Where cannabis comes from will depend on the product being consumed, and chances are it will not come from a greenhouse or field…
Companies are running full tilt in an effort to capitalize on the ending of cannabis prohibition.
And the biggest priority for the moment is making sure they have something to sell.
We’re talking acres of greenhouses in Canada, hectares of land in South America, and whatever U.S. growers can do to meet soaring demand in the states in which they operate.
This flurry of activity is all an effort to make the most of the legal structures these companies are given. Canadian limited producers can ship their product anywhere across the country, and exports to Europe are now possible. U.S. cannabis production can’t cross state lines, so every state has to grow its own cannabis.
Growers in South America know that, ultimately, they can grow the best cannabis at the cheapest prices, so South America is gearing up to be an exporting powerhouse.
But fast forward a few years, and most of the cannabis consumed around the world may not have started out in the fields at all.
Product Demand Drives Supply
Where your cannabis comes from will depend on the product you consume.
There will always be those that want to smoke cannabis. It’s all part of the experience. In North America alone, $86 billion was spent last year on marijuana. This market will only grow, and it will soon become a $100 billion legal market.
Much like wine, there will be the high-end connoisseurs and those that are fine with buying a $5 bottle.
For the aficionados, they will get their flower from places like Humboldt County in California and British Columbia – places that have a reputation for growing top-notch stuff. We can also expect the emergence of smaller craft grow houses to serve the demands of the discerning smokers.
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For the less picky – or less affluent – the commodity grade marijuana will come from South America and Africa, where there is a lot of sunshine and cheap land.
But chances are, a few years hence, most cannabis will not be smoked.
It will be vaped, eaten, or drank. It will also find its way into topical creams for targeted effects or pills to be taken as medicine.
Some of these products will emphasize the benefits of the “entourage effect” – meaning not only consuming THC or CBD, but also all of the other cannabinoids and terpenes found in the whole cannabis flower. But consumers of other products will prefer products infused with pure THC or CBD. The terpenes are what create the smell and taste of marijuana, and cannabis-infused beverage makers, for example, don’t want their cannabis drinks tasting like weed.
Also, for patentable, pharmaceutical drugs, the active cannabinoid must be tailored to include another molecule – and these drugs can’t be pulled from whole cannabis flower.
So while products that tout the merits of the whole flower will be sourced from cannabis plants, products that demand very pure or custom cannabinoids will get their start in a lab.
And that’s where things really get interesting and a lot of money will be made.
As I mentioned, a lot of people will want to try cannabis through things like infused drinks and food.
To make a CBD-infused soda or a THC-infused brownie, the seller of these products needs isolates, and it will all come down to acquiring them from a lab. Companies with a focus on creating these isolates in their labs will make a lot of money, as it all boils down to economics.
High-quality isolates can be created through two very scalable processes.
The science behind it all is a little complicated, but it’s done through either chemical synthesis or biosynthesis. You don’t have to dive too deep into the processes, but I want you to know about how isolates are being created because I want you to be able to identify the top-tier science cannabis plays out there.
Here’s just a little bit more about the process.
Currently, most isolates are derived from whole plant extracts. These extracts are then processed further to get purified cannabinoid isolates. And the higher the purity, the higher the price.
The least pure isolates can be had for about $5 per gram, but these products are far from pharmaceutical-grade purity. To approach those purity levels, the costs quickly escalate.
But synthesizing cannabis – by either creating it through a combination of chemical reactions or having recruiting microbes to do the work – results in a product with high purity at costs equal to or much less than the cost of isolates from extracts.
Large drug manufacturers are going the chemical synthesis route, and there are only a couple of publicly traded companies pursuing biosynthesis of cannabinoids. But there are a lot of startups using biosynthesis to produce cannabinoids at scale, and when they go IPO, we’ll be looking at the ones you’ll want to own.
So, within a couple of years, when you’re drinking your CBD-infused sports drink or popping a THC gummy in your mouth, chances are that the effect you’re looking for is from a cannabinoid that never passed through a cannabis plant at all.
As the biggest and best profit opportunities emerge from cannabis science plays, we’ll make sure you know where to put your money.
Executive Director, National Institute for Cannabis Investors
P.S. Over the next month and a half, we could be looking at 35 small cannabis firms going public. These are just part of the multitude of cannabis companies that will IPO this year, and investors who get in on – or before – IPO day could be handsomely rewarded right from the start. If you lock in a ground floor opportunity with one of these cannabis IPOs, your profit potential could soar 100%, 200%, or more in the first day… And then as momentum builds you could be looking at 1,000% gains – or more. Right now, our experts have two upcoming IPO recommendations ready to go. Click here for all the details.
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May 31 2019