2018 was a massive year for the cannabis industry, but it was also one loaded with ups and downs.
Despite the early pot stock market crashes, Canada paved the way for recreational use. As a result, the center of sales and significant trends, most of the industry’s capital has come from north of the border. We’ve also seen a massive rise in US companies going public there, due to the uncertainty of state-to-state legalization. That said, the US is also managing to gain its own steam. After Trump signing the farm bill legalizing industrial hemp, we’re probably going to be seeing even more growth in the upcoming year.
Cannabis Trends in 2018
Bigger companies from all sectors are beginning to see the value in marijuana. And, while we’re still in incredibly early days, its potential has been noted by the beauty and goods companies alike. While the US busied itself, Canada began preparing for entering the edibles market. All the while combating stock shortages and high demand. None of this came without its issues to cannabis investing, however. Legalization brought its pitfalls, too.
Issues that Arose in Canada
Unsurprisingly, the legalization of marijuana also came with a huge downturn in pot stocks. Once Canada made it legal, the stock market became volatile. Not exactly a fitting response for the goods-du-jour. However, it makes more sense when the facts are presented as facts. Rumors of big companies led smaller investors to act out in order to protect their own investments. This ended up leading to a product shortage and a market low of just $300 USD. In spite of that, Canada is still very much at the head of the pot revolution. For example, investor giants Aurora Cannabis acquired MedReleaf for $3.2 billion CAD. The heftiest acquisition so far.
The United States and the Rest of the World
The US has seen its fair share of cannabis industry grief, as well. We saw challenges with rollouts in liberal states such as California and Massachusetts. As well as this, the (unsurprising) failed legalization of recreational use in North Dakota was a thorn in the industry’s side. Rising prices didn’t help matters much, either. However, sales also grew to never-seen-before heights in 2018. They rose to $7.4-$9.3 billion USD from $5.8-6.6 billion in 2017.
President Trump also made a decent-ish decision for once in his life by signing the farm bill. Experts say that this will cause the industry to grow on a national level. Michigan alone is estimated to be a $1.4-1.7 billion market. This makes it the second biggest market in the country and the Midwest’s first state to legalize recreational use. In addition to all of this, we’ve also seen more legitimate mergers and acquisitions (M&A) occurring on both sides of the border and beyond.
Mergers and Acquisitions in the Cannabis Industry
Bigger cannabis-related businesses are starting to buy up smaller ones in order to raise their profit. Aurora Cannabis, one of Canada’s biggest, recently acquired Farmacias Magistrales S.A. in Mexico. As a result of this, Aurora now has exclusive access to supply medical cannabis to the Mexican market of more than 130 million. This being after they acquired MedReleaf easily sets them up as being one of the frontrunners in this business of pot.
Other companies such as Cresco Labs acquired MedMar branches in Rockford and Lakeview, Chicago. MedMar set out to ensure that the state’s cannabis patients receive the best care in the safest environment. They also cited Cresco’s patient experience and results as being an ideal alignment to their values.
Another exciting acquisition was CaniBrands with OMG Farms. The acquisition gained them access to California state licensing, supply, and Alta River distribution. With that said, it sounds as if 2019 is already shaping up to be the biggest and fastest moving yet.
Cannabis Industry Predictions for 2019
The relentless pace of the industry over the past eight months indicates that we’re in no danger of slowing down just yet. It’s going to be the year of craft cannabis and big marijuana.
Legalization and Decriminalization Predictions
- Up until now, 41 countries across the globe have either decriminalized or legalized adult-use/medical cannabis. In the US, the markets in America’s heartland are next on the books.
- States such as Oklahoma, Missouri, and Utah are expected to see a rise in investments. Worth $100-150 million, $175-276 million, and $15-25 million respectively, now is clearly the time to buy.
- New Jersey is also likely to legalize adult-use in the next few months. The state is close to passing the marijuana legalization bill, making it legal to possess up to an ounce of marijuana to consume at home.
- Worldwide, another six countries are slated to legalize medical marijuana. One of these is also expected to legalize recreational use. However, it’s safe to say that the UK probably isn’t one of them.
- Great news for Aurora Cannabis is that the Latin American market is ready to expand. With cannabis as a valuable, sizeable addition to Colombia’s economy, who knows what’s next?
Further Impact on the Industry
The growing interest will continue throughout 2019 and beyond, with edibles and beverages coming into play at some point. Although these infused items might have a bad effect at first, it’ll all depend on how long they’ll take to hit the market. We’re also expected to see a sharp increase in seniors who consume, thanks to more research being put into cannabis tech and CBD oils. Money will likely be spent on increased research into CBD and cannabis in general. Furthermore, there’ll be deals with “outsider” companies.
Tobacco, alcohol, pharmaceuticals, and even beauty industries are looking into the benefits of investing and utilizing the newfound legalizations. The beauty industry, in particular, wants to take a big step toward partnerships in the CBD oil market. This in addition to the research could inject more revenue into an older business model. On the whole, the main focus and investment will go into branding. The development of brands will ensure worldwide appeal to investors. From there, the edible products and CBD-infused drinks might become the new norm. What the protein fitness boom inspired in the last ten years, cannabis is slated to do, too… On a bigger and bigger scale.