CannabisNewsWire
Editorial Coverage: The legal cannabis industry, which
anticipates massive growth over the next few years, is seeing
constant innovation as companies move to provide essential services
needed for that growth.
- The global cannabis industry, which was worth $7.7 billion in
2016, is expected to reach $65 billion by 2023.
- The industry’s upward trajectory is happening despite legal
restrictions that have forced cannabis businesses to seek
alternative payment solutions.
- These solutions are among many innovations in the sector, which
has a strong strand of research and design.
Net Element (NASDAQ: NETE) (NETE
Profile) recently launched a compliant, secure payment
processing solution focused on serving the legal cannabis industry.
Medical cannabis company Tilray, Inc. (NASDAQ:
TLRY) is supplying materials for a range of research
projects around the world that are studying cannabis’ potential in
medicine. Canopy Growth Corporation (NYSE: CGC) (TSX:
WEED) has received massive investment from a beverage
company and is likely to be one of the first companies selling
cannabis-infused drinks. And the first U.S. Food and Drug
Administration (FDA)-approved cannabis-based drug has just gone on
sale from GW Pharmaceuticals Plc (NASDAQ: GWPH).
Meanwhile, new uses for the plant are being found, as exemplified
by Cronos Group, Inc.’s (NASDAQ: CRON) (TSX: CRON)
research on the use of cannabis in skin cream.
To view an infographic of this editorial, click here.
Cannabis Payment Solutions
The cannabis industry is currently growing at an astonishing
rate. Since 1996, its use for medical purposes has become legal in
31 U.S. states and Canada as well as a number of other countries
around the world, most recently the
United Kingdom. This remarkable pace of change has been
accompanied by the emergence of related industries producing
industrial hemp, cannabidiol (CBD) oil and support services for
cannabis growers.
Despite this, legal cannabis sellers in the United States face
serious problems in accessing basic business services. Because
banks and payment providers are often wary of working with cannabis
companies — even legal ones — these companies are forced to either
accept the risks and inefficiencies of a cash-based business or
seek alternative payment options. Fortunately, payment solutions
are becoming increasingly viable.
The Challenge — And Opportunity
The challenge — and opportunity — with cannabis payment
processing is significant enough to have drawn in businesses from
outside the sector, such as global technology company
Net Element
(NASDAQ: NETE).
With the growth of the medical cannabis market has come more
people are looking for one of the sectors most in-demand products —
CBD oil, which is the concentrated liquid extract of the cannabis
plant. Previously most CBD products were sold in head shops, but
increasingly these products are found on the shelves of natural
food stores, beauty aisles, cafes and doctors’ offices. This spread
to other venues has created an even greater need for smooth
transactions between merchants and consumers.
While the majority of states now allow the legal sale of some
form of cannabis or its derivatives within their boundaries,
cannabis providers may still find it challenging to find payment
options that allow mobile payments, offer value-added transactions,
and are easy for both the business and the end user. Fortunately,
companies such as Net Element are positioning themselves to provide
exactly what this underserved industry is looking for.
These alternative solutions, including Net Element’s Aptito and
Unified Payments systems, solve the problem by offering a
compliant, seamlessly integrated payment solution that is simple to
use. The systems rely on the latest digital technology, which
allows retailers to accept payments outside of conventional routes
while remaining user friendly for customers.
More Sales, More Payments
It’s a good time for companies to expand their reach in the
cannabis market, as Net Element is doing. The industry is
experiencing a period of huge growth. According to
recent research, the legal cannabis market was worth $7.7
billion in 2016 and is forecast to reach $65 billion by 2023, a
staggering 37 percent rate of compound growth per year.
Various factors are playing into this. Cannabis is already a
huge industry, but one historically run by criminal gangs. One of
the reasons for wide legalization is to take that trade out of
criminals’ hands. In the United States, 70 to 75 percent of the cannabis trade is still
illegal, but only 30 percent of it is illicit in states with
legal options on the books. As legal cannabis from regulated
suppliers becomes more widely available, the expectation is
customers will move away from illegal businesses. The customer base
is already there, and it’s huge.
Ongoing changes in the legal landscape are also a factor.
The White House has hinted that it is
considering liberalizing federal cannabis laws. Shifts in
medical-use cannabis are taking place in Germany and the United
Kingdom. In the United States, the current Farm Bill has enough
support that it is expected to legalize the widespread cultivation
of industrial hemp for nonrecreational cannabis uses.
This last change ties into an unexpected and significant trend
in the cannabis industry. Hemp, a nonpsychoactive form of cannabis,
was used in manufacturing rope and cloth before being made illegal
during the political campaign against marijuana. Now, it’s
returning to legality as a source of a new material — CBD oil. This
active ingredient of cannabis is used in a growing number of health
and well-being products. The hemp and CBD parts of the industry
alone are set to reach $22 billion by
2022. While CBD sales are still largest in the stores supported
by companies such as Net Element, these products are moving towards
the mainstream via health stores, beauty aisles and cafés.
Rising to the Problem
A growing sector with a need for innovative solutions is the
perfect place for a company such as Net Element to act on its
vision.
“We are excited to launch a legal cannabis payment acceptance
solution to meet the needs of sales partners and merchants for this
emerging market,” commented Vlad Sadovskiy, president of integrated
payments for Net Element. “Addressing the needs of our merchants is
our number one priority and we work closely with various vendors to
bring our merchants state-of-the-art payment acceptance
solutions.”
The cannabis sector is more than just cultivators and retailers.
It also includes the companies that support those businesses,
companies that are set to thrive if the industry maintains its
spectacular growth. The industry’s circumstances have ensured that
it has become a forward-looking one.
A Future-facing Industry
Cannabis companies constantly have an eye on the state of the
legal landscape and the new opportunities it may create for the
market. Because those companies are working in an industry that has
been illegal, industry-building techniques and products are only
beginning to be properly discussed now, with innovations in
research and design being announced as a result. Constraints such
as those established by the U.S. government are forcing them to
find technological solutions to problems other companies don’t
face.
Medical cannabis company Tilray, Inc. (NASDAQ:
TLRY) prides itself on the part it plays in pushing the
industry forward. With a strong emphasis on industry and
innovation, Tilray is committed to research that will expand the
possibilities of cannabis, carried out in partnership with
hospitals and universities. It is currently supplying products for a range of clinical trials in
Australia and Canada that promote the safety and effectiveness of
cannabis use in tackling ailments such as childhood epilepsy and
chemotherapy-induced nausea.
Research and design work at Canopy Growth Corporation
(NYSE: CGC) (TSX: WEED) has been super-charged by a recent
investment of billions of dollars from American
drinks company Constellation Brands. One of the reasons for
Constellation’s move into cannabis is the potential for drinks
infused with cannabis and CBD. The partnership with Canopy Growth
is likely to lead to novel products that will become part of
Canada’s large licensed cannabis market next year.
GW Pharmaceuticals Plc (NASDAQ: GWPH), a
company with a strong history of research in the cannabis sector,
has created the first plant-derived cannabinoid medicine to be
approved by the FDA, which has just become
available by prescription in the United States. This
introduction of a federally approved cannabis-derived medicine is
an important moment for the industry and may lead to the softening
of political and regulatory attitudes that have previously held
business back.
Cronos Group, Inc. (NASDAQ: CRON) (TSX: CRON)
is investigating the use of cannabis in a relatively new area –
skin care. The company has announced that it will be working with
the Technion–Israel Institute of Technology to research the use of cannabinoids in skin care,
research with potential to carry cannabis into more parts of the
high street and the consciousness of more consumers.
From payment solutions to new products, the cannabis sector’s
growth is fueling a rich wave of innovation.
For more information on Net Element, visit Net Element
(NASDAQ: NETE)
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