CannabisNewsWire
Editorial Coverage: The cannabis industry is seeing repeated
waves of growth, creating challenges for supply and
distribution.
- Currently worth over $7 billion, the cannabis industry is
expected to exceed $65 billion in the next five years.
- This growth is creating challenges for supply and distribution,
as companies struggle to meet surging demand.
- The passing of the 2018 U.S. Farm Bill will allow for further
growth, adding to the cannabidiol (CBD) supply.
SinglePoint, Inc. (OTCQB: SING) (SING
Profile) is one of the companies tackling distribution
problems through the establishment of an online store selling CBD
products. Tetra Bio-Pharma, Inc. (TSX.V: TBP) (OTCQB:
TBPMF), a medical cannabis company, is expanding into the
leisure market with a hemp-based energy drink. Luxury consumer
products company American Premium Water Corp. (OTC:
HIPH) is tapping into a similar market with CBD-infused
water. The Supreme Cannabis Company (TSX.V: FIRE) (OTCQX:
SPRWF) (FIRE
Profile) just launched 7ACRES, an exclusive brand of
high-end cannabis flower. And through its focus on research,
Insys Therapeutics, Inc. (NASDAQ: INSY) is
exploring the use of cannabis to tackle anxiety, autism, and early
psychosis.
To view an infographic of this editorial, click here.
Can Cannabis Live Up to Expectations?
After decades exiled to the criminal economy, cannabis is
finally finding a place in mainstream business. Liberalizing
attitudes, especially in North America, are driving a change in the
plant’s legal status. First as a medical drug, then as a
recreational one, and finally as a wide range of derivative
products, cannabis is turning into big business.
For cannabis users and patients hoping to benefit from it, this
is an historic moment. As celebrations around recreational
legalization in Canada showed, there’s huge excitement about what
the future brings for cannabis fans. Those high hopes come with
high expectations, with consumers queueing up to buy their first
legal weed, and many expecting to have access to a regular supply
from the moment legalization reaches their country or state. But
the reality is more complicated, and if the legal industry is to
succeed in drawing business away from criminal dealers then it will
need to rise to the challenge of meeting uncertain and possibly
unrealistic demand.
Cannabis Comes Out of the Shadows
Right now, cannabis is big business. Companies such as
SinglePoint,
Inc. (OTCQB: SING) are building entire strategies
around selling hemp-derived CBD, derivative products, and the
support systems needed by cannabis retailers. It seems
extraordinary that, only 22 years ago, there was no legal cannabis
industry.
Starting in 1996, individual American states began legalizing
the use of cannabis for medical purposes. At the time, this was a
rare and controversial novelty, tied to the plant’s potential to
tackle both pain relief and the high-profile problem of nausea from
cancer treatment. In less than a generation, that first drop in the
ocean has become a rising tide that looks set to wash away
cannabis’s illegality. Thirty-one U.S. states now allow the sale of
cannabis for medical purposes. Nine of those states, along with
Uruguay and Canada, allow the sale and consumption of cannabis for
recreational purposes. Other countries are taking steps towards
joining them.
The market isn’t just about straightforward cannabis. Industrial
hemp, a form of cannabis that doesn’t get users high, is being used
to produce products containing cannabidiol (CBD). Outlets such as
SinglePoint’s SingleSeed.com are selling everything
from muscle salves to beard oils infused with CBD. CBD is
reaching places that more familiar cannabis products can’t.
As a result, SinglePoint’s products are now part of an industry
worth billions of dollars. The global market for legal cannabis was
worth $7.7 billion in 2016, and it keeps growing, with analysts
predicting a value of $65
billion by 2023.
The Challenge of Distribution
This astounding forecast presents a great opportunity for
cannabis companies, but it’s not without its problems. Given that
there was no cannabis industry two decades ago, there has been an
impressive rush to create infrastructure from scratch. Each new
burst of growth generates demand for swift innovation, including
the establishment of fresh supplies and distribution systems, an
area in which SinglePoint specializes.
The challenges of this were well demonstrated
when Canada legalized recreational cannabis on October 17. Some
licensed shops were unable to obtain supplies of cannabis for days
on end and had to turn away customers. In Ontario, no licensed
dispensaries are expected until April, and the government store
faced more demand than it could possibly handle. Even big companies
faced supply chain issues and an uncomfortable few
weeks of business. Unable to obtain the cannabis they had been
told would be theirs, customers headed back to the black
market.
With demand for both cannabis and CBD products rising, but
patterns of demand still uncertain, companies are looking for
flexible ways to reach their customers. Approaches such as SinglePoint’s online SingleSeed store offer a way to
quickly reach a large number of customers, without the geographical
limitations of brick and mortar stores. The company has been
negotiating additional distribution contracts, as the industry
rushes to catch up with customer demand.
Innovative use of technology will be crucial in creating
smoothly running, adaptable supply channels. While also applicable
to other sectors, SinglePoint’s LastMile delivery
platform and SingleCoin digital
wallet offer the types of solutions that could make the process
of selling cannabis and CBD simpler. With access to an innovative
electronic payment system and a delivery product targeted at small
and medium businesses, retailers will be able to get started more
quickly, serving customers in under-served markets. Technology
won’t magically make the sector’s problems go away, but it will
make it easier to face them.
More Growing Pain to Come
It’s important for the industry to get solutions such as
LastMile into place now, because there are signs that another
growth spurt is coming.
Throughout the summer, U.S. politicians have been discussing the
2018 Farm Bill, a wide-ranging bill that will establish U.S.
agricultural policy for the next few years. The bill includes a
measure that would legalize the growing
of hemp, which federal authorities currently only allow in
research and test crops. This could lead to potentially huge growth
in the production of CBD, tackling some of the supply and demand
issues. Though the Farm Bill is
currently stalled, it will be a high priority for many
politicians after the mid-term elections. And while there is
dispute between Republicans and Democrats over other parts of the
bill, there is cross-party agreement on the hemp measure.
The passage of this legislation will be good news for
SinglePoint and other sellers of CBD products. Researchers at
Brightfield Group predicted a doubling in the size
of the CBD market to $1 billion from 2017 to 2022, and farmers
are eager to grow hemp as a high-value cash crop. Though it will
take time to ramp up production, companies that already have
distribution infrastructure will be well-positioned to make the
most of this growth.
Seizing the Potential of CBD
With the cannabis and CBD market growing, companies are moving
fast to create a range of products for the health, well-being, and
recreational markets.
Tetra Bio-Pharma, Inc. (OTCQB: TBPMF) is
primarily working in medical cannabis. The company is working with drug regulators on pharmaceutical trials
to better understand the effects of cannabis and its medical use.
In particular, it is working on the use of cannabis to manage
chronic pain as a healthier alternative to the opioids currently
causing health problems across the United States. Tetra is also
using its cannabis expertise to move into the broader CBD sector,
offering products such as a hemp-based energy drink, for which it
has recently signed a major distribution
deal for both U.S. and Canadian markets.
A diversified luxury consumer products company, American
Premium Water Corp. (OTC: HIPH) is developing health and
beauty products using biotech. American Premiums is using this
technology to help the body absorb CBD, courtesy of its Lalpina CBD water. This puts the company at the
forefront of development of cannabis-based drinks, which are set to
become an important part of the industry. Allowing consumers a more
sociable way of consuming cannabinoids, food and drink have the
potential to make cannabis and CBD as mainstream as alcohol.
The Supreme Cannabis Company (TSX.V: FIRE) (OTCQX:
SPRWF) (FIRE
Profile) established 7ACRES as the first licensed
producer focused on growing high-quality cannabis in high
quantities. Last month, Supreme announced that its initial 7ACRES
product was available exclusively online through Canada’s
provincially regulated adult-use channels. The full line of 7ACRES
products will be available soon both online and in brick-and-mortar
stores.
A specialty pharmaceutical company focused on cannabinoids and
novel drug delivery systems, Insys Therapeutics, Inc.
(NASDAQ: INSY) is involved in several studies with the University of California San
Diego School of Medicine. Covering issues such as anxiety,
autism and early psychosis, these studies are exploring the
untapped potential of CBD. If they prove successful, then the
market could see it used in treating a wide range of health
problems.
Many companies are working in the cannabis sector and so are now
relying on suppliers to tackle problems of distribution and supply.
Fortunately, other companies are rising to the challenge, allowing
this new industry to sustain its extraordinary growth.
For more information on SinglePoint, visit SinglePoint,
Inc. (OTCQB: SING)
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