The Story of Cannabis: What Investors Need to Know
It’s not often that a multi-billion dollar industry appears out of nowhere.
Despite the fact that the first-recorded cannabis use by humans was from as far back as 6,000 years ago, the emerging cannabis market remains a challenging enigma for most investors to wrap their heads around. The opportunity is there, but there are few precedents for companies pioneering in the space.
What will users look for in a legal cannabis product, and how can investors and companies prepare to make the most of this Wild West of a market?
What Investors Need to Know
Today’s infographic comes to us from The Green Organic Dutchman, and it serves as an introduction to the story of cannabis, providing context around the plant, its history, market trends, and the potential of emerging legal markets.
It’s the first part in an eight-part infographic series called “From Soil to Sale”, that will dive deeper into these trends and what they mean to investors.
The Bird’s Eye View
Cannabis has a 6,000 year history of human use – however, since becoming illegal in the early 20th century, it’s fair to say the knowledge gap has broadened as to the plant’s uses and potential.
A Quick Overview:
The female cannabis plant produces clusters of buds which are trimmed down for commercial use. Trichomes are small “hairs” on the outside of cannabis flower that produce and secrete resin, including the cannabinoids and terpenes sought after by users.
There are over 750 compounds found in the plant, including at least 104 cannabinoids.
THC is the cannabinoid you are likely most familiar with (it’s the psychoactive one), but another cannabinoid that is being intensely studied is CBD – a non-psychoactive medicine that has wide applications to several diseases.
Key Industry Trends
As the legal industry takes off, here are three consumer-focused trends to keep in mind as you watch the cannabis sector:
1. Environmental Sustainability
Indoor cultivation of cannabis is both energy and carbon intensive, while outdoor cultivation uses massive amounts of water. With these potential impacts in mind, consumers will demand cannabis products that minimize effects on the environment.
2. Organic Products
More consumers are leaning organic. The global organic market is expected to blossom into a $320.5 billion market by 2025 – and organic cannabis will likely see similar uptake.
3. Cannabis Retail Products
The market for cannabis-infused food and beverages is expected to grow at a 25% CAGR between 2018 and 2022.
In large legal markets like California and Canada, there is a multi-billion dollar opportunity for investors and companies in the cannabis space – and we will continue to demystify the legal cannabis market and how it works as we continue through this infographic series.
This is part one of an eight-part series. Stay tuned by subscribing to Visual Capitalist for free, as we go into the cannabis market in more depth.
Balancing the Environmental Costs of Cannabis
Legal cannabis cultivation emits as much CO2 as 92,660 cars annually. Growing cannabis sustainably can reduce this massive environmental footprint.
Balancing the Environmental Costs of Cannabis
Economic development comes with a massive environmental cost.
Since 1980, heavy industrial activity has caused the doubling of CO2 emissions. As scientists warn of the lasting negative impacts this will have on the planet, nearly every industry is committing to sustainable practices to try to counteract this effect.
Today’s infographic comes from The Green Organic Dutchman, and it demonstrates that while the business of cannabis isn’t always eco-friendly, there are several tried-and-tested ways to reduce its massive footprint.
A HEFTY PRICE TO PAY
Energy is the second-highest cost driver in cannabis cultivation after labor.
There are two main culprits – lighting and HVAC systems (heating, ventilation, and air conditioning). Combined, they make up a whopping 89% of energy use in cannabis cultivation operations.
Last year, legal cannabis cultivation was responsible for consuming 1.1 million MWh of electricity, and producing 472,000 tons of CO2 emissions. That’s enough to power 92,500 homes, and produce the same emissions as 92,660 cars per year. As legal cannabis production scales, this will only escalate.
Much of this data can be attributed to how the plant is grown.
|Growing method||Power consumption (kWh/g)||Carbon intensity (lbs CO2e/g)|
Indoor cultivation is roughly 18 times more energy-intensive than outdoor cultivation, and produces 25 times the carbon emissions. On the other hand, outdoor production produces lower overall yield per square foot. Since it’s difficult to control the environment, impurities can also end up in the final product.
That’s why many companies opt for a hybrid approach instead – balancing the benefits of precise control, with the use of natural light to lower production costs.
A GAME PLAN FOR SUSTAINABILITY
Many licensed producers are adopting a suite of strategies to relieve this environmental footprint.
- Renewable energy
Diversifying the energy sources for cannabis cultivation can reduce carbon emissions. Solar and wind are top choices among cultivators.
- LED lighting
LED light bulbs are more than 60% more efficient than other types. They also produce barely any heat, lowering ventilation requirements.
- Water efficiency
A single cannabis plant can use up to 23 liters of water per day. Water can be recycled and re-used through innovative techniques such as reverse osmosis.
The plastic packaging often associated with cannabis products is a considerable contributor of waste. There are several alternatives, such as paper, glass, and tin. Each of these have their own benefits and drawbacks, depending on what they are used for.
Maximizing energy-efficiency has a domino effect not only on the planet, but on reduced operating costs. These savings can then be passed on to the buyer, which could prove to be a strong competitive advantage as the cannabis industry matures.
Stay tuned for part 6 of this series, where we’ll delve into the scientific evidence for medical cannabis compounds.
The Rise of Organic Cannabis in North America
Consumer spending on cannabis is projected to hit $10 billion in 2018. As the industry matures, a trend towards organic cannabis will ensue.
The Rise of Organic Cannabis in North America
Canna-business is booming on the heels of Canada’s momentous decision to legalize cannabis nationwide, and the industry is now projected to bring in close to $95 billion by 2026.
Much like the way organic products have risen to prominence in supermarkets, consumers will start to demand high-quality products as the cannabis industry matures, as well.
Today’s infographic comes from The Green Organic Dutchman, and it elaborates on why investors and consumers alike are anticipating a growing trend towards organic cannabis.
Roots of the Movement
In a nutshell, organic refers to products grown without fertilizers, pesticides, or genetic modifications. By that definition, organic practices also help to minimize the impact of farming on an environmental level.
The organic trend originates in the post-WWII era, as technological advances transformed the efficiency of large-scale agriculture. As practices changed, farmers and scholars worried about the long-term effects that the use of synthetic chemicals could have.
Thus, the organic movement was born:
The phrase “organic farming” is first coined by English agriculturalist Lord Northbourne.
The book “Silent Spring” by Rachel Carson raises public awareness of the harms posed by pesticides, launching the contemporary environmental movement.
The International Federation of Organic Movements (IFOM), a worldwide organization for the organic agriculture movement, is founded.
The U.S. passes the Organic Food Production Act (OFPA), defining standard organic production practices.
More recently, Amazon’s acquisition of Whole Foods for $13.7 billion demonstrates the influence of consumers in catapulting organic products into the mainstream.
The Allure of Organic Cannabis
Consumers are expecting the same quality standards from other products they consume, such as cannabis.
Growing cannabis organically ensures that it is:
1. Safe for consumption
Natural cultivation methods mean that organic cannabis is often a safer end-product.
2. A premium experience
Organic cannabis offers consumers improved flavor and quality, with enhanced potency.
3. Environmentally sustainable
With organic practices, the surrounding water, soil, and biodiversity are unharmed.
One caveat to choosing organic is the price differential. One gram of organic cannabis can cost 26% more than regular grade cannabis – but that’s because organic cultivation requires more attention to detail.
Nevertheless, increasing consumer demand for less chemically-laden products can outweigh this price differential in many cases. The growing market for cannabis is now on track to bring in $10 billion this year – outpacing all previous estimates.
Stay tuned for part 5 of this series, which will look at the way growing organic cannabis can be complemented by sustainable practices.
Markets2 months ago
The Jeff Bezos Empire in One Giant Chart
Maps4 months ago
Mercator Misconceptions: Clever Map Shows the True Size of Countries
Advertising1 month ago
Meet Generation Z: The Newest Member to the Workforce
Misc4 months ago
24 Cognitive Biases That Are Warping Your Perception of Reality
Technology2 months ago
The 20 Internet Giants That Rule the Web
Environment4 weeks ago
The World’s 25 Largest Lakes, Side by Side
Healthcare4 months ago
An Illustrated Subway Map of Human Anatomy
Chart of the Week2 months ago
Chart: The World’s Largest 10 Economies in 2030