With just a couple of weeks left until we get to 2018, here are a couple of trends that we expect are likely to be instrumental in shaping the cannabis industry.
One trend that investors in the cannabis space should watch out for is the increasing demand for efficiency among producers and growers. As a result of major growing operations coming online, there has been a greater stress placed on water resources to the point that some states like California have enacted legislation that contains requirements for water usage.
Depending on the scale of the producer, the number of options available for efficiently utilizing water resources are somewhat limited. For growers looking for the most efficient and cost-effective way of ensuring a reliable water profile, a commercial reverse osmosis (RO) system is currently the most preferred option.
However, for industrial grade growers cultivating tens of thousands of hectares, RO systems are simply not a viable choice since the volume of water needed is too huge to purify. Producers who will strike the right balance when it comes to water management are likely to emerge ahead of their competitors.
Another important aspect of this trend will be power used by the growers. According to a report published last year, grow houses consumed about 2 percent of power supply in Denver alone, highlighting just how power hungry grow operations have the potential to become.
This space is likely to be dominated by cost-effective HVAC and LED lighting solutions providers like Heliospectra (OTCQB: HLSPY) which is one of the leaders in intelligent lighting technology for controlled environments. Its LED grow lights enable businesses to boost sales and quicken ROI by reducing electric consumption of HVAC load while providing consistently high quality harvests.
Plenty of interesting research and development has been going on in this space with the likes of New York based MSP Technology recently developing a high efficiency dehumidifier. According to researchers who tested it out on a model greenhouse, the device could help save 30 to 65 percent of the energy a grow house uses.
In addition to these, Marimed (OTCQB: MRMD) which we have previously written about should benefit from this trend. If you aren’t familiar with Marimed, it offers advisory services in the medical cannabis industry on how to set up grow operations, branding and other ancillary services and its quickly expanding top line confirming this trend.
- Increasing scientific focus
The number of scientific studies focusing on cannabis has been on a steady increase over the past couple of years. A recently released report from Solar Media Group found that as of 2015 there were roughly 22,000 studies published on marijuana and this number was expected to continue increasing going forward.
One of the notable studies that was recently published described how researchers had developed a compound from cannabis that had been extremely successful in destroying cancerous cells.
These studies haven’t been limited to only understanding the benefits of the cannabis plant, scientist have also been looking for ways of better growing the crop. Cannabis usually attracts a number of pests and bugs with growers often resorting to pesticides in order to control them.
Three years ago, a company call Natural Enemies became one of the first to specialize in providing bug-eating bugs to protect the crop without the need to use to toxic pesticides. “The predatory insects feed on the eggs, the juveniles and the adult insects rather than providing a cover up for the pest problem,” says founder of Natural Enemies Shane Young.
To better illustrate why such scientific progress is important, consider this. Last month, Colorado had to recall hundreds of batches of cannabis tainted with pesticides which left residue on the crop.
- Craft cannabis
Just like craft beers and liquor, some growers have been experimenting with special cannabis strains in limited batches for the more selective cannabis connoisseurs. Think of this like how the champagne region in France is home to the only sparkling wine that can use that name but instead for cannabis.
Humboldt county in California is about to get such a distinction which officials have said will be important in differentiating it from the rest of the locally grown strains as well as enabling officials to track and trace the product to ensure it isn’t diverted to the black market or sold to minors.
Former chief marketing officer for Anheuser-Busch Inbev (NYSE: ABBV), the brewer of Budweiser beer recently gave his thoughts on craft cannabis. “The same way craft beer started and for the longest time was ignored, and then exploded, there’s no reason why the same thing wouldn’t happen in this space’” he said.
Additionally, the announcement two months ago by Constellation Brands Inc. (NYSE: STZ) which sells Corona beer in the U.S that it would be investing in Canopy Growth (TSX: WEED) shows that ‘Big Beer’ also believes that the opportunity in craft cannabis shouldn’t be underestimated.
- High-end products and safety
As a result of the increasing differentiation among cannabis products, another important trend that we expect to see developing over the course of next year is the emergence of luxury cannabis brands. It is important to note that this will not be limited to the plant alone. Cannabis brands are already taking pages out of liquor brands playbook like what happened with the introduction of expensive vodkas and tequilas.
Things like high end dispensaries, gold rolling papers and high-end buds are just a few examples of what is already happening driven by this trend. With more and more people embracing marijuana use for both recreational and medical use, alternatives to smoking have been gaining widespread popularity as a result of their enhanced safety profile.
We expect to see considerable growth in the uptake of portable vaporizers and dab tools like the PuffCo Plus which will enable consumers to inhale discreetly while on the move.
Sally Vander Veer, President of Medicine Man, the largest cannabis dispensary in Denver, Colorado explains: “A trend that we are excited to see at Medicine Man is an influx of new delivery systems for patients that are produced in pharmaceutical –like environments with a focus on purity and consistent dosing. Products in forms such as inhalers, pills/capsules and sublingual’s are providing our medical marijuana patients with familiar, smokeless options to take their medicine.”
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