Compliance and tax burdens contribute to a 40-45% price differential, the imbalance ensuring that the illicit market continues to thrive. While there are licensed retailers for every 5,500 and 4,200 adults in Oregon and Colorado respectively, that ratio in California drops precipitously to one for every 35,000 adults. We expect licensing efficiencies to improve in 2020, with the likelihood of significant tax or regulatory overhaul remaining low. Six to eight new state markets may open up in 2020, and lessons learned from California and Illinois will help accelerate white market adoption if licensing and taxation are designed to not be a hindrance.
Hemp-based Cannabinoids:
The passage of the 2018 Farm Bill led to many developments in the Hemp space in 2019, perhaps none as proliferous as the national availability and interest in hemp-derived Cannabidiol (CBD). While the non-hemp cannabis (NHC)-derived CBD ‘dispensary’ channel is exhibiting high growth within the licensed space, we expect the hemp-derived CBD ‘supplemental and wellness’ channel to grow even faster.
CBD remains best accompanied by other cannabinoids, terpenes, flavonoids and other bio-active compounds rather than isolated to then be sold with false expectations of minimal efficacy compromise.
True market potential will be realized as we understand ways to use cannabinoids as platform components rather than isolated destinations. The next stage of growth for this market will be defined by combinations of cannabinoids, terpenes, flavonoids and other bio-active compounds working with vitamins, minerals, herbs and roots to produce desirable health outcomes. CBD origin matters, and CBN, CBC and CBG are three cannabinoids likely to join the polypharmacy party on a broader scale. It remains difficult to overstate the medical and economic potential hidden in these molecules as we traverse this pathway of discovery and healing.
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