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Everything Canadians need to know about Legalization 2.0

• Edibles, extracts, topicals, and vapes are finally legal in Canada. Billed as Legalization 2.0, the regulations came into effect on October 17, 2019 and products have slowly begun to trickle onto the market ever since.

By Leafly Canada Staff

Edibles, extracts, topicals, and vapes are finally legal in Canada. Billed as Legalization 2.0, the regulations came into effect on October 17, 2019 and products have slowly begun to trickle onto the market ever since.

From how to consume, to what to consume, here’s everything Canadians need to know about Legalization 2.0.

Edibles 101

Cannabis-infused edibles are now available for sale through licensed retailers in Canada, though there are strict rules around marketing and dosing, including a limit of 10 mg of THC per packaged item.  Edibles in the form of food products, lozenges, and beverages can produce effective, long-lasting, and safe experiences. These forms of cannabis can also produce unpredictable effects that may feel like overdose symptoms. The difference is, of course, the dose, although it’s worth noting that while consuming too much can feel very unpleasant, no one has ever died from it.

It can take anywhere from 30 minutes to four hours for an edible to fully kick in. Health Canada suggests that adults who use cannabis, regardless of how they consume it, shouldn’t combine it with alcohol, nicotine or other drugs.

Source: https://www.leafly.com/news/strains-products/legalization-2-0-guide-canada

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• Aside from the fact that cannabis sales hit a new all-time high in November — something not unexpected given that the Canadian pot industry is still ramping up — what really stood out is that monthly sales finally eclipsed $100 million (that’s U.S. dollars). 

By: Sean Williams

It’s pretty incredible what a difference a year can make.

At this time last year, cannabis stocks were flying high, and the expectation had been that most brand-name companies would push toward recurring profitability by the end of the year. Of course, hindsight being what it is, we know this didn’t happen. High tax rates in select U.S. states, persistent supply issues in Canada, and a resilient black market weighed heavily on the cannabis industry in 2019 and pushed a number of popular pot stocks to two-year lows.

However, there may be light at the end of the tunnel.

Image source: Getty Images.

Canadian weed sales just hit a monthly milestone

Late last week, Statistics Canada released its monthly retail trade sales data for November. Since the marijuana industry is tightly regulated, but nonetheless legal, licensed cannabis store data is included in this monthly report. Aside from the fact that cannabis sales hit a new all-time high in November — something not unexpected given that the Canadian pot industry is still ramping up — what really stood out is that monthly sales finally eclipsed $100 million (that’s U.S. dollars). 

Here’s a snapshot of how licensed cannabis store sales have progressed since adult-use weed hit dispensary shelves on Oct. 17, 2018 (data is reported in Canadian dollars (CA$), with parenthesis featuring U.S. dollar equivalency).

• October (2018): CA$53.68 million ($40.83 million)
• November (2018): CA$53.73 million ($40.87 million)
• December (2018): CA$57.34 million ($43.61 million)
• January: CA$54.88 million ($41.74 million)
• February: CA$51.66 million ($39.29 million)
• March: CA$60.94 million ($46.35 million)
• April: CA$74.58 million ($56.73 million)
• May: CA$85.81 million ($65.27 million)
• June: CA$91.46 million ($69.56 million)
• July: CA$107.36 million ($81.66 million)
• August: CA$125.95 million ($95.8 million)
• September: CA$122.93 million ($93.5 million)
• October: CA$128.98 million ($98.1 million)
• November: CA$135.75 million ($103.25 million)

It took more than a year, but November featured more than $103 million in sales for Canada, a market that Wall Street foresees generating $5 billion in annual sales by 2024. As a whole, the Canadian marijuana market has generated $916.6 million in revenue since sales commenced on Oct. 17, 2018. This makes it very likely that Canada surpassed $1 billion in aggregate pot sales since launch in December, but we’ll have to wait a month to confirm.

Image source: Getty Images.

Here’s why Canadian cannabis sales could make a major leap forward in 2020

The hope, among both Wall Street and investors, is that this uptick in sales is really just the tip of the iceberg. Two key changes in the cannabis market are expected to improve consumer demand and relieve a lot of the supply bottlenecks that’ve hindered pot sales to this point.

The first is the launch of high-margin derivative products, which kicked off in mid-December. Derivatives are non-dried flower products, such as vapes, edibles, infused beverages, topicals, and concentrates. Not only do derivatives offer a new means of consumption that doesn’t, necessarily, require smoking cannabis, but they’re significantly more attractive to a younger generation of users who have shown a greater willingness to try or buy these higher-margin consumption alternatives.

According to investment bank Cowen Group, half of all U.S. pot sales are expected to be generated from derivatives, with dried flower and pre-rolled cannabis making up the other 43% and 7%, respectively. If these figures translate similarly in Canada, then the launch of derivatives should begin to put some pep in grower’s step by midyear, or maybe even sooner.

The other major catalyst is the long-awaited dispensary license reform being undertaken in Ontario, the country’s largest province by population. Having previously worked with a lottery system, Ontario, home to 38% of Canada’s residents, only opened 24 cannabis retail stores as of the one-year anniversary of recreational weed sales. This created few channels for legal product to reach consumers and allowed the black market to thrive.

Moving forward, Ontario has plans to issue dispensary licenses in a more traditional fashion. Licenses should start being issued by no later than April, with the expectation of 20 (or more) stores opening each month. By year’s end, provincial regulators hopes to have around 250 open locations, representing about a 10-fold increase from where it began the year.

Image source: Getty Images.

Source: https://www.fool.com/investing/2020/01/28/canadas-marijuana-sales-top-100-million-in-a-month.aspx

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Cannabis Industry: 2020 Predictions

• Cannabis Legalization Is Going Global
• Real Medical Testing Will Increase
• Older Customers Will Expand Their Cannabis Purchases Beyond Medical Use

By: Julie Weed Contributor

Here, industry executives predict top trends for 2020.

Cannabis Legalization Is Going Global

Legalization is growing outside of the United States, and countries that are first to the global marketplace can create sustainable advantages for themselves in their customer base and their funding. Kyle Detwiler, chief executive of Clever Leaves, an international operator with brands, extraction facilities, cultivation operations, and other investments in six countries, says that countries like Colombia and Portugal that have been among the first to legalize cannabis “are poised to continue establishing their global dominance in short order.”

The countries’ first-mover status will also be a magnet for financial interest he said. “There is little doubt that the expanding European cannabis market will make it an attractive investment opportunity,” Detwiler said.

Hemp, the source for CBD in many non-psychoactive products, will expand internationally as well, driven by the CBD’s demand. The CBD market will grow to $2.1 billion in consumer sales by 2020 according to the Hemp Business Journal, with $450 million of those sales coming from hemp-based sources. Puerto Rico’s Department of Agriculture has already reported there will be at least 10,000 acres of hemp cultivated for commercial purposes in 2020

The CBD Product Market Will Mature

CBD is being added to products across the retail spectrum from food to make-up, but with little legal oversight or requirements, the products can easily be mislabeled or ineffective. Clever Leaves chief executive Detwiler says in 2020 CBD standards will begin to emerge based on customer demand. “Consumers are getting more savvy on the benefits of CBD and they will begin to insist on knowing exactly what they are paying for and what they are getting when they purchase ‘CBD’,” Detwiller said.

Consumers will “begin to insist” on CBD standards agrees Bill Thurman, chief executive of Redbird Bioscience a medical cannabis operator and producer of pharmaceutical-grade cannabis for patients in Oklahoma.

Thurman said companies will help the market succeed as a whole if they adhere to high quality standards and agreed-upon guidelines in testing and manufacturing. That kind of rigor is needed to significantly increase the size of the market and only by conducting “science-driven randomized clinical studies, can we shed reliance on anecdotal data to support medical claims,” he said. 

Barbara Goodstein of B GREAT  which produces full-spectrum upscale CBD items expects CBD to be added to even more products like deodorant, hand soaps, throat sprays and nasal sprays. The popularity of the category also creates additional business risks according to Goodstein. “The hype around this space will end up creating applications and uses that make no sense, which will unfortunately diminish the real value of the product,” she said.

Real Medical Testing Will Increase

Until cannabis is taken of the Schedule One substance list, medical research will be challenging to undertake. Still, executives in the industry are seeing some movement in the area. Israel still leads the world in global cannabis research, and Israeli scientists like chemist Raphael Mechoulam, a researcher at Hebrew University and pioneer in cannabis research, are being hired or given research grants by American organizations.

Dr. William Levine, founder and chief scientific officer of CannRx a subsidiary of Izun Pharmaceuticals that develops proprietary medical and recreational products expects companies to use better data, and well-designed clinical trials. His own company is focused on better “bio-availability” which focuses on lower dose products that can offer similar benefits to higher dose products, but with fewer side effects.

Older Customers Will Expand Their Cannabis Purchases Beyond Medical Use

CannRx’s Levine predicts there will be “increased recreational expansion into older populations,” as product quality and more controlled dosing options come to market.

Legislative Action Will Remain Robust

According to Marijuana Moment, as of January 16, there were 975 cannabis-related bills moving through state legislatures and Congress for 2020 sessions.

“We expect to see a lot more regulatory activity in 2020 on both the state and federal levels,” said Redbird Bioscience’s Thurman.

Each state makes its own rules. For example, regarding medical marijuana use, some states have a list of specific ailments that can warrant a recommendation of the substance (states include Florida and New Jersey). In other states the decision to use medical marijuana is entirely between patient and doctor (states include Oklahoma and California.)

States will have more models to look to as they develop their laws and will likely start adopting each others’ best practices. Law makers will start learning more from each other’s experiences and “harmonize” their regulations with each other said Levine. He also believes the federal government could take the first step to legalize medical marijuana.

Matt Anderson, chief executive of Vanguard Scientific, a company that provides service resources for cannabis and hemp botanical extraction, says just the ongoing discussion of legalization and decriminalization will continue to drive market growth.

Multi-state Operators Will Face A Shake-out

Running a cannabis business is expensive, and running a multi-state cannabis business when each state has its own rules to abide by make it hard to achieve economies of scale. Lack of access to traditional sources of capital like debt and equity add to the challenge. This year will see a few multi-state operators (MSOs) fold and sell off their component companies according to Lewis Goldberg, managing partner of  KCSA Strategic Communications“

Most of the MSOs have been run by financial operators Goldberg said, not operational experts, but “with the need to deliver results, that will change.”

Back To Basics

Businesses are focusing on the fundamentals to stay solvent or to make themselves attractive acquisition targets. Matt Hawkins, chief executive of Entourage Effect Capital a cannabis-only private-equity firm that has deployed more than $50 million into 32 companies says companies will â€œmake every effort to be more efficient.” They will still aggressively seek out new customer bases and explore innovation, he said, “but preserving margins will matter.”

Jeff Fallows, president of The Valens Company, says he also expects to see a marked improvement in the underlying fundamentals of the companies themselves. This will be a big year for the companies that execute well on their business plans, he said. Those companies will “emerge as leaders and those will be the ones to watch in 2020 and beyond. â€œ

Source: https://www.forbes.com/sites/forbestreptalks/2020/01/26/cannabis-industry-2020-predictions/#87768c3f31ff