263 million consumers, $344 billion global market, cannabis investment is going crazy and the future of the cannabis sector is played out on the Stock Exchange where American companies like West Coast Venture Corp. (OTC: WCVC)make fortunes while Europe merely watches.
Cannabis is not a niche market. On the contrary, it is a rapidly expanding global sector that involves different sub-sectors and offers investors incredible returns. Forget Amsterdam, Jamaican beaches and classic iconography. Retro taste and 1960s libertarian mysticism are definitely off the mark. The pot of the 21st century belongs to Wall Street and companies like West Coast Venture Corp. (OTC: WCVC).
A market worth $344 Billion
In April, a study by Washington New Frontier Data estimated the total value of the cannabis global market, legal or otherwise, at $344 billion. Asia leads the ranking by regional areas with $132.9 billion. North America ($85.6 billion), Europe ($68.5), Africa ($37.3) and Latin America ($9.8) follow in order. According to the survey, there are 263 million consumers worldwide.
“More than 50 countries have legalized cannabis for medical use, while six countries have legalized it for recreational use,” said Giadha Aguirre de Carcer, founder and CEO of New Frontier Data. The legal market “has enormous potential in dozens of areas,” she adds.
Another $2 billion to come into Canada
We are talking about the pharmaceutical sector, of course, but cosmetics, green construction and the food segment also fall into the market. At the end of 2019, edible products containing cannabis will be available on the Canadian market for the first time, while in the US companies like West Coast Ventures Corp. (OTC: WCVC)already offer CBD edibles in restaurants. According to a recent report by Deloitte, the market entry of food, beverages, topical products, concentrates, dyes and capsules should generate a turnover of about $2.7 billion local dollars (2.1 billion U.S. dollars), creating higher profits for retailers than those related to the sale of hemp products already legalized previously.
Cannabis is growing on the stock exchange
The Cannabis Market Cap portal currently monitors over 200 companies in the sector with a total capitalization of 76 billion dollars. Half of this figure is held by just 7 companies, among which the Canadian Canopy Growth Corporation (14.4 billion) and Aurora Cannabis (7.7) stand out together with the American Scotts Miracle-Gro Company (5.4). In April 2014, Canopy was listed on the stock exchange, making it the first public company in the sector. Its shares are now traded in Toronto and Wall Street.
Since 2018, Yahoo Finance has launched its Cannabis Stock Watchlist, a theoretical index that monitors the overall performance of twenty stocks in the sector. The list includes commodity manufacturers, but also pharmaceutical companies that invest in the industry, such as the British GW Pharmaceuticals Plc, which has developed medicines containing cannabinoids for the treatment of epilepsy.
For example, it includes companies operating in beverage market which entered the cannabis sector, such as the American Anheuser-Busch InBev together with Canadian Tilray that has invested in the production of soft drinks containing THC. Others, such as General Cannabis Corp in Denver, Colorado, offer consulting services and products to companies in the cannabis industry. Since the launch of the survey, the value of the cannabis industry shares monitored by Yahoo Finance has risen by more than 300 percentage points.
Smaller companies are also capitalizing on the growing cannabis market. West Coast Ventures Corp. (OTC: WCVC)is a small cap publicly traded company that recently made the news becoming the first American CBD restaurant stock. CBD (cannabidol) is a non-psychoactive part of the plant that is proven to be beneficial in treating chronic pain, muscle recovery and improving concentration, among others. WCVC’s Illegal Burger and Illegal Pizza restaurants offer a CBD-infused menu along with their famous Illegal Brands CBD water. It is part of their mission to serve high quality dining experience and educate on the benefits of CBD.
The company made a huge profit in the first year of operation (2018) alone, exceeding $3 million in revenue, and is since then experiencing a continuous growth. In the first quarter of 2019 WCVC reached the revenue growth of 21.55% and it’s expected to grow even higher.
Boom in the USA
Cannabis is legal in 34 states in the USA. In most cases the law allows THC-based products to be used for therapeutic purposes. 11 states have also legalized recreational use. In Alaska, California, Colorado (a well-known forerunner of US anti-prohibitionism), District of Columbia, Maine, Massachusetts, Michigan, Nevada, Oregon, Vermont and Washington, in other words, even making a rod is perfectly legal as long as it is supplied in authorized stores. A further boost for a fast growing sector.
Business Insider has recently done the math in the sector and the results are surprising. The impact of legalization on the U.S. economy in 2017 would have been between $20 and $23 billion. But by 2022, US market turnover could reach 77 billion dollars. To date, 250,000 workers are employed in the American cannabis sector, almost five times as many as their colleagues in the coal sector.
According to a study by Arcview Market research and BDS Analytics, within four years the share of workers could grow by another 80,000. Finally, last year, the US marijuana industry attracted $10 billion in investment, double the total amount invested in the previous three years. In 2019, according to estimates, it could reach $16 billion.
Illegal market bodes well for investors
What about the illegal market? To date, the high figures continues to dominate. In 2016, 87% of the marijuana sold in the U.S. and Canada was distributed through illicit channels. But paradoxically, the figure gives hope. Troy Dayton, CEO of Arcview Market Research, sees the black market as an enormous opportunity for the future.
The cannabis industry, he says, doesn’t have to worry about creating a market demand that actually already exists. But it must wait for anti-prohibitionist policies to progressively allow industry entrepreneurs to take a growing share of consumers away from illicit supply in order to channel demand to the legal market. By 2021, Arcview and BDS Analytics further argue, the market share held by traffickers should drop to 67%.
From Canada to Europe
And Europe? In the old continent, it seems, finance companies have already begun to bet on widespread legalisation. “Judging by the assets of the banks, European investors eager to emulate the stock market boom in Canada would not seem destined to wait much longer,” Bloomberg writes. Canaccord Genuity, a Vancouver-based brokerage and wealth management company and the leading stockbroker for newly listed cannabis companies, has opened a division for Europe. There are opportunities and quotations on the continental stock exchanges, (London above all) for companies in the sector. And then for the expansion of pharmaceutical companies, intending to enter the world of cannabis.
In March, Bloomberg noted, the British Spinnaker Opportunities announced its intention to acquire Kanabo Research Ltd., a private Israeli company operating in the field of hemp for therapeutic use. At the same time companies such as Gour Medical AG (France), StenoCare A/S (Denmark) and Dermapharm Holding SE (Germany) are working to enter the same market segment. There is still a long way to go, but the direction has already been mapped out.
