The emerging Medical Cannabis market.
The Medical Cannabis market has great business potential. This is not new to those who are either working in the field or have followed the developments over the last few years. How should we read the future of this intricate and intriguing market? Who will be the "Jordan" and the "Lebron" on the field and who will be those who's potential will be lost along the way? Can we read the signs of the future today?
The Canadian companies have a very aggressive market approach. With over USD 1.5 B in raised capital, they battle for dominance in their local market as well as looking to get a head start in the emerging European markets. Strategically, they create subsidiaries through partnerships with local growers (where possible) to provide investors a "feel" of growth. Currently, they are creating a 850 ton production surplus at their home-base.
Anybody remember the "hot days" of the communication revolution??? And how will the "Canucks" react to the 2019 "adult legalization"?
The US market is already in oversupply and without changes in federal legislation, this market will stay closed for outside producers disregarding the supply/demand situation.
In Europe, UK is the major producer with an output of nearly 45% of the worldwide actual production (95 tons). Their export reached 2.1 tons (2016 figures).
With these figures, it does not look as if the Canadian producers have an outlet venue for their highly up scaled production facilities.
Denmark has also a goal to "rule the seas". Canopy Growth and Aurora are building multi million dollar production sites, together with local license holders with the purpose of becoming exporters to all of Scandinavia and EU.
The Israeli Cannabis industry has seen some "stock exchange" activity where old "shell companies" raise capital in order to take a bite of the market (or to swallow as much as possible). Do these companies have a competitive edge over the more mature license holders? Are those license holders in the market for takeover? for partnering? The money of these "empty shells" come with a heavy price tag as all they have to offer is capital which can be found cheaper elsewhere. And why should they prefer "Israeli investors" over foreign companies with bigger world-market-reach potential?
The Israeli mature companies, the license-holders who have produced inflorescence, extracts, edibles and lately, registered medicinal products, have a competitive edge in the world market for various reasons: a. proximity to the epicenter of MediCanna rescearch, b. longest tracked experience worldwide and c.comparative low production cost (around 20% of the current cost in Canada for example). The government in Israel has talked with "two heads" over the last few years and as of now, export is still not permitted. This brings the Israeli companies in search for partners abroad whereby they can circumvent regulative obstacles and launch their foreign activity in spite of the governments indecisiveness.
The Colombian government is viewing the lucrative Cannabis market as an opportunity for their local economy. The weather conditions and cost of manpower are favorable and production costs are minuscule compared to all other active markets. The downside is Colombia's dark past as a "drug heaven" and the fear for a takeover by the local cartels.
There is still room for other countries to join the league. Africa, both a huge market and a possible producer (in multiples...) has not been heard yet. Still Things are happening in the field and no one yet can project the outcome.
The medical cannabis market will surely provide a lot of suspense over the coming years. For sure, there are good and valid reasons to "join the party" but where ever you go "parteying", enjoy the music but be aware and cautious. Make sure that the venue has a license and that the managers are keeping the regulations. More so, make sure that they are not on a troublesome path.