New Cannabis Markets: Show Us the Money!

A bevy of new territories began selling legal cannabis in 2018, including Canada, Massachusetts, Maryland, Ohio, and Oklahoma. How well these new markets are faring gives us a sense of the strength of the cannabis market and how closely actual results are meeting expectations.

Great Expectations for Canada  

As CNBC reported, when the country’s first recreational cannabis dispensaries opened on October 17, 2018, Canada became “the world’s largest legal marijuana marketplace.”

No official government tally is available for Canada’s first three months of legal cannabis sales, so it is not clear how well Canada has performed so far.

Statistics Canada projected sales would hit $1 billion in the fourth quarter of 2018 for the entire country. However, the only results provided by Statistics Canada so far are for the sales in the first two weeks after legalization, which totaled $43 million.

Vice, meanwhile, reported that Canadians spent $1.6 billion on legal cannabis in 2018, based on a report by Arcview Market Research and BDS Analytics.

Going forward, Arcview projects that Canada’s legal cannabis market will hit $7.8 billion in 2022. Recreational cannabis is expected to make up the lion’s share, with medical cannabis generating $1.4 billion of the total.

Deloitte projects that the total cannabis market in Canada, including medical and illegal as well as legal recreational products, will generate up to $7.17 billion in total sales in 2019. Legal sales are expected to contribute more than half of this total—up to $4.34 billion—in the first year.

According to Statistics Canada, Canadians spent $5.7 billion on cannabis in 2017, the vast majority of which came from the black market. This shows a strong demand for cannabis that will translate into large figures as consumers transition to the legal market.

Massachusetts Strong Out of the Gate

Massachusetts generated $23.8 million in recreational cannabis sales since its first dispensaries opened in November 2018, according to state officials. The number of dispensaries has increased from two to eight since sales began.

With only two dispensaries operating, the outlets totaled $9.3 million in recreational marijuana sales during the first four weeks of operation. The two dispensaries took in more than $440,000 on the first day of sales, and the state averaged $2.3 million in sales per week.

These are strong numbers compared with first month sales in other states that had many more dispensaries operating, such as Oregon ($14 million, 320 dispensaries), Colorado ($14.7 million, 59 dispensaries), and Nevada ($27.1 million, 53 dispensaries).

Maryland Med Market Soars

In its first year of operation, Maryland’s medical marijuana sales mushroomed to $96.3 million, according to state officials.

Medical cannabis sales in Maryland began in December 2017 with the opening of 10 dispensaries, and demand was so strong that supplies ran out within days. Since that time, the number of dispensaries has grown to 71.

Maryland’s first-year medical cannabis sales topped those of Illinois, Massachusetts, and New York combined. With about 52,000 registered patients at year’s end, Maryland also outpaced Illinois and New York, which each had fewer than 13,000 patients after one year of sales.

Oklahoma Posts Strong Med Sales  

Oklahoma, which legalized medical cannabis in June 2018, began selling plants in October and dried flower in December. In the first full month of operation, Oklahoma’s four dispensaries sold nearly $1 million worth of medical cannabis.

The Oklahoma market is projected to generate $400 million in annual sales over time, according to Marijuana Business Daily estimates.

Domino Effect

Legalization of recreational cannabis in Massachusetts seems to be spurring other New England states into action, including New York, New Jersey, and Connecticut. 

“Now that there’s cannabis stores in Massachusetts, we are really starting to see the dominoes fall,” said Matt Schweich, deputy director of the Marijuana Policy Project.

As mjbizdaily notes, recreational marijuana seems poised to sweep across the Northeast, which could mean billions of dollars of new business opportunities in the densely populated region.

Legalization Sweeping Across Europe

As ICBC reports, there are “fresh signs that wide-spread cannabis reform is afoot across the European Union.”  As the new year began, several European countries moved forward with their legal cannabis programs, including Poland, Portugal, and Luxembourg.

In Poland, medical marijuana supplied by Canada’s Aurora Cannabis went on sale in Polish pharmacies on January 17.

Luxembourg last year announced that it planned to legalize recreational cannabis, which would make it the first EU country to do so. Luxembourg currently is moving ahead with its medical cannabis program.

In Portugal, two bills have been introduced in the Parliament to legalize recreational cannabis.  As of January 15, the medical use law in Portugal, as well as the right to export the drug, was formalized by the Republic Journal, the official publication of the government documenting the passage of new laws.

Cultivation Craze

Another sign of the burgeoning cannabis market in new territories is the number of companies applying for cultivation licenses. In Germany, 79 bidders have applied for the 13 cultivation licenses that will be granted.

Only medical cannabis is legal in Germany, and until the first internal harvest occurs, which is expected in the last quarter of 2020, all medical cannabis flower and oil sold in Germany will continue to be imported.

In Canada, more than 800 new applications were in the pipeline, according to Health Canada.  There currently are 145 licensed cultivators, processors, and sellers in Canada. Beacon Securities analyst Russell Stanley says the Canadian market cannot support so many cannabis producers, which means “a reckoning is coming.”

Altacorp Capital predicts that cannabis cultivation companies will experience “margin compression” as the market matures. To combat this threat, cannabis producers must take measures to minimize their cost of operations. One of the best ways to control costs and maximize efficiency is through a highly integrated and automated cannabis management system.

As the maker of the most modern, integrated, and scalable cannabis manufacturing solution, MaxQ has deep cannabis industry expertise. Contact us to learn more about the latest trends and management solutions in the cannabis manufacturing industry. 

 


Cannabis Hits a Tipping Point and Crosses the Chasm

The cannabis market has reached a tipping point and is showing all the signs of an unstoppable juggernaut.

The signs are many, including:

  • Legalization is spreading at an accelerating pace.
  • The number of dispensaries is increasing exponentially.
  • Deals and investments are multiplying.
  • Big Alcohol, Big Tobacco, Big Finance, and Big Pharma have entered the market.
  • Big brand names like Coca Cola, Heineken, and Coors are entering the fray.
  • A vast new legal hemp market has sprung open.
  • A new generation of cannabis consumers is emerging.

Deals, Deals, Deals

As mjbizdaily reports, based on the number and size of the deals that were done, the year 2018 will go down as “a massive milestone for cannabis companies.” According to Viridian Capital Advisors, 557 deals raised over $13.5 billion in 2018, compared with 378 deals that raised $2.7 billion in 2017. 

Constellation Brands made waves with its $4 billion investment in Canopy Growth Corp. But Altria topped that deal with a $13 billion investment in vape company Juul, a deal that followed two weeks after Atria’s $1.8 billion investment in Cronos Group.

A key trend in the U.S. is the rapid expansion of large publicly traded cannabis companies through the establishment of multistate operations. This is the modus operandi of Acreage Holdings, Curaleaf, Green Thumb Industries, MedMen, and Trulieve—which are the five largest multistate cannabis operators with the greatest market capitalization.

Domino Effect

The big news in 2018 was the legalization of cannabis in Canada. In the U.S., Maine, Michigan, and Vermont legalized recreational cannabis. Medical cannabis is now legal in 33 states and Washington D.C., and recreational cannabis is legal in 10 states and Washington D.C.

As increasing numbers of territories legalize cannabis, resistance to legalizing cannabis is crumbling. At least seven U.S. states are leaning towards joining the recreational ranks as government leaders in New York, New Jersey, Connecticut, Pennsylvania, Ohio, Virginia, and New Hampshire push for legalization.  

Around the world, bans are being lifted to legalize cannabis and allow trade. Most recently, Bermuda announced that was lifting a regulatory ban on marijuana investment funds, while Israel’s parliament approved a law to permit exports of medical marijuana.

At year’s end, Thailand’s National Legislative Assembly voted to legalize medical marijuana and allow cannabis research. This follows on the heels of South Korea, Argentina, and Australia legalizing medical cannabis.

As Forbes notes, U.S. drug policies influence those of foreign nations, and the legalization of cannabis in the U.S. is having a contagious effect worldwide.  

Doubling Down on Dispensaries

The rapid expansion of the cannabis market is reflected in the exponentially multiplying number of dispensaries. Connecticut officials approved nine new medical cannabis dispensaries, which doubles the state’s existing number. New Jersey also doubled its number of medical cannabis dispensaries from 6 to 12.

Pennsylvania issued 23 new medical cannabis dispensary licenses, raising the state’s total to 79. Nevada issued 61 new recreational marijuana retail licenses, which nearly doubles that state’s number. Missouri plans to have 192 medical cannabis dispensaries open by 2020.

Michigan, which legalized recreational cannabis in 2018, approved 91 new medical cannabis licenses, including 45 dispensaries. Massachusetts opened its first recreational cannabis dispensaries, while the first medical cannabis dispensaries were licensed to open in Arkansas, Ohio, and Virginia.

Hemp Is Back

After an 81-year ban, the legalization of hemp in the U.S. became official when President Trump signed the 2018 Farm Bill on December 20. The ability to grow, process, and sell hemp products will unlock a wealth of new opportunities.

As Vox reported, not only will farmers coast to coast benefit from a new cash crop, but the CBD industry, which sold about $350 million worth of products last year, is projected to hit $1 billion in sales by 2020.  

Hemp becomes legal at a time when the demand for CBD oil is exploding. As Jason Williams of Wealth Daily notes, “CBD sales are growing faster than anyone could have predicted — faster than pretty much any other part of the cannabis market.”

And as Hemp Industry Daily reports, “CBD-rich hempseed is legal now, but it’s also rare, giving plant breeders a huge new market as barriers to national hempseed distribution are removed.”

Research Boom

Cannabis research is flourishing as biotech companies discover new medical uses and legal cannabis-based drugs are made available to patients. A historic landmark was reached in 2018 when Epidiolex was approved by the FDA, a move that caused cannabis to be reclassified by the DEA.

After five decades of barren neglect, the U.S. Congress is moving to fund and facilitate medical cannabis research. Besides a new Medical Cannabis Research Act bill, the U.S. federal government plans to award $1.5 million in grants during the 2019 fiscal year to researchers who study how components of marijuana other than THC affect pain.

Cannabis Crosses the Consumer Chasm

As the surging sales and supply shortages in the U.S. and Canada show, the demand for legal cannabis is strong. Consumers are taking advantage of the diverse medical and recreational cannabis products coming to market, including smokables, edibles, beverages, ointments, lotions, and suppositories.

Not only are veteran cannabis users taking advantage of legalized cannabis products, but a new generation of “canna-curious” people are becoming cannabis consumers.

As headynj.com notes, as legalization takes hold, “the doors have opened up to a whole new tribe of people” who are experimenting with cannabis and making informed decisions.  

This includes senior citizens, a group that tended to be anti-cannabis in the past, but who are now embracing cannabis chiefly for medical reasons.  An example is Rossmoor’s Medical Marijuana Education and Support Club in California, where scores of seniors are experiencing the benefits of medical cannabis. These seniors are not only becoming consumers, but pro-cannabis activists as well.

Helping consumers cross the cannabis chasm is Francis Ford Coppola, who has complemented his wine products by launching a cannabis line called The Grower’s Series. The first product is a kit that sells for $99, which is aimed at “individuals who are wine drinkers who may be intimidated by cannabis by leveraging some of the same language.”

Mainstream commercialization is causing the cannabis market to become more sophisticated, refined, and upscale. As Leafly notes, legalization has brought maturity, innovation, professionalism, and credibility to cannabis.

For cannabis producers, the expanding market represents an immense opportunity, and competitive advantages can be gained by deploying the right cannabis management and analytics solutions. 

As the maker of the most modern, integrated, and scalable cannabis manufacturing solution, MaxQ has deep cannabis industry expertise. Contact us to learn more about the latest trends and management solutions in the cannabis manufacturing industry. 

 

 

 

 

 

 


Power BI Gives Curio Wellness a Big Competitive Edge

In the highly competitive world of cannabis manufacturing, Curio Wellness has gained advantages by deploying a MaxQ Cannabis management solution that includes Power BI analytics. 

Brad Friedlander, CIO of Curio Wellness, described how his company is deriving a wealth of benefits from Power BI.

End-to-End BI Value

“Our executive team uses it for sales and key metrics, sales by customer, what products are trending, how things are selling within categories, in both quantity and dollars,” he explained. “We can view data in real time, daily, weekly, monthly, and quarterly.”

Power BI is used to monitor and manage the entire business, including operations, sales, and marketing, said Friedlander, adding that this has resulted in better planning, decision making, and performance.

Overall, Power BI has given his company a huge competitive advantage, said Friedlander. “Most of our competitors are on QuickBooks,” he explained, “so they don’t have the ability to do what we do with Power BI.”

Using Power BI also has resulted in better customer satisfaction, he said. “It enables us to meet demand and keep customers happy, which is our number one priority.”

Expanded Use

Curio Wellness obtained Power BI as a standard component of the MaxQ Cannabis solution that is used to manage the company’s seed-to-sale cannabis operations.

However, as users worked with Power BI and discovered its potential, they desired to expand the range of analyses they were able to perform. MaxQ provided additional consulting and customization to enable Power BI to meet the users’ expanding needs.

Friedlander said he is continuously adding pages to Power BI to add functionality that enables the management team to view data in new ways.

Real-Time Advantages

The ability to continually monitor and analyze data in real time is a big part of the advantages the company is deriving from Power BI, Friedlander said. “We can refresh minute by minute and can see data coming from the field for sales and operations.”

Daily monitoring and analyzing of key metrics have enabled the operations and sales teams to make better decisions and change business outcomes, Friedlander said. “It’s allowed us to quickly see problem areas and address them immediately rather than at month’s end,” he explained.

For example, same-day analyses of sales data enable the company to adjust its product processing and packaging to meet market demand. “We can meet demand within a day,” said Friedlander. “When we harvest plants, we have strains that are cured and in the final stages of being packaged, so we can modify the rotation of strains to meet demand on any given day.”

Leveraging Key Metrics

Curio Wellness’s operations and sales teams use Power BI to track a variety of key metrics on a daily, weekly, and monthly basis, Friedlander said. “We track many metrics,” he explained, “including sales by customer, sales by strain, dollars and weight sold, inventory on hand, and manufactured products. We also can see margins and selling price over any given period of time.”

Power BI helps the operations side keep in step with sales and marketing. “We can see the best-selling products in any given week, and modify our trimming and production schedules to meet the current demand,” Friedlander explained.

Power BI data also enables the sales and marketing teams to take steps to boost the sales of underperforming products. “We can see what’s selling and what isn’t, and we can put something on special or do special promotions for weaker selling products,” Friedlander added.

Power BI has proven to be fast, flexible, and easy to use, Friedlander said. “You can make changes on the fly, and you can look at the data in so many different ways.”

Production Optimization

On the operations side, Power BI enables the operations team to monitor production and gauge its efficiency. “We can see what yields are out of the garden and the gross weights and class of product that results from a crop,” Friedlander explained.

Power BI also enables the operations team to see how the crops that are harvested measure up to the planned production. “We can set the results we aim to hit for a crop, and we can see how well we have performed to hit that metric—for example, the percentage of flower that falls into upper tier, middle tier, and lower tier,” Friedlander explained.

The financial team uses the forecasting power of Power BI in the planning and budgeting process. “We can forecast relatively easily based on historical trends, including growth rates by customer, in quantity and dollars,” Friedlander explained. “We can see trends and apply those trends to our forecast for the next year.”

Limitless Potential

Friedlander said he could ever see a time when he could say the potential uses of Power BI had reached an end.“There are endless uses for this,”  he said. “It will continue to evolve to serve the business.”

The company currently is in the process of automating its Flash report, he said, which aggregates key metrics of entire business. “This will let users access data from a single source rather than dragging in data from multiple data sources, and the Flash report will be formatted for the purpose of visualizing the metrics,” he explained.

Going forward, Friedlander said the company plans to expand the use of Power BI in a number of ways, including creating customized dashboards for each team—executive, operations, sales, and marketing. “We also want to add the ability to analyze cost of sales, particularly on the cultivation side,” he said.

Better Than Expected

After using Power BI for a year, Friedlander said the tool had exceeded his expectations. “I love it,” he said, adding that, “I probably use it more than anybody on the team.”

Having never used Power BI before, Friedlander said he was surprised by the tools’ ease of use, ability to format data in many ways, and generally visualize data. “There’s a lot to like about Power BI,” he said. “It’s easy to create charts and visualize data in an appealing way. We use the mapping, which lets us see where the hotbed of activities is coming from.”

Is the company pleased with the return on investment in Power BI? “Absolutely,” said Friedlander. “The ability to get data in real time, and the amount of time you save in aggregating and reporting on data, you can’t put a value on that.”

Power BI has made life easier and benefited the business in numerous ways, said Friedlander, including better performance and decision making. “It also has given us a huge competitive advantage,” he added.

MaxQ Technologies provides state-of-the-art Power BI solutions and incorporates Power BI within advanced business solution suites. Contact us to learn more about Power BI and how your business could benefit from a Power BI solution.

 


Cannabis Sparks a Beverage Revolution

The infusion of cannabis into beverages is transforming the beverage industry and consumers’ drinking habits. Consumers today can find THC and CBD infused into beers, wines, coffees, teas, sodas, waters, elixirs, and energy drinks. Wellness drinks, in particular, is a significant new category that is bringing  the health benefits of CBD to consumers. This first wave of cannabis drinks is only the beginning, as many of the big guns in the cannabis and beverage industries have set their sights on what promises to be a huge cannabis beverage market. Next Big Thing in Cannabis The first phase of legalized recreational cannabis in Canada did not include beverages and edibles. With the next phase set for the fall of 2019, the major Canadian cannabis producers are forging partnerships with beverage, bio-research, and alcohol companies to bring cannabis beverages to market. Among the big players is Canopy Growth, which made headlines as the recipient of a $4 billion investment from liquor giant Constellation Brands. Canopy CEO Bruce Linton believes cannabis beverages “represent the next big opportunity.” Edibles and infused beverages might have a wider appeal than smoking cannabis, Linton said, because consumers might consider eating and drinking the products to be more socially acceptable than smoking them. Likewise, Tilray CEO Brendan Kennedy believes beverages will ultimately dominate the cannabis market, with only 10% of cannabis being smoked and 90% being consumed as cannabis beverages. Cannabis Chemistry Although many players recognize the commercial potential of cannabis beverages, there are significant challenges involved in producing them. Because cannabinoids are fat soluble rather than water soluble, as beveragedaily notes, “beverage producers are left with the age-old problem of trying to mix oil and water when creating cannabis beverages.” Another problem with oil-based cannabis absorption is that the effects are not felt for 90 minutes or more, in contrast to alcoholic beverages that are absorbed quickly. Among the companies that are developing ways to make cannabis water soluble and more easily absorbable are Trait Biosciences, Vitality Biopharma, Lexaria Biosciences, Ascent Industries, Chemesis International, Tilray, Sproutly Canada, and Emerald Health Therapeutics. Ascent Industries CEO Philip Campbell said his company’s Agrima Botanticals subsidiary has developed a compound that can be added to drinks to make cannabinoids water soluble and quickly absorbable, with the effects felt in 15 minutes. Sproutly Canada announced that it has developed a portfolio of cannabis beverages based on its water-soluble MisT and Infuz2O cannabinoid technology. Among Lexaria’s innovations is a new water-soluble hemp powder called ChrD+ that comes in packets and can be added to any hot or cold drink to infuse hemp oil. The Green Organic Dutchman (TGOD), which created a global division to focus on the beverage industry, has forged an exclusive agreement with Stillwater Brands to license its RIPPLE SC (Soluble Cannabinoids) technology to create soluble and fast-acting cannabis beverages. Taste Appeal Besides solubility, the taste of cannabis can be a problem, with many people finding cannabis to have an unappealing skunky flavor. Thus, cannabis producers are partnering with biotech research companies to acquire the know-how to create more palatable cannabis beverages. Terpenes are cannabis components that impart flavors and mood enhancements to cannabis products, and research is being devoted to infusing terpenes into beverages. NaPro Research, Flowr, and Yofumo are among the companies developing techniques to isolate terpenes and breed cannabis strains with particular aromas and tastes. As Mashable reports, a number of brewing companies are adding cannabis terpenes to their beers to produce various flavor profiles. Lexaria Bioscience has developed delivery technology called DehydraTECH that can be used to infuse cannabis in food and beverages. The technology enhances the taste, smell, speed of action, and absorption. Lexia has introduced a line of cannabis-infused tea, coffee and hot chocolate products, as well as an energy drink. Expanding into Cannabis Territory Among the beverage companies expanding into the cannabis market is Lifford Wine & Spirits. Lisa Campbell, CEO of the company’s Lifford Cannabis Solutions subsidiary, said many cannabis companies are in talks with food and beverage manufacturers that want to extend their brands into the cannabis space. Campbell said her company was working with a number of partners—including WeedMD, TerrAscend Canada, and Token Naturals—to bring “premium infused products” to market as soon as Canada officially permits edibles and beverages. Token Naturals focuses on extracting and refining cannabis oils, and CEO Keenan Pascal said his company was working with food and drink manufacturers to design formulas to bring cannabis-infused products to market. Among Token Natural’s products are bitters for infusion into beverages. Cannabis Brews Studies show that cannabis sales are growing at the expense of alcohol in states in which cannabis becomes legal. To hedge against a decline in their revenues, major beer brands are launching non-alcoholic cannabis beer lines. New companies also are sprouting up to bring cannabis craft beers to market. Constellation Brands, the company behind Modelo and Corona beer, has tied its wagon to Canopy Growth Corp. through a $4 billion investment. Molson Coors followed suit by announcing a joint venture with The Hydropothecary Corporation to develop non-alcoholic cannabis-infused beverages for the Canadian market. Heineken created a subsidiary called Lagunitas and teamed up with AbsoluteXtracts to create cannabis-infused sparkling water beverages called Hi-Fi Hops that are being sold in California. Most recently, Budweiser maker AB InBev forged a $100 million deal with Tilray to research cannabis-infused beverages. Keith Villa, who invented Blue Moon beer for MillerCoors, has launched a new company called Ceria Beverages that will focus on producing a line of non-alcoholic cannabis-infused craft beers.  Villa has partnered with Ebbu, a cannabis company that will provide the extract for beers with or without the skunky cannabis taste. As Villa notes, “It’s tough to make good tasting non-alcoholic beer.” Also pioneering new beer brewing methods is Province Brands, which has developed a unique method of brewing beer from cannabis rather than barley or grain. The process involves milling and “mashing” to extract fermentable sugars from the cannabis plant, an operation that requires specialized equipment and technology that would not be found in a normal brewery. In November 2018, Province Brands announced agreements with Lost Craft Beer and Brock Street Brewing Company to brew beers from cannabis and hemp. Cannabis Goes Pop Coca Cola originally contained cocaine, which was replaced by caffeine, so it’s no large stretch to infuse soda pop with cannabis. Rumors are rampant that Coca Cola and Pepsi are planning to introduce cannabis beverages. Bloomberg reported that Coca Cola was “in serious talks” with Aurora Cannabis. Meanwhile, a new wave of companies is already fielding a variety of cannabis sodas, including Keef Brands, California Dreamin’, Cannabis Creations, Canna Cola, Dixie Brands, and Sprig. Erik Knutson, founder and CEO of cannabis-infused drink manufacturer Keef Brands, believes that “cannabis beverages are the new soda.” Keef produces a line of cannabis beverages, edibles, and additives that includes Keef Cola, Keef Sparkling Blood Orange, and Keef Sparkling Lemon. Cannabis Elixirs The cannabis boom has unleashed a wave of research aimed at discovering the medical benefits of cannabis. As Raphael Mechoulam, the father of cannabis research notes, cannabis is a “medicinal treasure trove waiting to be discovered.” Among those leading the charge is Mindful CEO Phillip Hague, who observes that marijuana contains numerous substances—cannabinoids, flavonoids, terpenes—that have never been investigated in depth. Mindful and other cannabis producers are cultivating CBD-rich strains of cannabis to help unlock the medical potential of cannabis. Lauren Rudick, a partner at cannabis-focused law firm Hiller, says CBD could become an even bigger mainstream ingredient than THC for the beverage industry. “It’s the perfect wellness product, and there are going to be many CBD-fortified foods and beverages,” she says. As consumer demand for CBD products rockets, companies like Lexaria, Zoots, High Performance Beverage Co., and Sprig are racing to create CBD formulas and bring CBD-infused health drinks to market. We are witnessing an incredible turnaround in which the once-forbidden cannabis plant is bringing entirely new types of beverages to market—beverages that are revolutionizing not only the beverage industry, but consumer health, drinking habits, and lifestyles. As the maker of the most modern, integrated, and scalable cannabis manufacturing solution, MaxQ has deep cannabis industry expertise. Contact us to learn more about the latest trends and management solutions in the cannabis manufacturing industry.