On June 21, 2018, the Government of Canada announced that Bill C-45 received Royal Assent and that it will come into force on October 17, 2018. Management has invested significant effort in securing channels into the future regulated recreational markets. This, in addition to various states in the US beginning to work towards legalization of cannabis, has resulted in growing interest from investors. This effect can be magnified if Congress passes the 2018 Farm Bill which will fully legalize commercial hemp production in the US. Various other countries have also worked to remove various government red tape surrounding cannabis.
Marijuana or cannabis is one of the most popular recreational drugs used worldwide. It has been estimated that more than 175 million people between the age of 15 to 64 have used the drug at least once. Medical cannabis, refers to use of the plant’s cannabinoids as medical therapy to treat disease or alleviate symptoms. Cannabinoids can be administered orally, inhaled, smoked, mixed with food, or made into tea. They active compound, cannabinoids, can be taken in the herbal form, extracted naturally or synthetically created in a lab.
One of the active compounds of cannabis, cannabidiol (CBD) has been, shown to be effective in various diseases and disorders, mostly due to its anti-inflammatory characteristics. Furthermore, there is an ever-growing body of evidence that suggests that cannabinoids can play a significant role as inflammatory modulators. Thus, they have been very beneficial and effective in treating pain (both chronic and acute). Medicinal marijuana has been shown to be effective in pain management. In light of the global opioid epidemic, use of medicinal marijuana for treatment of pain has gained some momentum in the medical community as well.
The global pain management market is valued at $35.5 billion at the manufacturers’ level for 2016. BCC Research projects growth over the forecast period at a compound annual growth rate (CAGR) of 7.6%, which will result in sales totalling $52.0 billion by 2022. The current market for pain management is valued at $36.1 billion, which constitutes as prescription pharmaceuticals and the device segment. It is estimated that the global market for pain management will grow from nearly $36.1 billion in 2017 to $52.0 billion by 2022, with a compound annual growth rate (CAGR) of 7.6% for the period of 2017-2022. Additionally, it is believed that the pharmaceutical segment will grow from $32.3 billion in 2017 to $47.6 billion by 2022, rising at a CAGR of 8.1%.
The global pain management therapeutics market is presently dominated by two products: opioids and Nonsteroidal Anti-inflammatory Drugs (NSAIDS). Collectively, they account for more than 52% of market share, with North America accounting for more than 56% of total consumers [i]. Currently, pain (chronic or acute) is the most common cause for seeking medical care in North America. Generally, patients are treated with NSAIDs or Opioids.
The global opioids market has been estimated to be valued at $35B USD in 2015 and is anticipated to be $43B USD by 2021, registering a CAGR of 3.2% during the forecast period [ii]. Considering that North America (U.S. and Canada) consume more than half of the total supply of opioids worldwide, we can assume that the current market can be valued to be over $20B USD.
Data suggests that United States and Canada are among the top consumer of opioids worldwide [iii] consuming more than half of the global opioid supply. In Canada alone, the opioid epidemic has hit all communities. There have been approximately 4000 apparent opioid-related deaths in Canada in 2017 of which more than 90% were accidental [iv]. Additionally, more than 70% of the deaths were associated with fentanyl or fentanyl analogues. Such data has resulted in many physicians becoming open-minded in various methods of pain management. Among such methods has been the prescribing medicinal Marijuana, especially in chronic pain patient population.
According to data collected and reported by Health Canada, as of December 31, 2017, there are 269,502 ACMPR Patients who are authorized, on average, to use 2.4 grams of dried medical cannabis per day [v]. Data suggests that the number of patients taking medicinal marijuana has been increasing exponentially. It is imperative to note that this is not indicative of the total number of Canadians using medicinal cannabis but an indication that there are more and more patients using medicinal marijuana.
The recreational market is harder to dissect. Cannabis is considered to be the largest cash crop in the United States, enjoying a growth rate of 77% over the last few years and continued future estimated growth rate to 700% by 2020. The Cannabis industry, present and future, has been said to be potentially more lucrative than corn, cotton, and wheat. In fact, according to UN data, the cannabis industry is around an estimated $142 billion. To put that in perspective, the global coffee market – one of the most valuable commodities on the planet – is valued at around $80 billion per year.
This is part one of our multi-segmented series, in which we will break-down some of the best cannabis stocks to own in the coming year. We must preface that this sector is extremely volitive and that most evaluations are and have been blown out of proportion. Thus we advise our readers to proceed with caution.
What are the best cannabis stocks to own in 2018?
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