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“Cannabis 2.0”: The next wave of pot profits just arrived

by , 28 October 2019
“Cannabis 2.0”: The next wave of pot profits just arrived
Did you see recently the huge news on the Canadian cannabis front?

Well, on 17 October 2019, derivatives of marijuana — topicals and extracts — that were previously out of the question, were legalized in Canada.

This next stage of cannabis legalisation will create a tidal wave of new profits for cannabis companies.

And in turn reward early investors - who bank on the right companies - with big profits!

So here's what you need to know about Cannabis 2.0…

 
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It’s a small but untapped market worth billions of dollars
When Canada legalised marijuana in 2018, it applied to dried cannabis, cannabis oil, fresh cannabis, cannabis plants and cannabis plant seeds. That means, companies could sell these products without any hassles.
 
Now with “Cannabis 2.0”, cannabis-infused products like…
Edibles containing cannabis
Cannabis concentrates
Cannabis-infused beverages
Tinctures
…are now legal!
 
In fact, Deloitte estimates the annual Canadian market for edibles and alternative cannabis products is worth over $2 billion annually. While this is not as big as the total marijuana market, there’s still plenty of money to be made for pot shares.
 
You see, products like dried cannabis, cannabis plants etc … are of lower margin. However, with derivative products available, companies can differentiate their products. So, they can sell at a higher price.
 
Vice president of communications at Canopy Growth (largest marijuana company in Canada), Jordan Sinclair recently confirmed this, 

“They’re going to have a higher margin. People are willing to pay more for those products because it’s not just the cannabis itself. It’s been converted in some innovative way. So, we expect derived-products to help marijuana companies’ profits”.
 
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The big profits lie in the edibles market

Although this market is estimated to be worth over $2 billion annually, cannabis extract-based products including edibles will account for over $1.6 billion alone!
 
Deloitte surveyed Canadians and found that not only do Canadians already consume cannabis edibles and other alternative products, but many would consider buying them.
 
The reason being is edibles and other alternative products offer a more discreet and accessible way to consume cannabis and avoid any stigma surrounding smoking it.
 
With almost one in four Canadians consuming or likely to consume cannabis edibles and other alternative cannabis products, legalising these products should clearly create valuable new growth opportunities for Canada’s cannabis sector.
In fact, some major pot companies have already set their sights on the edible market.
 
For example, Canadian company, Aurora Cannabis announced that it would manufacture vapes and edibles at its Aurora Air and Aurora Polaris facilities. Also, the company has started making mints, gummies, and chocolates.
 
And, Canopy Growth will also make several cannabis-infused chocolates. In fact, the company bought a former Hershey chocolate factory to help make its products.
 
The market will be a “slow-burn at first” – but will gain momentum in the long-term
 
While it is a massive step for cannabis enthusiasts, companies and the whole industry, the Cannabis 2.0 market won't explode (like Cannabis 1.0 did back in 2018).
 
The reason being is no cannabis derivative products will hit the market, just yet.
 
Although the new regulations are now in effect, licensed cannabis producers must provide a 60-day notice to Health Canada, before actually marketing any new cannabis products.
 
This means, cannabis derivative products won't be available to consumers until mid-December. 
 
And even after the new products are available for sale, it could be a while before we know how well the marijuana 2.0 launch was.
 
Also, the first quarterly reports from companies that will include Cannabis 2.0 sales won't come until February or March 2020. 
 
However, over the long-term, this market could be a boon for cannabis companies and investors over the long-term and a recent report from the Deloitte agrees….
 
It said, the marijuana 2.0 market will be, “a slow burn at first, but as more products become available it will catch fire and gain momentum”.
 
So if you have a long-term perspective, Cannabis 2.0 could present a great opportunity to buy stocks of cannabis companies with a solid business model and a strong management team. 
 
See you next week.
Joshua Benton,
Analyst, The South African Investor
 
P.S: This next phase of the global marijuana revolution is poised to generate investors explosive gains. Here’s your best chance to profit!



“Cannabis 2.0”: The next wave of pot profits just arrived
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