Cannabis 3.0: rapid change is coming

Cannabis is mainstream. Cannabis derived Consumer Packaged Goods are going to be available everywhere – way quicker than you can possibly imagine.

Bill Griffin, 28 September, 2018

“The cannabis industry works in dog years,” Sky Pinnick, CEO of Phantom Farms Cannabis Co. tells me. “One cannabis year is about equal to seven years in other industries.”

He’s not wrong. Two weeks ago, I sent an email requesting an interview with Michael Kraland and Peter Vermeulen about a cannabis investment event they were organising – Cannabis Capital Convention – the first of its kind in Europe. Within minutes, I received a Whatsapp from Michael. We met for lunch the next day in Amsterdam. Before the coffees arrived they had hired me as their editor. I was promoted to “Executive Editor” within a week.

“It’s an exciting industry that is a once in a lifetime opportunity and things are changing rapidly in front of us,” explained Danny Brody of The Green Organic Dutchman – a Canadian organic licensed cannabis producer founded by a Dutch couple in 2012. TGOD now has a market cap of around $1.720B.

“Let’s do a show of hands here. Who was alive in 1975?” says Danny. Most of the 300 delegates attending the sellout conference – hosted in The Eye Film Museum in Amsterdam – raised their hands “Who was alive in 1950?” Most hands went down. “Who was alive on December 5th 1933, when Franklin D Roosevelt ended the prohibition of alcohol? Go on, look around.” No hands remained in the air. “That is what I mean when I say this is truly a once in a lifetime opportunity.”

Cannabis 1.0 – keeping the plant alive

I’ve been writing about cannabis for around 70 dog years. 10 years ago, cannabis was still the realm of dreadlocked activists and heavily tattooed hardcore cannabis enthusiasts keeping the plant alive in their basement – away from the prying eyes of the law – a practise that has its origins from the 70s in Holland.

“Medical Marijuana” was really a fledgling industry only available in a few US states and still in its pioneer days. That was cannabis 1.0. You could feel that we were on the verge of something big, yet the political climate was such any progress seemed frustratingly far away.

It’s only courteous that the giant corporations – who are going to benefit financially from a world where cannabis is legal – should show the utmost gratitude to these people who pushed the cannabis agenda.

Cannabis 2.0 – a medical revolution

“2011/2012 came and the world started changing,” points out Tjalling Erkelens, CEO of privately owned Bedrocan the world’s first GMP certified cannabis cultivator who is contracted to supply medical cannabis to the Dutch government. “People got more knowledgeable about cannabis. It definitely became clear that cannabis could be used as a medicine.”

“Different compounds were revealed. The major one – CBD – as a means to treat child epilepsy came to the surface. It was actually a TV doctor in the US who brought this to light, Dr Sanjay Gupta.” Dr Sanjay Gupta had been very vocal in his opposition to medical cannabis  until he met with a little girl who was suffering from severe epileptic seizures. “She got CBD and the seizures started disappearing. We have seen many such examples across the world where CBD in combination with a little THC does help.”

“That was a big game changer,” admits Tjalling, “Since then, the industry really started growing,” resulting in Canada fully legalising cannabis for medicinal use and many US states and other countries around the world following.

In 2012, Colorado and Washington were the first US states to legalize recreational cannabis – a great experiment had begun.

Cannabis 3.0 – Rise of cannabis infused Consumer Packaged Goods (PCGs)

“I was reluctant to be involved in the event,” a senior PR specialist attending the event tells me. “We represent many traditional banks and other clients. I called my contacts in the big banks and asked them their opinion. You know what they told me was the best performing stocks on the markets in 2017? Cannabis! The investment banks wanted to attend!” The reality is cannabis is no longer taboo. If anything, people are fascinated by the topic.

What struck me most about the event was that the conversation mainly skipped the whole medical thing. We were in a room full of bankers, VCs, other investors and industry veterans sharing coffee and chatting with coffeeshop owners, seed companies and other cannabis entrepreneurs. These guys had survived despite extreme business conditions. Many not only survived – they are flourishing.

“Lawyers can’t grow weed,” Robert Cheney CEO of C21 Investments – a vertically integrated cannabis company that cultivates, processes and distributes cannabis products – tells the audience. “You need at least 10 years experience to grow cannabis well. That is the people who we work with.” C21 are “creating entirely new consumer packaged products at light speed, it’s pretty exciting.” It’s not just exciting – it’s profitable. In their retail stores they turnover “$11,500 of sales per square foot – that’s double Apple.”

You would expect a CEO of a cannabis company to be bullish on the sector. How about an analyst from the world’s oldest bank – Berenberg?

“We’ve been looking with interest at the recreational psychoactive cannabis market and in particular the potential development of THC infused beverages and the risk they pose to established alcohol players,” explains Alcoholic Beverage Analyst Matt Reid of Berenberg, in the first plenary of the day, to a stunned audience.

“We see THC infused beverages as a very strong substitute to alcoholic beverages. We think they will cannibalize volumes in the future. We believe the existing beverage companies are the best positioned players to take advantage of this opportunity. And, in addition, we believe the recreational psychoactive opportunities – particularly the THC infused beverage market – will be the most profitable.”

In fact, it seems merchant banks are amongst the most excited in the potential of a new cannabis economy in which major consumer brands produce packaged goods containing cannabis derived ingredients.

Cannabis Capital Convention aims to keep this dialogue going beyond the event. We’ve got the contacts and the knowledge to keep this information flowing to you the cannabis investor or entrepreneur.

Follow us on Twitter @CanCapConv and/or sign up to our newsletter to keep updated on developments in the most exciting market to emerge in 10,000 years. It’s only a matter of time before the smart politicians in the room wake up and put into place the right conditions for this industry to flourish – at which point, you’re gonna wish you got in early.

2018-09-28T14:16:16+00:00
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