Money Talks: Cannabis could ‘easily’ be a $200b-plus market
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Money Talks is Stockhead’s regular drill down into what stocks investors are looking at right now. We’ll tap our extensive list of experts to see what’s hot, their top picks and what they’re looking out for.
Today, we hear from Maxim Jacobs, managing partner at New York-based Edison Investment Research.
Jacobs told Stockhead the hottest sector “by far” is cannabis.
“While some people may consider it to be a bubble there is a substantial secular growth trend that is driving growth,” he explained.
“This is a market that could easily be $200 billion worldwide (with some estimating much higher levels), with that potential being unlocked by the process of decriminalisation and legalisation that is occurring in Western countries (the ones with highest prevalence of cannabis use).
“Besides legalisation, a key driver of growth I believe is that cannabis products are becoming much more consumer friendly as you no longer have to smoke it.”
There are now a bunch of different consumer and therapeutic options available in the market.
“On the consumer side, there are various edible and concentrate alternatives which provide for a completely different experience than it had been previously,” Jacobs noted.
“On the therapeutic side, we’re seeing cannabis based products with very strong clinical data packages, like GW’s Epidiolex, be approved, with more to come.”
There are now over 30 ASX-listed companies with exposure to cannabis (see list below).
Scroll or swipe to reveal table. Click headings to sort.
|ASX Code||Company||Price July 30 (Intra-Day)||Market Cap||1-Year Change|
|AGH||ALTHEA GROUP HOLDINGS (LISTED 21/09/2018)||1.03||0.88|
|AC8||AUSCANN GROUP HOLDINGS||0.53||150597488||-0.494949|
|CP1||CANNPAL ANIMAL THERAPEUTICS||0.175||17228124||-0.054054|
|EOF||ECOFIBRE (LISTED 29/03/2019)||3.34||0.73|
|ECS||ECS BOTANICS HOLDINGS||0.068||35531376||-0.36|
|MMJ||MMJ GROUP HOLDINGS||0.285||66743204||0.156863|
|MRG||MURRAY RIVER ORGANICS GROUP||0.088||39038500||-0.716129|
|ROO||ROOTS SUSTAINABLE AGRICULTURE||0.061||5221724||-0.806452|
|THC||THC GLOBAL GROUP||0.535||71260464||-0.054054|
|WOA||WIDE OPEN AGRICULTURE||0.14||9881095||-0.222222|
The newest entrant is ECS Botanics (ASX:ECS), which lit up the boards last week, reaching almost double its recent offer price before closing the session out 62.5 per cent higher.
The agribusiness and hemp food company backdoor-listed into tech shell Axxis Technology.
Hemp is a low-THC variety of the cannabis plant. Depending on state laws, farmers are allowed to harvest the seeds of the plant and the stem fibre as well, but they do need a licence.
ECS recently concluded its maiden hemp harvest from its Tasmanian operations and planted a crop in Queensland, where it leases land, which is expected to be harvested in August.
The company has Tasmanian licences to grow, supply and manufacture industrial hemp for non-therapeutic commercial purposes and research, and a grower licence in Queensland.
It’s also applied for cultivation and manufacturing medical cannabis licences, but says if they are granted it’d be a side hustle rather than the main business.
Data-tracking technology company Dotz Nano (ASX:DTZ) also recently expanded into the cannabis sector.
The company struck a deal with Israeli company Seàch Medical Cannabis Group to use its tracking technology for Seàch’s cannabis plants.
The “BioDotz” technology will be applied to mark and track cannabis plants at Seach’s facilities, which are used in the production of buds, rolls and oils.
Medicinal cannabis player THC Global (ASX:THC) is finally on the path to production in Queensland after scoring a manufacturing licence for its prized Southport facility.
The company expects annual production from Southport will amount to over 12,000kg of Active Pharmaceutical Ingredient (API) medicinal-cannabis isolate products.
A new chain of medical cannabis clinics are set to roll out across Australia as part of a collaboration between Australian biopharma Zelda Therapeutics (ASX:ZLD) and Emerald Clinics.
Zelda is developing a new cannabis-based treatment to reduce opioid usage in patients with chronic pain as well as patients with insomnia and autism.
YPB Group (ASX:YPB) last week locked in its first cannabis consumables client, which has “significant” operations in the US.
The client is Canada-headquartered cannabis grower and processor Halo Labs.
MGC Pharma (ASX:MGC) is advancing its research into the treatment of glioblastoma, an extremely aggressive type of brain cancer for which there is no cure, using cannabinoid formulations.
A full report on pre-clinical research, conducted by MGC Pharma in collaboration with the National Institute of Biology and University Medical Centre Ljubljana, has shown that certain cannabinoid formulations can inhibit tumour growth as well as cause cancer cell death.
Glioblastoma is the most aggressive brain cancer for which the survival rate is very low — fewer than 5 per cent of patients survive longer than five years.
Maxim Jacobs heads up Edison’s North American research franchise, which is currently focused on healthcare but is expanding into other sectors. He conducts investment research and extensively models healthcare companies, publishing findings in periodic research reports that are available to investors globally. Prior to joining Edison, Jacobs worked at Guidepoint Global, conducting primary market research on various medical device and therapeutic areas, as well as modelling the results.