DOES WALL ST. UNDERESTIMATE CANNABIS?

An analysis by Mitch Baruchowitz, managing partner at investment firm Merida Capital, argues Wall Street analysts drastically underestimate cannabis’s total addressable market (TAM). He predicts the industry will have a $1T global economic impact by 2027.

Baruchowitz acknowledges this would be pretty remarkable for such a new industry, but here’s his case:

“We can start by looking at the innumerable industrial applications of the hemp plant. We can also take a swing at predicting hemp-based CBD sales as nutraceutical, or medical formulations over the next 10 years.  We can reference the amount of total predicted cannabis sales for adult-use in 2027.  We can extrapolate ancillary spending from current levels and get a sense of what that will look like in 2027. We can also glance at the current state of medical markets and project what those look like in 2027.  We can then take a reasonable guess at what type of ancillary activity would have to occur to support the plants’ cultivation, manufacturing, productization and shipping…

“The conclusion we reached is that even the most intelligent and professional analysts are likely underestimating the full impact of cannabis/CBD over time by orders of magnitude and are failing to account accurately for how fast the global industry is evolving.”

That’s right, $1 TRILLION.

Not to be outdone, Bengal Capital calls the war on drugs a “lost $5.3T U.S. sovereign wealth fund.“

DRINKS: THE TOUGHEST SUBSECTOR IN WEED?

Matt McGinn, talked to Business Insider about Spacestation the California white-label manufacturer of infused beverages. A co-founder of the company, McGinn argues drinks are the toughest cannabis subsector for operators:

“McGinn said that most bottling options on the market degrade cannabis potency, as the bottle eats into the beverage’s cannabinoid content. Glass is the only container that won’t eat the compounds. “If you see anything in plastic, it’s suspect,” he added — aluminum cans, meanwhile, can see degradation between 8% and 98%. 

“To find a solution, McGinn’s team worked with custom emulsions system Vertosa to create can liners to cut down on degradation at the manufacturing level.” 

Read the whole thing.

  • Spacestation holds a controlling share in Fly Beverage Co. which sells drinks by the 24 pack.
  • But McGinn’s worried about potency caps, which have been proposed in several states.
  • I previously spoke to Novel Beverage Co. which is doing something similar in Maine.
    MJBrand Insights
  • Meanwhile, hot brand Cann, which Spacestation manufactures in California, released a line of non-infused beverages called Cann Unspiked.
    BevNet

Quick Hits

  1. Columbia Care CEO Nicholas Vita discussed how he quietly built a national footprint.
    Business Insider
  2. In another high-profile executive interview, Curaleaf chairman Boris Jordan discussed how “science and economics” will overcome prohibition in Europe.
    Business Cann

IN THE NEWS — 5/22/21

Here’s what’s happening:

MINOR CANNABINOIDS GAIN TRACTION

Insiders have been discussing them for years, but lessor known cannabinoids such as Delta-8 THC, CBN and THC-V are beginning to attract attention from companies and consumers.
WeedWeek 

Jackie Bryant explains:

THC-V, which has been dubbed “weederall,” after the stimulant ADHD medication Adderall, is said to be an appetite suppressant with focusing effects. Delta-10, which, like Delta-8 is a close molecular cousin to Delta-9, is said to produce energizing euphoric effects but with less punch.

Read all about ’em.

This story made possible by MoonWlkr.

Quick Hits

  1. Early mover CBD topical company Apothecanna sold to HempFusion for up to $25M.

PROHIBITION’S LAST STAND

As many state legislatures wind down for the year, there’s been a flurry of cannabis bills, many of them in deep red states. While some of the reforms are quite minor, and even many of those won’t pass this year, legalization opponents have their backs to the wall:

In other state news:

ANOTHER BIG BEER CO. GOES GREEN

The Boston Beer Co., the publicly-traded parent of Sam Adams and other craft brands, said it would create a subsidiary in Canada to develop weed-infused beverages.
MassLive

In another crossover story, Uber wants to deliver cannabis after federal legalization. Forbes says it won’t be easy.

Quick Hits

  1. MSOs Columbia Care, Ascend Wellness and Verano reported big quarters.
  2. New Cannabis Ventures says a strong quarter shows that the industry is “rapidly scaling.”
  3. MSO Curaleaf said it would acquire outdoor farm Los Suenos for $67M, boosting its presence in Colorado.
    MarketWatch

IN THE NEWS — 5/19/21

Doings:

SURVEY SUGGESTS A LACK OF DIVERSITY IN CANNABIZ LEADERSHIP

When last year’s protests against police violence began, diversity consultancy CannaClusive created The Accountability List, a continually updated document recording various operators’ commitment to equity and corporate social responsibility. 

The list is not comprehensive. But while many companies have made statements or social media posts in support of racial justice, the available data suggests far fewer have made a meaningful commitment in their hiring of workers of color. And it’s not always clear whether the more diverse companies have diverse leadership.

  • As CannaClusive’s Kassia Graham put it, “Are [people of color] just an ornament or do they have a voice? And is anyone listening to that voice?”

Companies seeking to update their info on diversity and corporate social responsibility can do so here.

Quick Hit

  1. Business Insider profiled Colorado entrepreneur and activist Wanda James, founder of Simply Pure.

BIG SMS SERVICES DROP POTCOs

Several major SMS text marketing services including Twilio, AT&T, Avochato and T-Mobile have dropped cannabis customers, according to Rachel Kurtz-McAlaine, the National Cannabis Industry Association’s (NCIA) deputy director of public policy.

  • Numerous industry businesses use these services to reach customers and facilitate deliveries and pick-ups.
  • Some companies have found workarounds or alternate services which do not monitor their users as closely.
  • Some form of the issue could persist until federal legalization.
  • NCIA is working to understand the extent of the problem. Businesses can contact Kurtz-McAlaine ( rachel@thecannabisindustry.org ) if they have information to share.

Quick Hit

  1. Colorado banned the sale of delta-8 THC, a popular, intoxicating cannabinoid found in hemp, and other similar compounds.
    Hemp Industry Daily

IN THE NEWS — 5/15/21

Other happenings: