Harry van Gelder, 5th of September, 2018
Beer brewers are investing more frequently in the booming cannabis market. Last month, Constellations Brands, makers of Corona beer, announced almost $4 billion in investments in Canopy Growth, Canada’s largest cannabis firm. Molson Coors are by now working together with medicinal cannabis producers Hydropothecary. Heineken, too, are putting up some show in this field.
In California, American subsidiary Lagunitas are marketing the Hi-Fi Hops cannabis drink. It boils down to a sparkling hop water, infused with the cannabis substance THC. Where top executive Jean Francois van Boxmeer got more than just a shock on hearing about the plans (“Have you gone completely mad?”), he has by now become convinced of the appropriateness of this step, which is legitimate by the way. Lagunitas are allowed free range as long as this does not invoke legal problems.
This consent on the part of Van Boxmeer might well turn out to be a good decision. After all, despite president’s Trump’s war on drugs, interest on the part of Wall Street in investing in marijuana firms just never was as high as this. According to Bloomberg, the North-American Marijuana index rose by 140% this year; a poor contrast being the S&P 500, at a mere 17%.
This year, legitimate cannabis sales in the US are moving around $6 billion. According to analysts at Canadian investment bank GMP Securities, the American market will be valued at over $20 billion by 2022.
“It is the fastest-growing market segment”, says CEO Robert Cheney of listed investment fund C21. The fund puts money into cannabis firms of sound repute and quality. In this way Cheney recently managed to acquire Grön Chocolate, producers of Fairtrade cannabis chocolate bars. Grön are truly shooting up. In 2016 sales amounted to $1.6 million; this year’s expectations being around $4,6 million.
The cannabis market is expected to revive this fall, with marijuana assumed to become fully legal in Canada, where medicinal hash has been on sale in this quality since 2001. The US are keeping very close track of Canada. By now, ten American states have more or less legalized marijuana. Other states are expected to follow suit.
Investor Robert Cheney thinks that president’s Trump’s approach of cannabis in the US will prevent legalization at federal level, but it will be condoned nonetheless. “The States put up a clever game, contending that they are charged with public health and that medicinal cannabis is included in this. The Federal State consented to this approach, promising not to interfere”, says Cheney.
Support for legalizing soft drugs
There is no stopping things by now, it would appear. Legalizing marijuana in the US and Canada, either fully or in part, has put a boost on companies that sell marijuana products. Where about 36 companies are listed on a minor Canadian stock exchange, they are (still) prohibited by force of law on the New York Stock Exchange. While putting his best foot forward in combating drugs at federal level, President Trump would now appear to lose the battle on states level. According to studies, 60% of Americans are now in favor of legalizing soft drugs, five times as many as during the 1969 hippie era.
“Where American politicians thought that they were actually legalizing the weed plant, they were in fact legalizing a molecule fit to be infused in everything ranging from chocolate and drinks to chewing-gum; you name it”, says Tony Magee, founder of artisan brewers Lagunitas, fully owned by Heineken.
The market seconds him. Smoked far less frequently nowadays, marijuana is now taken increasingly in the form of sweets, drinks or chewing-gum. “When eight years ago soft drugs became legalized in Colorado, 90% of sales originated in smoking. This has fallen until 40% right now”, says Cheney. “Youngsters go for user-friendliness and comfort. In no way do many of them like the taste and fragrance of hash. What’s more, they consider smoking as a health hazard. That’s why they switch over to eating or drinking marijuana products”, says Cheney.
In the view of the American investor, the big advantage of these edibles lies in the possibility of dosing the marijuana content. “No longer will you need to become raving stoned; instead you can turn this into a real wellness product when you take just so much as will make you feel good.”
Quality and security
The key to the breakthrough of cannabis products is found in their quality, consistency and security, according to Cheney. In his view it is especially medicinal soft drugs that will conquer the world, including the Netherlands. By helping troubled sleepers for instance, or as pain relief for the elderly.
On 26 September he will turn up at the Amsterdam Eye during the first European congress for investors in cannabis companies.
Assuming fully legalized and regulated markets, turnovers will amount to over €115 billion by 2028, according to the 2018 European Cannabis Report.
The convention is organized by Dutch investor Michael Kraland. “I just did not manage to receive sound data on investment in cannabis companies. Since shining figures may just make me believe anything I thought: let’s invite the Americans and Canadians over so I can look them in the eyes and obtain loads of information.”
Kraland is surprised that the marijuana market would appear to be lost to the Netherlands. “This is truly a case of dialectics of lead; the handicap of a head start. In fact, I saw space cake in the Amsterdam Paradiso as early as 1969.”