The Cannabis Industry is More than About Smoking a Joint: 13 Industries that Cannabis is Disrupting
Updated: Dec 4, 2018
Legal cannabis has gone mainstream. As it transitions from an illegal and niche product, legal cannabis is now the fastest-growing legal industry. And, it’s disruptive, impacting industries from beer to snack foods to construction.Today, more traditional industries have begun or indicated their intention to begin incorporating cannabis-derived and CBD-derived extracts into their products and research and development.Recent reports by Wall Street analysts indicate that the global cannabis industry will exceed $20 billion by 2025. However, Constellation Brands, the beer, wine, and spirits company that distributes among other brands Corona beer believes that the cannabis market will be a $200 billion category globally, and has the potential to disrupt $500 billion of traditional Consumer Product Goods (CPG) categories. Seeing the opportunity, Constellation Brands has invested more than $4 billion in the Canada cannabis producer Canopy Growth. Medical cannabis is now legal in more than half of U.S. states. Recreational or adult-use marijuana is now legal in nine states. A majority of members of the US Congress and Americans now believe that cannabis should be legal. As a result, it’s likely that cannabis will be in some form federally legal in the next few years.Products based on cannabidiol (CBD) derived from industrial hemp are now sold throughout the United States. Canada has legalized both medical and recreational cannabis. Today, traditional industries, including agriculture, construction, consumer packaged goods (CPGs) including in addition to Constellation Brands other beer and alcohol companies are now incorporating cannabis into their products, strategic plans, and research and development programs.Let’s take a look at the ___ industries that cannabis is disrupting today and will likely disrupt in the near future.
AgricultureThe growing of industrial hemp is transforming the farming industry in many states.The legal definition of industrial hemp in the United States an many other countries is the “cannabis plant with less than .3% of the psychoactive THC.The growing of hemp was allowed for the first time in decades when President Obama signed the Farm Bill in 2014. The bill allowed the growing and marketing of hemp and hemp-derived products in states that had a licensing program. While for thousands of years hemp was a source of fiber, the plant was not grown nor bred for its flowers, which include the cannabinoid CBD. Typically, hemp requires less than half as much land as cotton to produce a ton of finished textiles. Potential uses of hemp include textiles for weaving products for clothing, strong textiles for commercial and industrial purposes, and rope and cables for lifting heavy products. While products that include CBD derived from hemp are now the objective of most hemp farmers, tens of thousands of other hemp-derived products are being made from hemp. These include food products including hemp seeds or fiber, building materials, fabrics, specialized papers, as well as bio biodiesel and ethanol. With drought conditions becoming normal, hemp as a crop can be beneficial in achieving water conservation objectives. The National Hemp Association has indicated that it’s one of the most “drought resistant” crops on the planet. Industrial hemp, which is a variety of the cannabis plant has very low levels of the psychoactive cannabinoid THC and high levels of the non-psychoactive cannabinoid CBD. In addition to hemp being a source of CBD, it requires half as much land as cotton to produce a ton of finished textiles. In a few short years, hemp has become an alternative for farmers, in the United States, Canada, Colombia, Australia, Poland, and even China. Hemp is also a flexible crop for farmers since it is fast-growing and can be grown in a number of soils and temperatures. The National Hemp Association has also stated that hemp can help with water conservation since it is one of the most “drought-tolerant crops” on the planet.Since hemp was traditionally grown for very strong cables and ropes, it can also be woven into light materials for clothing as well as durable commercial textiles. Some estimates indicate that more than 25,000 other products can be manufactured from hemp including building materials, ethanol, biodiesel, food and even Vodka!Today hemp is thought of as the source of CBD, and products based on CBD are now the largest market for U.S. hemp growers. Future Farm reported that hemp provided on the average $90,000 of revenue per acre in the U.S. in 2017.
Alcohol and BeveragesGlobally, alcohol is no longer a growth industry, with consumption declining globally. This has led to beer, spirits and wine companies seeking alliances to expand their offerings. The broker, Canaccord Genuity has indicated that the market for cannabis-infused beverages including those infused with both THC and CBD could exceed $600 million, in the US alone by 2022. The firm also indicated that CBD-infused beverages could exceed $260 million annually. Many cannabis-derived beverage brands are seeking to rival the appeal of beer.Coca-Colas has already initiated its beverage strategy and has entered into a venture to produce CBD-infused beverages. Constellation Brands, the distributor of brands including Modelo and Corona invested $4 billion to obtain a 38 percent stake in the Canadian cannabis company Canopy Growth.Heineken’s popular Lagunitas brand recently developed a THC-infused sparkling water. Not to be left on the sidelines, Molson Coors formed a venture with Canada-based Hexo to produce cannabis-infused beer for the Canadian marketplace.
ConstructionThe interest in hemp-based building products is impacting the construction industry globally. Hemp can be used as an additive to concrete, as an insulation material and even for a form of drywall.It’s estimated that there are more than 50 houses that are mostly built from hemp in the Untied States.
E-CommerceE-commerce has been described as the next frontier for the cannabis industry. While the ability to sell products including THC online is not currently legally possible, today’s tremendous e-commerce opportunity is for products that include CBD. In California, consumers can obtain a doctor’s recommendation for the use of cannabis in an online chat session and then order online from a shop that delivers. In Canada the current opportunities, while embryonic are significant. They include companies such as Canada-based Shopify who is handling sales of cannabis for the province of Ontario.The bottom line in the United States, e-commerce for products including CBD are here today. As legalization spreads, there will likely be numerous e-commerce strategies that will be implemented by state-licensed cannabis companies. E-commerce, which has disrupted many industries provides a great opportunity for cannabis retailers, marketers of hemp-derived products including CBD and customers to transact business online. E-commerce is already enabling cannabis and hemp businesses to scale more quickly and efficiently.
Energy and Bio-Diesel Soybean is the only corp currently grown on a large scale for biodiesel in the U.S, Hemp thrives in poor soil conditions, requires minimal fertilizer, and produces as much as four times as much oil as soybeans per acre. Researchers at the University of Connecticut funded by a grant from the U.S. Department of Energy grant are researching new ways to produce biodiesel and are planning on building a reactor capable up producing up to 200,000 gallons of biodiesel annually,Another benefit of producing biodiesel from hemp is that the fuel could reduce the levels of carbon produced by conventional fossil fuels.
In less than a decade, cannabis edibles have evolved from an illegal product to one impacting much of the American food industry. In 2017, consumers in California purchased over $180 million of cannabis-infused drinks and food. This trend is not unique to California. In 2016 cannabis-derived edibles increased 121%. Some of the cannabis-infused products that have gained popularity include cannabis-infused coffee beans, chocolates, gummies, truffles, mints, juices and drinks.
Health, Wellness, and Beauty
Cannabis has had a significant impact on the health, wellness and beauty industries in a few short years. Products that include CBD are particularly generating interest from both consumers, the media as well as both large and early-stage companies in the health, wellness, and beauty industry. While there is very little research substantiating many of the claims that are being made for products including CBD, the anecdotal evidence regarding the use of products including CBD for numerous health conditions. Products that include CBD are particularly generating interest as it is not psychoactive and won’t result in the user getting “high.” Numerous claims have been made regarding the benefits of products including CBD. These include relief from pain, anxiety, and depression. Generating more attention are products including CBD for their anti-inflammatory benefits, as well as its benefit for skin disorders, including acne. Many athletes have indicated that the use of CBD oil to boost workout results and that its use can reduce post-exercise inflammation as well as the promotion of muscle growth.The benefits of CBD are also impacting the beauty and makeup sectors, including mascara and lip balms. The Farm Bill signed by President Barack Obama in early 2014, which enabled the growing and production of industrial hemp in states that have registration requirements typically under a state’s department of agriculture has had a significant impact on products that contain CBD. The Bill resulted in hundreds of products being sold online and through retail channels.
Medicine and the Pharmaceutical
In a few short years, cannabis has had a revolutionary impact on the way that many ailments are being treated worldwide, especially in the United States.The cannabis plant has over 100 cannabinoids, chemical compounds unique to the plant. Research is at an early stage, but many could provide alternative treatments for many diseases or disorders. Today, research is increasing regarding some of the most well-known cannabinoids contained both in the cannabis plant as well as hemp, tetrahydrocannabinol (THC), cannabinol (CBN) and cannabidiol (CBD). Of these, THC and CBD have generated the most interest. CBD can be derived both from the cannabis plant as well as from hemp.Recently the U.S. Food and Drug Administration (FDA) approved the use of Epidiolex, a plant-derived purified form of CBD as a treatment for two types of pediatric epilepsy. It is likely that Epidiolex will be available as a prescribed drug and available through traditional drug stores including Walgreens and Rite Aid before the end of 2018.With the attention that opioid addiction and abuse are generating globally, for many patients various forms of cannabis or cannabis-derived formulations have shown potential as an alternative to opioid use. In states that have state-licensed medical cannabis programs, this has already led to a reduction in the number of opioid prescriptions.Based primarily on anecdotal evidence, cannabis is increasing as a treatment option for sleep disorders, anxiety, pain, inflammation, skin disorders, and other medical diseases and disorders. According to a study by the University of Georgia, with the influx of patients using cannabis-derived products from state-licensed dispensaries, the pharmaceutical industry could take a hit of $4 billion annually. This has led to many pharmaceutical companies incorporating cannabis into their drug pipelines and research and development. Indicative of this trend, Canada-based cannabis producer Tilray has entered into a partnership with Sandoz Canada, an affiliate of the large, global pharmaceutical company, Novartis.
The legalization of cannabis at the state-level has opened the floodgates on the need for specialized packaging. Packaging has been described as one of the key “pick and shovel” industries tied to the growth of legalized cannabis.Packaging for cannabis requirements is highly-regulated at the state-level. Requirements typically vary on a state-by-state basis but requirements typically focus on the requirement for tamper-proof packaging, products with child-resistant and resealable lids, and in some states opacity. Until recently providing packaging solutions was something that was ignored by major American packaging companies. This led to entrepreneurs seeing the opportunity and building businesses around fulfilling the needs of state-licensed cannabis businesses. This entrepreneurially driven direction has led to a great variety of different types of packaging, from concentrates in heatproof glass or polystyrene containers, to edibles in smell-proof and resealable bags.Innovation driven by cannabis packaging entrepreneurs has led to major innovations. These include numerous slide boxes, tins, tubes for pre-rolls and blunts, very little jars that at first glance look like contact lens cases, and tamper resistant dropper bottles for various types of cannabis-derived oil. As cannabis becomes more mainstream, its likely that most, if not all major packaging companies will see the opportunity in the fast-growing cannabis market and develop products to meet the industry’s needs. For packaging companies, the cannabis industry has the potential of becoming one of their highest margin and fastest growing product directions.While much of the focus has been on state-compliant packaging, the larger opportunity is for innovative packaging solutions to further distinguish a company’s products from both competitive products as well as other more mainstream products on retailer’s shelves. Packaging innovation, for both cannabis products sold through state-licensed businesses as well as the market for products including CBD. In both cases, packaging innovation is a way for brands to distinguish themselves as a way of distinguishing themselves or dominate the marketplace with their products.
Currently, the world consumes more than 400 thousand tons of paper annually. It takes an average of 17 trees to produce each ton of paper. One acre of hemp can produce four times the quantity of paper that from one acre of trees. With deforestation being a problem globally, hemp could greatly impact environmental sustainability.
While plastic products are very versatile and relatively inexpensive, since plastic is not biodegradable, plastics are an ongoing environmental threat. This was most recently seen with the environmental issues from one small product, plastic straws.Hemp has the potential of providing an eco-friendly alternative to all kinds of plastics, from small household appliances to bottles to toys. The opportunity for hemp-derived products as an alternative to plastics has been estimated to be a $80 to $120 billion opportunity.
Textiles and Fashion Goods
Recent trends indicate that many consumers are often willing to spend up to 20 percent more for eco-friendly products. The result, many large retailers and niche brands are now initiating strategies to manufacture products derived from hemp.The Colorado-based EnviroTextiles has introduced a line of hemp-based products that look like denin or wool and don’t have the scratchiness often associated with hemp. The Columbia Sportswear yoga clothing brand prAna has launched an outdoor clothing line. Not content to sit on the sidelines, Patagonia has also introduced hemp-based products.The potential for other textile and fashion goods manufacturers is huge. Hemp-derived products can not only provide the potential for new fast-growing product lines, but also the possibility of higher margin products. It’s likely that influencers including celebrities will be beneficial in promoting the use of hemp-based clothing.
No industry has the potential of being impacted by the cannabis industry as significantly as the tobacco industry. Legal cannabis has already been disrupted to the tobacco industry, and this trend is likely to increase.Not to be left on the sidelines the tobacco company, Imperial Brands with the Snoop Dog backed venture capital firm, Casa Verde invested $10 million in the UK cannabinoid research firm Oxford Cannabinoid Technologies. The Switzerland-based subsidiary of Philip Morris International, Philp Morris Product SA has a patent for improving genetically modified organisms (GMOs) for improving cannabis cultivation systems.