Legalization of Cannabis 2.0 will take place in Canada next month. The second wave of legalization includes edibles of cannabis, alcoholic beverages, drinks, and other products. The cannabis players are hooked up to expand into the edibles market. Let's see what Aurora Cannabis (ACB) is planning.
The growing cannabis industry in Canada
The legal marijuana marijuana industry in Canada in October 2018. The second phase of legalization will allow the country to become a leader in the cannabis market. To learn more, read Cannabis 2.0 Legalization: Canada is Ready. Earlier, I discussed Canadian regulations for the second phase of legalization. Health Canada has taken steps to ensure that public health is not endangered after legal edibles have been legalized.
Despite stricter regulations and reforms, the black market is still a problem in Canada. Interestingly, supply and high price issues are fueling the black cannabis market.
Is the edibles market the next big thing?
Meanwhile, a forecast by Arcview Research shows that the legal marijuana market could be worth $ 57 billion worldwide by 2027. The cannabis edibles market alone could hit $ 4.1billion in Canada and the US by 2022.
Deloitte's recent report "Marriages of new growth," said edibles and extracted products will dominate the Cannabis 2.0 market. According to estimates:
- the Canadian market for edibles and alternative cannabis products is worth 2.7 billion Canadian dollars
- edibles worth 1.6 billion Canadian dollars
- alcoholic beverages beverages cost 529 million Canadian dollars [Ang19659009] topical amounts to 174 million Canadian dollars
- concentrates are worth 140 million Canadian dollars
- tincture or liquid extract is worth 116 million Canadian dollars
- capsules will cost 114 million Canadian dollars
. , research shows that 46% of people want to try cannabis-infused products when commercials are available. Around 93% of people favoring legalization are more open to trials in edibles.
What are the plans of Aurora Cannabis?
In June, Aurora Cannabis announced its plans to expand into the edibles market. The company has built improved facilities to produce new and high quality products. Aurora Cannabis has entered into a partnership with PAX Labs to advance the vape products business. The company plans to produce a new range of vape products at different prices. The products will appear in the target consumer markets through 510 thread cartridges and disposable single-use units. Notably, Aurora Air and Polaris facilities are responsible for producing vape pens, mints, gummies, and chocolates.
In a fourth quarter earnings call, Aurora Cannabis mentioned that it entered into a partnership with the UFC in the US. . The company plans to enhance research on the use of CBD as a treatment for illness and recovery in high-performance athletes.
To raise awareness about the product, Aurora Cannabis has launched educational campaigns in Canada. The company is also investing in understanding consumer preferences in the US legal market. Overall, the company wanted to produce enough products to reach store shelves on December 17.
The cost of SGora's Aurora Cannabis increased in the fourth quarter. The company coordinates preparation costs for Cannabis 2.0. Shipping costs and fulfillment costs for developing new products are higher. Also, branding costs related to UFC partnerships are an additional expense.
Results of the fourth quarter of Aurora Cannabis failed. The company missed the earnings guidance and revenue estimates. Also, Aurora Cannabis reported negative EBITDA of $ 11.7 million Canadian dollars. The company management said, "With the launch of Canadian derivative products in the coming months, we have made the necessary investments to ensure readiness and focus on the different products added. We are excited to provide of an expanded consumer market with premium cannabis and new product forms. "
The company does not expect an immediate increase in revenues from the edibles business. However, Aurora Cannabis expects the edibles business to contribute to a positive EBITDA. We need to see if the edibles market increases the company's profitability in upcoming quarters.
Other cannabis players
HEXO (HEXO) partnered with Molson Coors to launch CBD-infused drinks through a newly formed venture company called "Truss." The company designs and manufactures edibles products. Meanwhile, Tilray (TLRY) is conducting further research on THC and CBD beverages in Canada with Anheuser-Busch. ), Carl's Jr, Anheuser-Busch, Neal Brothers, and Coca-Cola (KO) are also looking at the edibles market.
Canopy Growth (CGC) (WEED) will manufacture high-quality beverage and edible products beginning in the third quarter of 2020. Canopy Growth and Constellation Brands plans to launch several cannabis beverage products. We can also expect many CBD products, including beverages, edibles, and oils, later this fiscal year. Canopy Growth stock rose in September due to a positive outlook from some analysts.
Aurora Cannabis fell 5.8% in September, while Canopy Growth gained 22.0% . HMMJ, which monitors the North American cannabis industry, rose 0.42% in September.
What is the US doing about the legalization of marijuana?
After the third presidential debate, things got a bit colder about the legalization of marijuana in the US. Canada and other countries are striving for emerging industries. However, I am concerned that the US cannot capitalize on the cannabis industry because of legalization delayed.
President Trump wants more research on cannabis to understand the pros and cons. Further and higher levels of evaluation require more funding and resources. Funding and resources are only available after federal legalization. Lack of research has raised doubts about vaping products and CBD-based products.
Democrats and Republicans want a banking and reform bill to help existing companies expand their businesses. An Forbes article noted that after legalizing marijuana in the US, recreational use would dominate the sale of cannabis out of necessity.
I hope the US can learn from the success of Canada. Marijuana legalization may pick up steam during the presidential elections of 2020.
Stay tuned for more insights on the cannabis industry.