2018 has been a massive year for the cannabis industry. Canada became just the second country after Uruguay to legalize weed for recreational use. The industry is booming, but what do the numbers point to? Here is an analysis of the fourth quarter of cannabis market research.
Acceptance in the Healthcare Industry
With more states and countries legalizing the recreational use of cannabis, it is paving the way for new scientific research. In 2017, the first US research institution was created to study cannabis use. With the trends leading more and more towards the acceptance of cannabis as a medicine with benefits, you can expand to see more research in this area.
Fourth Quarter 2018 Cannabis Market Research
There are more than 100 different known cannabinoids right now. The two used most heavily are THC and CBD, and the research focuses heavily on these two. However, more research will have to be done before either will have widespread adoption. The fourth quarter of the cannabis industry saw more medical practitioners willing to consider medical cannabis for patients. This number is expected to grow as the use becomes more widespread.
The Growing Popularity of CBD
CBD first made its rounds in early 2018, as medical research displayed its potential to reduce inflammation. The market blew up even further when rumors that Coca-Cola is working with a Canadian cannabis provider, Aurora Cannabis, to create a wellness beverage with cannabidiol (CBD). Aurora Cannabis saw its stock price increase more than 300% this year and has a Q4 revenue increase of over 220 percent. By Coke potentially becoming involved in the cannabis industry, it could mean considerable strides in the general public accepting the recreational use of cannabis.
Increase in Products Available
Back in 2014, flower accounted for 63% of all cannabis sales in Colorado. Products like concentrates, edibles, and topicals were not as popular. However, 2018 and Q4, in particular, has seen in an explosion in popularity of cannabis products other than flower. Now, in 2018, flower accounts for just 43% of the market. With more brands jumping into the market and offering a wider variety of goods, it is clear that the tastes of the consumers are changing. Now, there are sublingual, which are applied beneath the tongue to get you a quicker high, transdermals, which are a patch so the THC can slowly enter the bloodstream for long-term relief, and other new methods of delivery that are starting to crop up. In 2018, the market is wide open for someone to create another innovative way to ingest cannabis.
Luxury Cannabis Brands
High-end dispensaries like Diego Pellicer and gold rolling papers have started to pop up. Essentially, you can begin to get top-shelf cannabis. As there is still a significant stigma around cannabis, many large, mainstream corporations aren’t going to wait to get involved. This will help smaller, more cannabis-specific companies have more opportunities to expand into this market and charge a higher price.
The cannabis industry was rocked when Canada legalized all recreational use of the drug in mid-October. Because of the legislation, it is caused companies to capitalize on the new market. Canada’s Tilray filed for an IPO and has plans to list CLASS 2 shares on the Nasdaq under the ticker TLRY. In addition, Aurora Cannabis, one of the biggest cannabis companies in Canada, plans to seek investments in the United States through a spun-off subsidiary.
Wins for Cannabis Companies
Supreme Cannabis made $8.85 million in revenue, making the company among the highest grossing publicly traded Canadian cannabis producers. Fourth quarter revenue for Supreme Cannabis reached more than $3.55 million, which was a 71% increase from Q3. The company also experienced 49% less in net losses, with just a $7.35 million loss in its fiscal 2018 year. Supreme Cannabis also completed a $10 million strategic equity investment and worldwide distribution partnership of medical cannabis oils with Lesotho-based Med grow.
Canopy Growth saw a considerable growth not only in Canada but also in Germany. Canopy had record sales in the German market of roughly CA$2.3 million. The company only reported CA$1 million in sales to Germany in Q3. Overall, Canopy Growth reported Q4 revenue of CA$22.8 million. Canopy has increased their spending as they prepared to move into new markets, so we can expect to see big things from them in the upcoming quarter.
Losses from Industry Leaders
MedMen has been one of the top dogs for a while. Many other cannabis companies have been attempting to spread their market share by buying more dispensaries and cultivation, but MedMen seems to be doing the opposite.
The company has spent $4.7 million in marketing and branding during its fourth quarter alone, as an attempt to dispel “stoner” stereotypes while also adding in a touch of high fashion to cannabis consumption.
MedMen experienced a net loss of $78.7 million in the fourth quarter, compared to just $7.35 million a year ago. This is due to a massive push to expand and grow. Sales did increase from $20.6 million from $1.5 million a year ago as MedMen continues to add more stores.
Aphria also had a tough year
Their stock prices went down almost 40% year to date. While the company did experience a 17% revenue growth from Q3, and a 110% increase year over year, part of that growth stemmed from increased medical cannabis sales. However, much of this increase is thanks to the acquisition of Broken Coast, with the company’s revenue only included in one month of Aphra’s fiscal Q3 results.
The cannabis industry still is growing rapidly, with some more mainstream companies entering into the industry. You can expect the next quarter to see more changes among the highest-grossing companies, with new companies breaking into the top.