2018
The impending legalization of cannabis will make it the fourth regulatory leg of the state-sanctioned psychoactive stool. Given our global fascination with physiological change, the implications of this move are tremendous. Once the potential impact on the other legs is considered, estimates of an $80 or even $100 billion industry seem myopic and outright conservative.The pursuit of intoxication with drugs is a rule rather than an exception and is one of the primary motivational forces in organisms. Goats gobbling magic mushrooms, baboons consuming iboga, sheep pursuing hallucinogenic lichen, dolphins chasing puffer fish and dogs licking toads for the buzz are but a few of the endless examples of drug use in nature. Even though intoxication isn’t considered directly necessary for survival, the Amazon jungle is likely a greater psychoactive paradise than the Burning Man festival.The coffee break, the smoke break and the happy hour are advertised and sanctioned times for daily drug use. Caffeine, nicotine and alcohol have been socialized into our collective consciences and continue to rank amongst the most widely used drugs on earth. Add in our current fascination with opioids, and we have some major building blocks for the future of the cannabis industry.Caffeine – A strong psychoactive drug, caffeine addiction leads to lines outside coffee shops every morning as well as lines such as ‘I haven’t had my coffee yet’. A $46 billion industry, coffee alone has exhibited a 5.9% 5-year CAGR since 2013 despite having only one known action on the brain – blocking the neurotransmitter receptor for the chemical adenosine. Over-caffeinated societies have an abundance of chronic stress due to the reduction of neurotransmitters related to the endocannabinoid system. This is the opposite of what cannabis consumption does, and CBD infused coffee is only the very beginning of the ‘cannabis-caffeine’ relationship.Tobacco – Despite a decline in consumption, the tobacco industry has shown revenue growth for the past five years and is expected to near $125 billion in 2018. 500,000 lives are lost every year amongst the 50 million tobacco consumers in the US, and tobacco’s global death toll is staggering at 5 million lives lost annually. Cannabidiol (CBD) could play a transformational role as CBD inhalers have been shown to reduce tobacco usage by ~40%. CBD has also been credited with disabling the trigger for relapse in those who have quit.Alcohol – The alcohol industry is expected to near $240 billion in 2018, an increase of $8 billion from last year alone. At ~88,000 fatalities, it is also the third leading annual cause of death in the United States. Cannabis legalization has resulted in a ~15% reduction in alcohol sales, and recent cannabis investments by global alcohol brands are certainly intended to help offset expected revenue impact. Nano-emulsification technology allows for cannabis infused beverages to mimic the 8-10 minute onset times of alcohol as well as its 75-90 minute impact window. Healthy, non-alcoholic beers with 2.5-5 mg of THC offer hydration and psychoactivity in a 40-60 calorie package without any of the liver impact and hangover effects. Given current consumer willingness to pay more for a cannabis infused beverage, true market potential is far greater than 15% of the alcohol market.Opioids – 55% of global opioid consumption occurs in the United States with less than 5% of the world’s population. With a market size of ~$17 Billion and a 5.2% CAGR, US opioid use continues to increase faster than the rest of the world and causes nearly 50,000 deaths on an annual basis. The largest use of opioids is to address chronic pain; the potential for cannabis to address pain without the debilitating side effects caused by many traditional pharmaceutical prescriptions is vast. Even the DEA has recently pushed to increase the amount of cannabis grown for research purposes from 1,000 lbs to 5,400 lbs/year while working to reduce annual opioid production. States with medical cannabis laws have seen a 25% reduction in deaths from prescription painkiller overdose, and the potential for cannabis to profitably reduce opioid harm remains high.Cannabis – With its unique ability to impact all of our senses, cannabis legalization will also impact our food, entertainment, pet food, travel and hospitality industries. Hemp alone has 50,000 uses and is effectively used to produce products that range from blenders to buildings and bricks to boats. Impending legalization will have an indelible impact on the overall industrial production complex, and the true potential for the cannabis plant is likely to prove significantly greater than even the loftiest estimates currently quoted by media. Investors are well served to study this generational wealth-creation opportunity and to shepherd their capital in a responsible and ethical manner for the greater benefit of society.
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