Cannabis, Beauty and Nutrition – a new El Dorado for the industry

Cannabis, a new El Dorado for investors? Cannabis use is spreading in the world of beauty and nutrition, with States considering its authorization in therapeutic form. Cannabis companies such as Illegal Burger of West Coast Ventures Corp. (OTC: WCVC), Canadian Tilray, Aurora Cannabis and Canopy Growth offer promising prospects. West Coast Venture Corp’s US Illegal Burger offering is a cannabis-themed business showing positive results in the restaurant space. After a strong 2018, earning more than $3 million in revenue, the rising star in this growing industry is set to continue soaring. The first quarter of 2019 has already seen year-over-year growth of 21.55%.

Illegal Burger is well aware of the exciting potential of the space where CBD intersects with the food & beverage sector. It was the first publicly-traded US restaurant to launch a CBD-infused food menu and plans to leverage the existing values of the brand – with its focus on health, community, and quality – which are an ideal match for CBD consumers.

Cannabis Beauty Nutrition

In Canada, Tilray has signed a partnership agreement with AB InBev to market cannabis-infused drinks. Canopy Growth has attracted Constellation Brands, which produces Corona beer, to its capital. Another Canadian company, Cronos, saw Altria, the cigarette manufacturer, arrive as a shareholder. Aurora Cannabis, like its competitors, is focusing on its international development.

All these companies have been taking advantage of the positive climate for cannabis since two countries, Uruguay and Canada, legalized the use of this drug. Mexico is also on track to legalize the recreational use of cannabis, after allowing its medical use in 2017. The United States has not given the green light, but more and more American states are allowing its use, either for medical purposes or recreational use.

Research firm BDS Analytics estimates that when the United States lifts its federal cannabis ban, sales will double by 2022 to $32.2 billion from $12.9 billion in 2018. In Canada, the green light given on 17 October 2018 caused a rapid increase in cannabis sales, the firm noted. The firm believes that Europe can lead the rest of the global increase in cannabis use. Currently, 11 of the 28 countries in the European Union have authorized the medical use of cannabis. Denmark and Luxembourg agreed to pilot programs over several years before permanent authorization. France is examining a therapeutic experiment. In December 2018, the Medicines Agency ruled in favor of therapeutic cannabis for pain not relieved by other medicines, treatment-resistant epilepsy, the effects of chemotherapy, uncontrolled contractions of multiple sclerosis and palliative care.

The experiment is expected to take place at the end of the year. Aurora Cannabis, Canopy Growth and Tilray were interviewed by the committee of experts in charge of the future experiment, alongside the Dutch company Bedrocan, the American Columbia Care, the Colombian Clever Leaves and the British Emmac Life Sciences. In addition, some MEPs recently announced the creation of a parliamentary fact-finding mission on cannabis use, to “inform the public debate over a long period of time,” while the issue of legalization is regularly subject to controversy. The mission, which will be launched in September, is shared by four committees of the French National Assembly: the Law Committee, the Sustainable Development Committee, the Social Affairs Committee and the Economic Affairs Committee.

In Belgium, the government parties in current affairs (MR, CD&V and Open Vld) tabled a bill in February in a plenary session of the Chamber to create a kind of government agency to regulate medical cannabis.

Mexican boom

The medical use of cannabis, which is on the rise, is of great benefit to companies such as Aurora Cannabis. When presenting its first quarter results, the company reported a 40% increase in international medical cannabis sales from one quarter to the next, while over the same period, its recreational cannabis sales increased by 37%. The company has positioned itself for the opening of the Mexican market, by acquiring Farmacias Magistrales in 2018, becoming the first foreign holder of a medical cannabis import license as a result of this acquisition. BDS Analytics estimates that the number of Mexicans using therapeutic cannabis could increase by 60% per year by 2022.

Wide use

Canopy Growth has entered a new field other than medical cannabis. In May, the company acquired This Works, a beauty products company, for C$73.8 million. The British company, founded in 2003 by a former editor-in-chief of Vogue UK magazine, manufactures anti-wrinkle and body creams. Canopy Growth believes that this acquisition will allow it to expand globally, and to develop products infused with cannabidiol (CBD).

In February, the company teamed up with Martha Stewart, the lifestyle guru in the United States, who was appointed as a consultant, to help her develop a line of CBD products for humans and animals. In the United States, the Sephora chain of stores has been selling CBD-infused products since 2018. Ulta Beauty has developed hemp-based products, and, recently, products containing CBD. Broker Jefferies estimates that the cannabidiol beauty market could reach $25 billion within ten years, accounting for 10 to 15% of total cosmetics sales.

The beauty sector is not the only one to see such a transformation happen. The food sector is also seeing the development of cannabis products. AB InBev wants to launch infused drinks, just like Constellation Brands, already on the market, and the aforementioned WCVC is pioneering CBD restaurants.

Potential

BDS Analytics points out that overall spending on legal cannabis products could increase by 22% per year by 2022. The global cannabis market is estimated at $150 billion, but only $13 billion is currently in legal channels. In addition, in the United States, negative feelings towards opioids, which have caused a significant wave of deaths, may turn in favour of therapeutic cannabis. A study has shown that CBD can calm tremors and discomforts associated with opioid withdrawal. “If you were in the cannabis industry ten years ago, you were clearly illegal. But the industry has matured very quickly,” says Dan Daviau, CEO of Cannacord Genuity Group, a Canadian bank. But the industry is also made up of companies at the start-up stage. Some companies stand out by surrounding themselves with strategic advisors. “I’m not saying you won’t see any strange companies getting caught up in the carpet, but the propensity for such a trend is quickly disappearing,” Dan Daviau says.

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Shane Watson

About the Author: Shane Watson

Shane is a cryptocurrency journalist and an ICO writing consultant at The Written Craft content service. He's an advocate of decentralized public control of finance, an off-grid enthusiast, and really fun at parties too.