Cannabis Sales Continue to Soar Through The Pandemic

Cannabis Sales Continue to Soar Through The Pandemic

Original Post: 420 Intel Business: Cannabis Sales Continue to Soar Through The Pandemic

[Canniseur: It’s not surprising that cannabis sales are up during the time of COVID. And now, in several states, the economy would be helped by the addition of the revenue from legal cannabis. Oklahoma (in spite of the quality issues) seems to be going full-bore into cannabis sales. Now the state needs to get adult-use legalized.]

Every day, people across the United States demonstrate how legal cannabis could save the nation’s economy from the virus-caused downtown. They do so by buying record amounts of weed.

Almost all legal cannabis states made medical and adult-use dispensaries essential businesses that could stay open as lockdowns began. The lone exception, Massachusetts, has since changed course. This is good news for industry workers in the state since it now has more cannabis industry employees than hairstylists and cosmetologists. Most legal cannabis states release numbers each month that prove how right they were in making the choice to keep dispensaries open.

Oklahoma provides a great example. Only in the last year becoming a hotbed for cannabis advocates, the state clocked its fourth month in a row of record sales in May. Consumers spent $73.8 million on medical marijuana in April. The sharp rise in sales started with the COVID-19 pandemic, according to The Oklahoman.

And sales could have risen even more in future months. In May, state lawmakers from both parties voted for a bill that allowed dispensaries to deliver weed and for people from out of state to buy cannabis with a 90-day temporary card.

Gov. Kevin Stitt, a Republican, vetoed the bill.

Marijuana still has a long way to go for acceptance in some parts of the country.

Some parts of the nation have still not learned the lessons driven home by the War on Drugs. It’s a mindset best exemplified by former U.S. Attorney General Jeff Sessions, who famously said: “Good people don’t smoke marijuana.”

This stigma against weed seems like one major component holding nationwide legalization back. Experts agree more research is needed on the effects of cannabis. But plenty of research has been done on alcohol and cigarettes. Both are linked to thousands of deaths each year, and both are legal from coast to coast. And there’s no such correlation with marijuana.

While the stigma persists, consumer actions during the lockdowns have shown the financial windfall for businesses and governments. Oklahoma dispensaries, for example, sent the state more than $5 million in taxes in April alone.

Seeing this, state lawmakers in New York have asked Gov. Andrew Cuomo to make weed legal in the Empire State. The state, hard hit by the virus, faces a $60 billion budget shortfall. Cannabis can’t cover all of that, but it also would not hurt.

New York State Sen. Jessica Ramos told the New York Post: “It’s not enough to say the state doesn’t have money. We have to find it. I believe legalizing marijuana can help.”

The benefits of legal marijuana are being seen across the nation.

All states must deal with the economic havoc caused by the coronavirus. But those with legal weed have seen some help because of record sales. Some of the record sales include the following.

  • Oregon residents bought $89 million in adult-use and medical marijuana in April, a 45 percent increase over April 2019. It’s the largest amount of single month weed sales in Oregon history.
  • In Ohio, medical marijuana sales reached $12.9 million in March and $14.2 million in April. That’s a high mark for sales in the state. It’s also a big jump over February ($10.7 million) and January ($9.6 million)
  • In Arkansas, 40 percent of all medical marijuana sales for the past 12 months came after March 1. People have bought almost $30 million in weed since that date.
  • The amount of medical marijuana sales in Florida, which reports sales weekly, has steadily increased since the COVID-19 outbreak.

It’s not all cannabis and roses. In Nevada, some predict a sales drop as the virus continues to impact tourism. However, now that casinos are open, that could change quickly. Experts also expect a lack of tourism to impact places with legal adult-use marijuana, including Colorado and Alaska.

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Original Post: 420 Intel Business: Cannabis Sales Continue to Soar Through The Pandemic

3 Reasons Medical Marijuana Is a Better Long-Term Investment Than Recreational Pot

3 Reasons Medical Marijuana Is a Better Long-Term Investment Than Recreational Pot

Original Post: 420 Intel Business: 3 Reasons Medical Marijuana Is a Better Long-Term Investment Than Recreational Pot

[Canniseur: Medical cannabis is exactly the same as adult-use (recreational) cannabis. In many states it comes from the same jars, it’s just taxed less than adult-use. But there’s a downside risk to adult-use cannabis and that’s market volatility. Here are a few tips and ideas on why medical cannabis is better for people looking to invest their dollars in the cannabis market.]

It’s been a wild ride for pot stocks already in 2020. Last year, the Horizons Marijuana Life Sciences ETF (OTC: HMLSF) fell by 39% while the S&P 500 soared by 31%. This year, the Life Sciences ETF is already down 35%, except this time the S&P 500 is also down by 11%. Unfortunately, some volatility is unavoidable as a result of the coronavirus pandemic. However, for cannabis investors who want to minimize their risk and look for safer options to invest in, there is a solution — medical marijuana.

Some examples of stocks in this space include pharmaceutical companies like Corbus Pharmaceuticals (NASDAQ:CRBP) and Arena Pharmaceuticals (NASDAQ:ARNA) that have drugs that utilize cannabinoid receptors. Another is Trulieve Cannabis (OTC:TCNNF) a cannabis producer that’s heavily focused on the medical marijuana segment, serving the Florida market where it has 46 dispensaries.

Here are three reasons why medical marijuana stocks are safer options for investors.

A sign advertising Medical Cannabis

 

1. Medical marijuana is essential and demand should remain strong

During the coronavirus pandemic, individual state governors are deciding whether cannabis is essential and if pot shops can remain open within their states. But for many patients, medical marijuana isn’t a discretionary expense; it’s necessary for their health and wellness. And as concerns grow that drug shortages may be on the rise, demand for medical marijuana may actually increase as current non-marijuana users may look for alternatives, including cannabis. In Pennsylvania, the state is seeing a surge of new patients. At the Sanctuary Wellness Institute, doctors are fielding approximately 300 calls every day from prospective patients.

But even if demand doesn’t increase, it should at least remain stable. In Michigan and in states across the country, there were wild swings in recreational pot sales during the month of March. But according to sales at Ann Arbor-based Exclusive Brands, the demand for medical marijuana remained steady.

Colorado’s recreational pot market’s been around since 2014 and is a lot more developed, and it says much of the same: Medical marijuana sales are more consistent. Data from 2019 shows that monthly medical marijuana sales were between a range of $24 million to $32 million. In contrast, recreational pot sales had a much wider range, from a low of $95 million to a high of more than $141 million.

2. More places around the world permit medical marijuana

There are more than 30 states in the U.S. that permit medical marijuana, but cannabis is only legal for recreational use in 11 states. And outside of Canada and Uruguay, no other country has legalized recreational pot, either. Much of the excitement and optimism surrounding pot stocks has been the potential growth and the potential opportunities that exist once legalization happens around the world. However, that’s been moving at a snail’s pace. Even though legalization has progressed in the U.S., there’s still no sign that federal legalization of pot is imminent. It could still take years for that to happen.

There’s more acceptability of medical marijuana around the globe than there is for recreational pot, and that’s why it’s a safer investment. Even in Asia, where countries are very conservative when it comes to cannabis, medical marijuana is making progress. South Korea was the first to legalize medical marijuana in 2018, and other Asian countries have since softened their views as well.

There are more places around the world for medical marijuana companies to sell pot to, and that makes them more diversified and safer investments than cannabis producers that depend on the growth of the recreational market.

3. Medical marijuana stocks are less volatile

Given their stability, it comes as little surprise that medical marijuana stocks are often more consistent in their returns as well. GW Pharmaceuticals (NASDAQ:GWPH) is one of the top medical marijuana stocks in the industry, with its cannabis-based Epidiolex drug the only one approved by the Food and Drug Administration thus far. The drug got the OK from the European Commission last year as well, paving the way for more countries to permit the sale of Epidyloex, which is the drug’s trade name in Europe.

Here’s how GW has performed against some of the big-name pot stocks in North America since the start of 2020.

GWPH Chart

GWPH data by YCharts

While the stock’s suffered losses, they’ve been nowhere near some of the declines that other stocks have gone on this year. The other stocks sell medical marijuana products as well, but the difference is that GW’s focus is on that segment of the market. Its growth depends on the growth of the medical marijuana segment, rather than the success of the recreational market, which is the case for many other cannabis stocks. That’s why GW is a safer, more stable investment, and it explains why the stock hasn’t been as erratic as many of its peers.

What does this mean for investors?

In short, if you’re looking to cut down your risk and minimize your potential losses, investing in a stock like GW may be a safe bet. The company was near breakeven in 2019 with a net loss of just $9 million, and its revenue soared from $15 million to $311 million, largely due to the success and growth of Epidiolex. The company’s focus on a more stable segment of the industry, coupled with strong financials makes the stock one of the better pot stocks that you can buy for the long term.

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Original Post: 420 Intel Business: 3 Reasons Medical Marijuana Is a Better Long-Term Investment Than Recreational Pot

France: With no smuggling going on, black market cannabis prices are absolutely wild right now

France: With no smuggling going on, black market cannabis prices are absolutely wild right now

Original Post: 420 Intel Business: France: With no smuggling going on, black market cannabis prices are absolutely wild right now

[Canniseur: Short but important article of what happens in the black market when supplies become scarce. There’s a lesson in here, but one that legislators are not going to pay any attention.]

It’s a matter of supply and demand. With coronavirus shutting down the regular pipeline of cannabis into France, where marijuana is not legal, pricing has soared.

Hash seems to be a product of choice for the French, according to Merry Jane. But while nearby countries such as Morocco, Belgium and the Netherlands usually offer enough supply to satisfy demand, travel restrictions have bumped black market pricing to absolutely wild levels.

Since the coronavirus crisis took hold, “the price of a 100-gram bar of resin went from 280 euros to 500 euros in a week in Marseille,” Yann Bastiere, a senior police union official, told Reuters last week.

Of course, Marseille is not alone, Bastiere said. Bordeaux and Rennes appear to be in the same boat. And the situation is likely only to worsen as COVID-19 rages on.

There may be some hope coming down the pipe, at least for medical marijuana users, however. The country’s National Assembly recently green lit a two-year initiative aimed at offering an alternative treatment to 3,000 patients with conditions such as neuropathic pain, severe epilepsy and muscular sclerosis-related painful spasticity.

Original Post: 420 Intel Business: France: With no smuggling going on, black market cannabis prices are absolutely wild right now

The Single Most Important Marijuana-Use Statistic

The Single Most Important Marijuana-Use Statistic

Original Post: 420 Intel Business: The Single Most Important Marijuana-Use Statistic

[Canniseur: I have to wonder how accurate this poll is actually. My “n” while admittedly small, has encompassed at least 8 states where adult cannabis use is legal. I have found the numbers of people are skewed older, meaning 50 or so and up. I’ve done my little survey on all days and at all times of the day, so it can’t just be the younger skew isn’t represented. Yes, there are lots of young people, but there are more older adults as well and it’s far greater than 15% stated here! Are moving into a time of fake cannabis news?]

Putting aside the growing pains that the marijuana industry has encountered over the past year, it’s still expected to be one of the fastest-growing industries on the planet over the next decade. Though estimates are all over the board, Wall Street is looking for annual weed sales to catapult from $10.9 billion in 2018 to between $50 billion and $200 billion worldwide on an annual basis by 2030. This is why North American pot companies have aggressively expanded their capacity, and why investors piled into marijuana stocks over the years.

However, not all growth in the marijuana space is necessarily the same. Statistics show that there are certain demographics that cannabis companies are going to want to pay especially close attention to. In fact, there’s one marijuana-use statistic that stands head and shoulders above the rest.

A man holding a lit cannabis joint up by his fingertips.

The one cannabis-use statistic you need to know

In July 2019, Gallup released its latest breakdown regarding what percentage of Americans smoke marijuana. Considering that a record-tying 66% of Americans want to see marijuana legalized, and the U.S. is projected to be the largest cannabis market in the world by annual sales, the data contained within this national survey is invaluable to weed-based companies.

Though the confidential national usage rate has remained fairly steady between 2015 and 2019 (it was 12% in 2019), it was the age breakdown of the usage statistics that cannabis CEOs are really eyeing. When broken down by age, the 2019 marijuana-use rate in the U.S. was as follows:

  • Age 18 to 29: 22%
  • Age 30 to 49: 11%
  • Age 50 to 64: 12%
  • Age 65+: 3%

On one hand, there’s no surprise here that older Americans are less likely to be regular cannabis users. Seniors have historically had a more adverse view of cannabis than younger adults, so this data provides even more evidence to this fact.

But what really stands out is just how many younger adults regularly use marijuana. Based on this survey, young adults are pretty much twice as likely as millennials, Gen X, and late-born boomers to use cannabis products. Not only does this mean that younger adults are the future and would-be focus on the marijuana industry, but it’s important to note that young adults are also considerably more likely to use higher-margin derivatives, such as edibles, vapes, and infused beverages, than older adults. This makes younger consumers an important cog to the future profitability of cannabis stocks.

A person holding a vial of cannabinoid-rich liquid in front of flowering cannabis plants.

Image source: Getty Images.

Investors will want to know these three derivative-focused marijuana stocks

While there’s no doubt that every single marijuana stock throughout North America will be focused on producing a number of high-margin derivatives targeted at this burgeoning younger base of consumers, there’s a trio of names you’ll want to follow especially closely when it comes to derivative production.

In my view, it’s basically a no-brainer to consider extraction-services companies, such as MediPharm Labs (OTC:MEDIF), The Valens Company (OTC:VLNCF), or Neptune Wellness Solutions (NASDAQ:NEPT). These are companies that take cannabis and hemp biomass and process it to yield the resins, distillates, concentrates, and targeted cannabinoids used in the production of high-margin derivatives. Not to mention, extraction-service companies may also offer white-label service and production, thereby reaching the consumer on a more direct basis.

MediPharm Labs and Valens are both solely focused on the Canadian market, which has shown similar marijuana-use rates among younger adults. MediPharm should ultimately have 500,000 kilos of peak annual processing capacity, with Valens aiming for 1 million kilos per year on a run-rate basis. The thing is, both companies began processing hemp and cannabis biomass a little over a year ago, but they’re already generating no-nonsense profits on a quarterly basis, without the aid of one-time benefits.

If you want a more U.S.-focused processor, then Neptune Wellness Solutions would be the better choice. Through its acquisition of SugarLeaf in 2019, Neptune boosted its peak annual run-rate processing capacity from 200,000 kilos (in Canada) to about 1.5 million kilos. SugarLeaf’s 24,000-square-foot facility in North Carolina should be a long-term boon for Neptune.

While growers do provide a more direct investment opportunity in the cannabis space, extraction companies are at the heart of the derivative movement — a movement that speaks loudest to young adults.

A large marijuana sign atop a dispensary.

Yes, there are short-term risks associated with derivative pot products

On one hand, there’s little doubt that derivatives are going to represent a major growth driver for North American cannabis companies over the long run, and that young consumers are the future of the cannabis industry. But this doesn’t mean that there aren’t risks in the short term.

In Canada, supply issues have, and will continue to be, a persistent problem. Since traditional cannabis flower sales commenced in our neighbor to the north on Oct. 17, 2018, supply shortages and/or bottlenecks have been ongoing. These supply problems have been especially notable in Ontario, the country’s most-populous province. Having initially operated with a retail license lottery system, Ontario only opened 24 dispensaries by Oct. 17, 2019, the one-year anniversary of recreational weed sales. That’s approximately one store per 604,000 people, which is far too few for a province of its size. Even with changes in place, it’ll be a while before there are sufficient retail channels in place throughout Ontario (and Canada) to reach consumers.

Meanwhile, in the U.S., high tax rates in select recreationally legal states have made it virtually impossible for legal producers to compete with black-market products. For example, California, the largest marijuana market in the world by annual sales, saw its cannabis revenue decline by $500 million in 2018, the year that adult-use weed sales commenced. Since derivatives sport even higher price points than traditional dried flower, the gap in pricing with black-market products is even more pronounced.

While there are resolutions to the issues the North American cannabis industry is contending with, it’s going to take time for these fixes to take shape. That means patience is needed by investors as marijuana companies work through these early stage growing pains.

Original Post: 420 Intel Business: The Single Most Important Marijuana-Use Statistic

Is cannabis to blame for slumping beer sales?

Is cannabis to blame for slumping beer sales?

Original Post: 420 Intel Business: Is cannabis to blame for slumping beer sales?

[Canniseur: Beer sales in Canada is hurting. Is it because of cannabis? For comparison, you look at a few of the adult legal states in the U.S. The answer might appear to be “No.” In Colorado, beer sales actually went up in January. A lot. Perhaps it’s because beer with more than 3.2% alcohol can now be sold in grocery stores, but that shouldn’t account for the huge increase in beer sales. We’ll have to take a look at the numbers in Colorado next January. The jury is still out on cannabis hurting beer sales.]

Canada’s beer business is looking a little flat.

The industry experienced its largest drop in sales in seven years in 2019, with domestic and imported beer purchases falling by 3 percent from the previous year, according to Marijuana Business Daily.

Domestic beer felt the brunt of the decline, with sales dropping in each of the final eight months of the year and in 11 out of 12 months in 2019.

Sales in December stood at 68,000 hectolitres (hL), down 4 percent from the same month in 2018. Marijuana sales, on the other hand, have been moving in the opposite direction.

While the country’s cannabis industry has fallen short of the lofty projections initially touted by analysts, a report by Statistics Canada shows that some $907.8 million worth of regulated cannabis was sold online and in retail stores between October 2018 and September 2019.

More cannabis was sold in Ontario than any other province or territory, totalling $216.8 million. Alberta, the province with by far the most stores, sold $195.7 million, just edging out sales in Quebec.

FILE – It was a busy opening day for Ottawa licensed cannabis shop, Superette, located on Wellington St in Ottawa.

Recreational cannabis more than doubled from $53 million in November 2018, to $135 million by the following November.

It was a trend that beer manufacturers foresaw when they began cutting deals with cannabis producers to infuse their beverages with the popular plant in a bid to reap the rewards of the emerging industry. But the creation of a new line of elevated beverages has proven more complicated than anticipated, and companies such as Canopy Growth have been forced to delay the new offerings, to the frustration of shareholders and eager consumers alike.

It’s also likely why Constellation Brands inserted itself into Canopy Growth’s affairs last summer. This coming year, the company will make its influence felt even more, by tightening operations and making sure its US$5.1 billion investment in Canopy will one day pay off.

With the Canadian market for edibles and infused beverages expected to take up around 12 percent of the market by the end of the year, things may get worse before they get better for brewers.

“A thorough strategic review is underway,” said David Klein, former chief financial officer of Constellation Brands who took over as Canopy Growth’s CEO last month. “We will rightsize our business over the next 90 days … in a thoughtful and measured fashion,” Klein said.

With the Canadian market for edibles and infused beverages expected to take up around 12 percent of the market by the end of the year, according to data firm Headset, things may get worse before they get better for brewers who played it safe and stayed on the sidelines.

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Original Post: 420 Intel Business: Is cannabis to blame for slumping beer sales?

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