Weed Week: American pot could be worth $60 billion by 2025
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Data analytics company Nielsen predicts that the American cannabis market will hit $US41 billion ($59.5 billion) by 2025 — a fivefold increase over 2018.
While a good chunk of cannabis products are still illegal in the US, Nielsen reckons state-legalised cannabis and cannabidiol (CBD) from hemp will translate into billions of dollars in revenue.
By Nielsen’s estimates, total sales of all legalised cannabis in the US reached $US8 billion last year.
“This includes sales of hemp-derived CBD. That’s $8 billion in a country where marijuana is now legal for recreational use in just 11 US states and Washington, DC,” Nielsen said.
“With newer recreational markets such as Michigan and Illinois opening up for business in 2020 and more states likely to follow suit, we predict that sales of all legalised cannabis in the US will reach $US41 billion by 2025.”
Earlier this week, Maxim Jacobs, managing partner at New York-based Edison Investment Research, told Stockhead that while some might consider cannabis to be a “bubble”, there was a substantial secular growth trend.
“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),” he said.
“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.”
Exactly half of ASX-listed cannabis companies made gains of between 2 and 60 per cent in the past week, while a couple stayed put and the rest lost ground.
Here’s a table of stocks with exposure to cannabis:
Scroll or swipe to reveal table. Click headings to sort.
|ASX Code||Company||Price July 31 (Intra-Day)||Market Cap||1-Year % Change||1-Week % Change|
|WOA||WIDE OPEN AGRICULTURE||0.175||9881095||-3||25|
|AC8||AUSCANN GROUP HOLDINGS||0.485||158523680||-48||16|
|ROO||ROOTS SUSTAINABLE AGRICULTURE||0.065||5221724||-79||12|
|ECS||ECS BOTANICS HOLDINGS||0.066||32485828||-35||5|
|MRG||MURRAY RIVER ORGANICS GROUP||0.088||38170976||-72||-2|
|CP1||CANNPAL ANIMAL THERAPEUTICS||0.185||16296875||0||-3|
|MMJ||MMJ GROUP HOLDINGS||0.285||67102920||4||-5|
|THC||THC GLOBAL GROUP||0.515||71939136||-4||-6|
|AGH||ALTHEA GROUP HOLDINGS||1.03||213475504||-14|
YPB Group (ASX:YPB) was this week’s biggest gainer with shares rallying 60 per cent to 1.2c.
The company declared it had issued over 100 million ProtectCodes in the past two years to its cannabis and Pharma customers.
YPB’s proprietary smartphone-enabled technology allows consumers to confirm product authenticity and, for brands, that triggers consumers’ engagement.
The Connect platform receives data from smartphone authentication scans and provides subscribing brands with detailed portraits of their end-consumers, including location, timing and purchasing information.
Ecofibre (ASX:EOF) this week reported a massive jump in its revenue and profit.
Revenue climbed 519 per cent to $35.6m, while net profit after tax rose 170 per cent to $6m.
Ecofibre attributed the big gains to the rapid growth of its nutraceutical business Ananda Health, which supplies hemp-derived CBD products to US retail pharmacies.
Shares added 17 per cent to trade at $3.35.
Roto-Gro International (ASX:RGI) has been granted a new US patent for its Stackable Modular Rotatable Gardening System, news that pushed shares up 29 per cent this week.
CEO Adam Clode said the patent secured many different aspects of RotoGro’s intellectual property covering stackability, hot air removal and direct carbon dioxide delivery to the plants.
Agtech company CropLogic (ASX:CLI) entered into a joint venture to grow “premium CBD hemp-trimmed flower with experienced Oregonian agriculturalists, the Shephard Brothers”.
The company said trimmed flower is modelled to have a higher return on investment than hemp biomass. Shares rose 20 per cent to 7.4c.
Medicinal cannabis player Althea Group (ASX:AGH) is buying Canadian cannabis extraction company, Peak Processing Solutions, for $5.8m.
The acquisition gives Althea exposure to Canada’s more liberal regulatory environment, where both CBD and tetrahydrocannabinol (THC) products are both fully legalised at the federal level.
Peak’s operations include extraction of raw cannabis (both CBD and THC), as well as contract manufacturing of various cannabis-infused products including edibles, drinks and nutraceuticals.
Althea is undertaking a $30m capital raising to fund the deal and grow its business.
Investors didn’t seem to fussed on the news, sending shares down 14 per cent to $1.03 in the past week.
Bod Australia (ASX:BDA) has broken into the UK market by way of a distribution deal with medicine manufacturer PCCA.
PCCA will import and distribute Bod’s pharmaceutical grade medicinal cannabis products, MediCabilis, in the UK.
PCCA is a Specials and MHRA-licensed medicines manufacturer with a network of over 4,000 hospitals, clinics, physicians and medical specialists across the UK.
“The UK is an important strategic market entry for the company and an important one for growth, estimated to be worth €8.8 billion ($14.2 billion) by 2028,” CEO Jo Patterson said.
Bod shares jumped 36 per cent to 65c.
Impression Healthcare (ASX:IHL) named Dr Sud Agarwal its new chief medical officer and non-executive director.
Agarwal is the current CEO and managing director of Cannvalate — Australia’s largest network of medicinal cannabis prescribing doctors, which currently represents about 40 per cent of the total prescribing market.
CEO Joel Latham was appointed managing director and Alistair Blake stepped down from the board but will remain in his role as chief technical officer.
In its June quarter report, AusCann (ASX:AC8) revealed that Canadian supplier of raw materials, MediPharm Labs, had successfully completed its first commercial export shipment of active pharmaceutical ingredient medical cannabis concentrate to AusCann.
AusCann plans to use the imported resin for product development batches and then commercial batches of its hard-shell cannabinoid-based capsules, which can be prescribed by doctors for the treatment of chronic pain alongside a broad spectrum of health conditions.
The company said it was the first ever bulk international shipment of active pharmaceutical ingredient medical cannabis concentrate from Canada to Australia.
Cann Group (ASX:CAN) secured manufacturing licences for its Northern and Southern medicinal cannabis facilities in Melbourne.
The company now holds all cultivation, production and manufacture licences under the Narcotics Drugs Act, along with import and export licences under the Customs Act.
Elixinol Global’s (ASX:EXL) Dutch subsidiary, Elixino BV, has partnered with PharmaCare’s Naturopathica brand to create a co‐branded CBD capsule range to be sold via Holland & Barrett, a leading UK health and wellness retailer.
The company also this week reported 19 per cent year-over-year growth in its Q2 revenues, which came in at $9.9m.
Anti-snoring company Rhinomed (ASX:RNO) reported 49 per cent year-on-year growth, with its revenue rising to $3.2m.
Rhinomed’s anti-snoring nose stent Mute is being adapted by New York company Columbia Care to deliver a slow-release dose of cannabis for, initially, sleep apneoa, pain control and PTSD.
The Annual US Drugstore State of the Industry Report (2019-2020) revealed recently that the Mute product was the fastest growing product in the nasal strip category in US drugstores.
Roots Sustainable Agricultural Technologies (ASX:ROO) booked $114,000 in Root Zone Temperature Optimisation (RZTO) sales orders from three North American cannabis producers during the June quarter.
The RZTO technology heats and cools the roots of crops, rather than the air.
Roots CEO Sharon Devir says the RZTO technology has been proven to mitigate external weather conditions on crops to substantially increase crop yield and quality, as well as reduce costs.