannabinoidAilment
Pain/ SleepCBD, THCCramps, Migraine
CBC, CBD, CBN, THCInsomnia
CBC, CBD, CBN, THC, THCvPain
CBC, CBD, CBDa, CBG, CBN, THC, THCaArthritis, Inflammation
Gastro-IntestinalTHCAppetite loss
CBD, THCNausea
CBD, THCvDiabetes
CBD, THC, THCaCrohn’s disease
Mood/ BehaviorCBD, CBGAnxiety
CBD, THCADD/ADHD, Stress
CBD, CBG, THCBipolar disorder, OCD, PTSD
CBC, CBD, CBG, CBN, THCDepression
NeurologicalCBC, CBD, CBG, CBN, THC, THCaAmyotrophic Lateral Sclerosis (ALS)
CBC, CBD, CBG, THC, THCaParkinson’s, Alzheimer’s
CBD, CBN, THC, THCaMultiple Sclerosis
CBD, CBN, THCa, THCvEpilepsy, Seizures
OtherCBC, CBD, CBDa, CBG, THC, THCaCancer
THCFatigue

When cannabinoids and terpenes interact, the human endocannabinoid system is already equipped to deal with the entourage effects that are created.

Modern-Day Medical Cannabis

It’s clear that many cultures embraced cannabis long before scientific research came into play. Its therapeutic properties were widely recorded and extolled around the world.

After decades of restricted access and stigma, the tide is turning back towards what our ancestors discovered long ago. Millions of patients rely on medical cannabis today, with Canada and Israel paving the way in cannabis research.

  • Canada
    Medical cannabis has been legal nationwide since 2001, aiding scientists in studying its effects.
    Funding: CAD$1.4 million (US$1.05 million) invested by the government towards research projects.
  • Israel
    Since the 1990s, medical cannabis has been legal for patients of cancer, chronic pain, and PTSD.
    Funding: 8 million shekels (US$2.16 million) annual government funding to support innovation.

Back in the day, typically only dried cannabis flower was used. However, consumption methods have evolved into three broad categories today: ingestion, inhalation, and application.

  • Ingesting
    The dosage of cannabis consumed is easy to control using edibles or beverages, tinctures or sprays, and capsules.
  • Inhalation
    The effects of cannabis are quickly felt through smoking, vaporizing, and/or dabbing concentrates.
  • Application
    Transdermal patches and topicals like balms offer localized relief through a controlled dose.

Each of these methods have their own pros and cons, but in the end, they all offer the medical cannabis patient with a wide variety to choose from. Some of these forms, such as topicals and edibles, even lend themselves to the rapidly growing consumer cannabis segment.

In the seventh part of this series, we’ll delve into the rise of retail that’s set to disrupt the cannabis industry.

The Story of Cannabis: What Investors Need to KnowAnatomy of a Cannabis PlantA Quality Cannabis ProductThe Rise of OrganicA Sustainable Cannabis ProductThe Science Behind the Medical Cannabis IndustryComing soonComing soon

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