As marijuana business grows globally, many stock watchers and research analysts are making predictions about where the most significant investment opportunities are. Investment site, The Motley Fool, recently published an analysis by Keith Speights of forecasts for the 2022 marijuana market. A lot can happen even monthly in the ever-evolving cannabis space. Here is a different analysis of it.
According to Motley Fool, their third-party market and analytical researchers projected that “marijuana sales in Germany will reach close to $1.6 billion in 2022.” Germany has more than 691,000 legal consumers in the country, in a population of approximately 82.67 million. That means less than one percent of the population consumes medical marijuana.
Considering Germany just legalized medical marijuana in 2017, their market is most likely going to expand. However, the 12,000 German pharmacies that currently stock Cronos Group’s cannabis might patriotically switch to domestically cultivated medical marijuana, rather than rely on a potentially pricier import. The remaining 8,000 pharmacies that presently provide medical marijuana might stock domestic strains as well. If that occurs, Cronos’ market share in Germany might go up in smoke.
The listing of the United Kingdom in second place is odd. Marijuana laws in the U.K. are currently strict. However, the U.K.'s Advisory Council on the Misuse of Drugs has “recommended that cannabis-derived medicinal products should be placed in Schedule 2 of the Misuse of Drugs Regulations 2001.” As a result,“Cannabis-derived medicinal products are recommended to be available on prescription.”
While doctors will soon be able to prescribe medical marijuana, older, conservative Brits might not rush to obtain cannabis for their arthritis, instead of paracetamol, (assuming it is even a qualifying condition). Then again, who knows? Maybe senior citizens will line up around the block to consume cannabis at gin o’clock. Either way, U.K is just on the cusp of offering a medicinal market. It is better to wait and see how this aspect of the market debuts, before predicting they will be in the second-to-the-top spot in four years.
MF predicts an estimated $7 million for U.K. medical marijuana sales this year, with four months still to go. $7 million in the big scheme of things, is peanuts, considering Nevada is projected to earn $70 million in tax revenue alone from cannabis sales, while the actual sales are forecasted to make over $500 million. Keep in mind the state of Nevada has a population of approximately 2.998 million people (in 2017), while the 2016 population of the U.K was 65.64 million people.
Relatively, the U.K. market is barely noticeable for now. Let’s not get over-excited hoping that Her Majesty will provide the royal warrant of approvalto a British cannabis company just yet.
According to Motley Fool, Switzerland is the only country in their top five list that “currently allows the legal adult use of low-THC marijuana,” - less than one percent THC, to be exact. The legal THC limit in most other European countries is 0.2 percent.
According to the Swiss newspaper Tages-Anzeiger, in 2017 there were 410 registered companies in Switzerland that were manufacturing or trading cannabidiol- the non-psychotropic compound of cannabis that’s also known as CBD. The combined total of their CBD sales garnered approximately $62 million (about CHF 60 million) for the year.
Sounds impressive, but in the United States, there are hundreds of companies doing a brisk business in CBD as well, such as Charlotte’s Web and CBD American Shaman, which has 150 stores and counting.
Even though CBD and THC are opposites concerning their psychotropic effects, anyone taking a product containing one percent THC for the psychoactive effects will be in for a disappointment.
All of the over-hyped European “marijuana cafes” that are serving drinks with one percent THC or less only are serving a decent cup of coffee that might put their customers in a slightly better mood. (Americans can do this at home by putting a few CBD drops in their coffee.)
Swiss supermarket Coop Cooperative is the world’s first major chain to sell cannabis cigarettes that contain less than one percent THC, in its 700 stores across the country. Europeans are used to smoking cannabis or hashish in tobacco, so this product produced by Koch & Gsell was bound to occur.
The Swiss spliffs called “Heimat” cigarettes debuted in 2017 with little fanfare. If Switzerland is still more globally-renowned for its cheese and chocolate, rather than its cannabis cigarettes, it is unlikely that it will be a significant player in the marijuana marketplace four years from now. Although, it will have a brisk CBD business, similar to several other countries.
Italy legalized medical marijuana in 2013. Currently, however, the country's regulations restrict cannabis use. As a result, marijuana sales this year are expected to be less than $7 million - again, mediocre financials. Motley Fool listed Italy on the prediction that they might legalize recreational cannabis. Let’s not hold our collective breaths until that happens. That’s like predicting Afghanistan will corner the orange market if they decide to grow oranges instead of poppies.
According to Motley Fool, “Mexico rounds out the top five ranking of the largest international marijuana markets of 2022.” Remember, this is according to third-party research. Common knowledge forecasts this to be highly unlikely.
Mexico has long given lip service to legalization. During President Enrique Peña Nieto’s 2016 United Nations General Assembly speech, he announced that he was going to legalize marijuana. This bombshell drew unprecedented cheers from an audience that would otherwise be half-asleep. Realistically though, in a narco-democracy like Mexico, kingpins aren’t going to give up their marijuana market share so easily.
The country’s legalized medical marijuana contains THC levels of one percent or lower, like Switzerland.
Fool predicts that Mexican sales of legal marijuana “are projected to reach $99 million by 2022, as regulations are relaxed, up from an estimated $14 million this year.” $99 Million may sound like all the money in the world, but in the marijuana marketplace, it is hardly a top earner.
Where do the potentially more significant investment opportunities occur? Below are the countries that I humbly predict will have one of the biggest slices of the marijuana market share four years from now. Let us focus on markets where the medical marijuana business is booming, like Israel. Speaking of Israel, Tikun Olam -the Coca-Cola of Israeli cannabis- exports to Mexico.
Israel is light years ahead of the cannabis game. It is unfathomable why so many periodicals covering pot overlook this tiny nation. An Israeli organic chemist, Dr. Raphael Mechoulam, and his partner, Y. Gaoni were the first scientists to isolate Δ9-tetrahydrocannabinol (THC) - the psychoactive component within the plant. The entire free world has two Israelis to thank for their discovery.
In February of this year, Mr. POTUS Trump asked Israel to stop exportingmedical marijuana. Even so, Israel-based global cannabis brand, Tikun Olam (Hebrew for “Repair the World”), is bringing its pioneering medicinal to Puerto Rico through an exclusive licensing agreement with iaso Corporation.
iaso, a leading San Juan-based science and technology company, is Puerto Rico’s only all-indoor cultivation facility, employing soil-less, aeroponic technology. iaso will cultivate proprietary Tikun Olam cannabis strains, including the widely researched high-CBD strain, Avidekel.
iaso will also distribute Tikun Olam’s products throughout the Commonwealth in 2019. The arrangement with iaso is the tenth struck in the United States by Tikun Olam’s US-Israeli joint venture, TO Global LLC (Tikun). With so much exciting expansion occurring by Tikun Olam, Israel tops our list.
Tikun Olam has 40% of the market share in Israel, and even though they are not a publicly traded company, their proprietary technology and research are licensed worldwide, by other companies that may be publicly traded.
“If one is to look at a county that is at the forefront of the cannabis industry, they need to consider Israel at the top of their list. From the early discoveries from Dr. Mechoulam to the significant work in identifying the endocannabinoid system, Israel has been leading the path for some of the most significant advancements in cannabis science. As the first nation to legalize medical cannabis over a decade ago, Israel has allowed companies like Tikun Olam, as well as medical, research and educational institutions, to undertake the groundbreaking research that has created the basis for some of the advancements in this fast-growing industry,” said Stephen Gardner, Chief Marketing Officer of Tikun Olam, USA.
Canada and Uruguay are the only countries with marijuana export licenses written into their legislation. Canadian marijuana cultivators, Tilray, (NASDAQ: TLRY) currently exports to ten other countries so far. Their stock debuted with an overvalued bang and may level off over time, primarily if the company doesn’t expand further. However, they could do well in the initial stages of Canadian legalization, until more competition occurs in the recreational marketplace. However, if more countries follow Canada’s lead and legalize adult recreational marijuana use, medical marijuana stocks will probably nosedive. Currently, Tilray is will report its first-ever earnings as a publicly traded company on Tuesday, August 28.
Meanwhile, Canadian company CROP Infrastructure Corp (CSE: CROP) acquired a 49% stake in a 217,000 square foot property in the Westmoreland parish of Jamaica. The facility is perfectly prepared for cannabis production and extraction. Stay tuned for their launch of Hempire Jamaica. It could drive up the price of their stock.
Additionally, the Canadian-Jamaican partnership, Jamaican Medical Cannabis Company (JMCC), under the leadership of savvy CEO Diane Scott, is working with world-renowned Jamaican scientist Dr. Henry Lowe, whose product is recognized by as an orphan drug by the FDA, which is unusual for a cannabis-based drug. If their clinical trials of his drug have a positive impact on Leukemia, JMCC will be recognized as one of the most major players in the industry, which will garner Canada a position at the top.
The relationship between the world’s second country to fully legalize marijuana and the country that is best known for its marijuana is a strong one:
This one should be self-explanatory. Even though the U.S. put tremendous pressure on Jamaica not to "legalize it," as Rastafarian Bob Marley said, “None of them can stop the tide.” People have been going to Jamaica for decades to smoke a spliff and listen to reggae. That is probably never going to change.
What does that mean to the global marijuana market? Jamaican cannabis is already world-renowned for its authenticity. People worldwide want to get their hands on proprietary Jamaican strains of tasty, Ital (natural), outdoor bud, even if they can't go on vacation in Kingston or Negril.
Unlike cultivation in Puerto Rico, Jamaican cannabis can and does grow outdoors. Jamaica has the perfect climate for producing sun-grown cannabis, which is preferential to some consumers than hydroponically grown cannabis. With recent inroads from CROP Infrastructure Corp and the JMCC, Jamaican cannabis is primed and ready for export.
Bob Marley’s family has deep roots in the cannabis trade. Marley Natural is the official cannabis brand of Bob Marley, developed by his estate in conjunction with the Seattle, U.S.A.-based private equity firm Privateer Holdings, which develops cannabis industry brands. Officially launched in February of 2016, Marley’s widow, Rita Marley maintains the brand is based on her husband's life and legacy. Marley Natural marijuana is currently grown in California and has an established fanbase.
Bob Marley's son Julian Marley, helped to develop his own separate, namesake cannabis brand, JuJu Royal, which creates premium cannabis and cannabidiol products. Juju Royal, like so many other brands, are cashing in on the "health and wellness," buzz that has globally taken hold of marketing medical marijuana.
JuJu Royal is a subsidiary of GEA Technologies, a Calgary, Alberta, Canada-based company that trades on the Canadian Securities Exchange, as JUJU.A. According to Juju Royal’s website, “All of the plants for our products are grown in the U.S.A. using organic farming.”
With their established companies Marley Natural and JuJu Royal in full swing, they will probably expand their cultivation operations to their native Jamaica, either once recreational growing is legalized, or legislation frees up to allow Jamaican cannabis to be exported to the United States and elsewhere. That could potentially occur by 2022 just as easily as Motley Fool’s other predictions.