Within the fast and rapidly growing marijuana industry, anticipating the second phase of legalization – the adoption of what is collectively referred to as the next generation of cannabis products, pot-soaked food, beverages and top products – is adding to the crazy pace of activity in both Canada and the United States. And both investors and consumers are keeping a close eye on.
To prove, all you have to do is look at the amount of attention that two recent events have generated, one in the US and the other in Canada. Last Friday in the United States, the US Food and Drug Administration (FDA) held a full day of hearings in Maryland about cannabis products and substances that can be used anywhere, from baked goods, drinks, food supplements, skin care products, oils and dog food. The hearings, which amounted to an open fact-finding mission, were short on conclusions, raised many questions, but mainly served as a major public step forward on the legalization of these products.
The testimony focused primarily on CBD oil, the non-psychoactive extract of marijuana that is being touted for its medicinal and therapeutic benefits. More than 100 people – researchers, doctors, health professionals, manufacturers and legalization opponents – gave their insights and insights.
Because CBD oil is listed as a drug in the United States, it falls under the jurisdiction of the FDA and cannot be added to food or beverages. However, the FDA acknowledged the strong public interest & # 39; in the substance as a wellness product, which was touted for its anti-inflammatory properties and for the treatment of pain and anxiety, and promised to work towards the approval of regulated use. At the end of last year, the FDA approved its first cannabis-based drug, Epidiolex, to treat seizures in children. It is manufactured by GW Pharmaceuticals (NASDAQ :).
The markets reacted negatively to news items from the hearing, with many pot stocks including Aurora Cannabis (NYSE :), (TSX :), Canopy Growth (NYSE :), (TSX 🙂 and Cronos Group (NASDAQ:) , (TSX :), the week starts with a lower rate.
Compare that with the Monday event in Canada, where the legalization of these products will take place in just a few short months. A new report pegged the value of the market for cannabis infused products at $ 2.7 billion ($ 2.01 billion USD). That is in addition to the C $ 6 billion (USD $ 4.47 billion) domestic market for recreational and medicinal cannabis.
Regulations that regulate the rollout of these products for retail are expected in Canada before October 17.
A report titled Feeding New Growth: Canada is preparing for Cannabis 2.0, issued by Deloitte, offering a concise analysis of the landscape that investors interested in the sector should remember.
"Canadian cannabis companies currently enjoy significant benefits over their US and global counterparts, including government support, access to capital markets and the banking system, and a uniform market that is more scalable than the fragmented US market. But the introduction of the Farm Bill from the US will be a game change and Canadian companies will have to keep innovating to ensure a strong, sustainable competitive position as the legislation develops in other countries. "
The statement continued: "With the global cannabis market valued at an estimated $ 100 billion combined among the top 13 cannabis markets, these new products will create valuable growth opportunities for the Canadian cannabis industry and help maintain the country's leading position. "
The report estimates that approximately C $ 1.6 billion (USD $ 1.19) will be spent on food in Canada, another C $ 529 million (USD $ 393.65) on cannabis infused drinks and C $ 174 million (USD $ 129.50) in topicals, which come in the forms of creams and ointments, and C $ 140 million (USD $ 104.2 million) on concentrates.
The report also estimates that the global market will almost double in the next five years to US $ 194 billion. The question for investors in Canadian cannabis stocks will be: The near future looks bright, but will that change when federal legalization gets the green light in the US?
It is a new frontier with many promises. But there are still many corners, shifts and bumps in the roll-out path that is still running.
