Three of the Most Powerful Cannabis Catalysts of 2019

Cannabis is quickly emerging as the hottest investment story of the year.

The best part -- there are no clear signs that’ll change – at least, not any time soon.  Not only did Canada recently legalize cannabis use, many more U.S. states are approving it, too.  

Better, the Marijuana Business Factbook estimates the industry could be worth $77 billion by 2022.  By 2025, Cowen & Co. analysts believe CBD use will grow to 10% of Americans, which implies a potential $16 billion market opportunity.  

And, according to the Brightfield Group, worldwide CBD sales are expected to soar from $591 million in 2018 to as high as $22 billion by 2022 – a compound growth rate of 147%.   

Even better, American approval ratings are going through the roof.

For one, nearly 7% of Americans currently use CBD, according to Cowen & Co. analysts.  In fact, according to Cowen’s January 2019 consumer survey of 2,500 adults, 6.9% of respondents are using CBD.   “This initial response piqued our interest considerably, as it was much higher than we would have suspected,” they said, as quoted by the Press Herald.

According to The General Social Survey conducted by NORC at the University of Chicago, 61% of those surveyed support legalization. That’s up from 57% in 2016.  A Gallup survey found that 66% of Americans are in favor of legalization. That’s up from just 60% in 2016. 

A Pew survey found that 62% of Americans want to see cannabis legalization in the country, as compared to just 57% in 2015.  

Those are all powerful catalysts.  But there are three other stories to be aware of.

No. 1 – Retail Demand for CBD is Growing Rapidly

With sizable consumer demand, CBD is quickly emerging as one of the most popular wellness ingredients in skincare products. In fact, demand is becoming so strong analysts at Greenwave Advisors estimating $3 billion global CBD market value by 2021.  Analysts at Transparency Market Research say the market could double in value to $2.5 billion by 2026.

Better, according analysts at Jefferies, the CBD beauty market could reach $25 billion by 2028.

So, it’s no wonder retailers have been quick to jump on the CBD sales bandwagon.

To date, Neiman Marcus, Vitamin Shopper, Kroger’s, Barney’s, DSW, CVS, and Walgreen’s will all carry CBD products.  Most recently, American Eagle Outfitters announced it would sell CBD-infused personal care products in 500 stores and online starting in October 2019.  

Now, even Sephora consumers are able to buy products containing CBD in their stores.

The beauty chain began selling the Lord Jones’ high CBD formula body lotion online in 2018.  Now, that product is being sold in 170 Sephora locations.  “At Sephora, we consistently strive to bring first-to-market product trends, innovation and experiences of the highest quality to our clients, and the growth of our CBD category is one such example of this,” Cindy Deily, Sephora’s vice president of skincare merchandising said, as quote by GreenState.

DSW for example, has been running tests in its stores with CBD, announcing plans to expand such products to nearly 100 stores.  Neiman Marcus is pushing ahead with CBD sales at some of its stores and online. Simon Property Group is partnering with Green Growth Brands to open 108 stores in its malls just in 2019.  Barney’s will launch “The High End.”

CVS will now carry a line of CBD products in eight states, including California, Illinois, and Colorado. In fact, the drug chain will now sell CBD creams, sprays, and lotions in those states.  “We are carrying hemp-derived CBD products in select states to help meet consumer demand for alternative care options,” said CVS Health Spokesperson, Mike DeAngelis.

However, it appears this is just the start of an incredible CBD retail boom.

No. 2 – The U.S. Farm Bill

With the passage of the Farm Bill, hemp will see a significant catalyst for growth. It could see even more growth once the U.S. Department of Agriculture (USDA) introduces federal hemp rules in August 2019, speeding previous plans to roll out the guidelines by 2020.  Along the way, it may just create a $39.4 billion market, says Markets and Markets, strong growth from a $10.3 billion valuation in 2018.  

Farmers across the U.S. have been rushing for a piece of the hemp market ever since President Trump signed the Farm Bill into law last year.  That legislation removed hemp from the government's controlled-drug category, triggering a surge in demand.

"There's a lot of excitement in the farming community because hemp is seen as a high-return crop. There are many farmers around the country who are struggling to make ends meet and they're looking for an alternative like hemp to boost revenue," said Eric Steenstra, president of VoteHemp, as quoted by The KXLY Broadcast Group.

Total sales for hemp-based products in the US were nearly $1.1 billion in 2018.

By 2022, sales are expected to more than double.

No. 3 – The Race to the White House is a Major Catalyst

As the race to the White House heats up, cannabis has become a major platform.

Just recently, Democratic candidate Sen. Kamala Harris just introduced a marijuana bill this week that would decriminalize the substance at the federal level.  The bill would also expunge marijuana convictions, and tax marijuana to generate revenue.

Reportedly, Harris wrote the bill – Marijuana Opportunity Reinvestment and Expungement Act – with House Judiciary Chairman Rep. Jerry Nadler.

"We need to start regulating marijuana, and expunge marijuana convictions from the records of millions of Americans so they can get on with their lives," she said. "As marijuana becomes legal across the country, we must make sure everyone—especially communities of color that have been disproportionately impacted by the War on Drugs—has a real opportunity to participate in this growing industry."

President Donald Trump said he would support bipartisan efforts in Congress to ease the federal ban on marijuana.  Part of the reason for that is the current ban has created sizable conflict with states that have legalized its use in some form.  New legislation now seeks to ensure that states  have the right to determine on their own the best approach to marijuana legalization inside their own borders.

Sen. Elizabeth Warren has co-sponsored a bill with Republican Sen. Cory Gardner to protect state legalization efforts and has said on the campaign trail that she favors legalization at the federal level.

Sen. Kirsten Gellibrand unveiled her plan to legalize marijuana, which includes taxing legal cannabis and helping small businesses.

Sen. Cory Booker introduced the Marijuana Justice Bill in the U.S. Senate, which would legalize marijuana, expunge criminal records of nonviolent marijuana convictions and creates a “community reinvestment fund.”

On the road to the White House in 2020, we expect cannabis to gain great traction.

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