Challenges and opportunities ahead for the Cannabis industry
By: Sam A. Rushing, President – Advanced Cryogenics, Ltd – www.carbondioxideconsultants.com
Special to The Digest
For the last few years, there has been a great deal of excitement surrounding medically available options from the cannabis industry. Further, it becomes more obvious and impressive to find the number of locations where legal cannabis products are offered, many of which are controlled under the auspices of recreational cannabis. However, even more significantly important are legal prescriptions for pain, anxiety, and a number of other medical conditions, which the drug is alleged to provide relief. Toward this end, when having conversation with physicians and pharmacists in recent months, they support cannabis products via prescription, v. conventional drugs. On the other hand, there are many critics and those who are generally skeptical of such value, and often see this in the light of marijuana use among the illegally – sourced recreational users.
The history of marijuana use for medicinal purposes extends through millennia; back to 2737 BC, where the drug was prescribed in Asia for treatment of gout, rheumatism, malaria, and even poor memory – dispensed in tea.
EVIDENCE, CHALLENGES
In A cross-sectional study of cannabis as a substitute for prescription drugs, published by the Journal of Pain Research, it is initially stated that medical cannabis is increasing, mostly for pain, anxiety and depression where the product is legal. Further, it is found that the use and abuse of prescription drugs may be decreasing in states where medical cannabis is legal. The findings in this study indicate due to social acceptance, and expansion of legal cannabis as a prescribed drug, more physicians are writing such prescriptions, and often advising of the option in lieu of opioids, anxiolytics, and antidepressants. Over the years, this market has expanded at a heathy rate, and evidence shows that such a trend will continue to occur.
Medical-marijuana, or cannabis as we prefer to call it, is also effective for alleviating nausea and vomiting associated with chemotherapy, treating wasting syndrome associated with AIDS, and controlling muscle spasms due to multiple sclerosis. Such benefits vastly outweigh the negative effects of the drug, which would allow physicians to prescribe the drug to suffering patients. Despite increases in legalization for medical use in more states; and for some recreational use; this is in stark contrast to the federal government’s stance of zero-tolerance, which has led to heated legal debate in the US.
The cannabis industry has grown dramatically in size in recent years, in response to expanding legalization and a flood of financing from venture capital firms, and private investors. In the recent past in New Jersey, Montana, South Dakota and other states and jurisdictions voted to legalize the recreational use of cannabis. In 2021 New York, Virginia, New Mexico, and Connecticut were added to the states legalizing recreational use. The legalization and sale of cannabis is advancing rapidly, not only in the US, but globally. Global cannabis sales are predicted to increase from $13.4 billion in 2020 to $33.6 billion by 2025. Such growth has spawned a long list of startups, IPOs and a wave of cannabis – related mergers and acquisitions, involving companies in production, distribution, real estate, retailing and others. Despite such impressive growth, the global Covid-19 pandemic created major upheaval in the cannabis industry in 2021, and the industry faces major challenges in 2022.
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Legality and regulation will continue to be key forces driving the industry, as different countries and states approach and use and sale of cannabis differently.
Banking will continue to be a challenge because cannabis companies within the US cannot legally access traditional banking services.
Through partnerships and acquisitions, cannabis companies are establishing further industries like that of the tobacco and alcohol which treat addiction, or what is perceived to be addiction. This will add more substance to the cannabis industry.
With the Federal Reserve’s announcement on December 15, 2021, that it will raise interest rates in 2022, and even more evidence of several likely interest rate increases this year, it will be more difficult for cannabis companies to raise capital.
As the industry grows, it must adapt to rapid changes and a complex legal landscape; such includes the challenges associated with legality, use, distribution, the growth of the product; and of course quality.
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Quality standards, or effectiveness in medical or even recreational use will be a key to future growth as well. Unlike recreational use alone, which may not be yield results which are quantified; medical usage will require proof of effectiveness in management of maladies.
Some of this growth and treatment as a valid option for medical use is rater incredible, as viewed by many. However, with respect to the medical community, physicians and pharmacists are typically writing prescriptions and supporting cannabis products in lieu of prescription drugs; and apparently this trend is continuing.
There remains the reality where marijuana is classified by the DEA (Drug Enforcement Agency) as an illegal schedule I drug, which has no acceptance in medical use – including specific crops of cannabis, and refined CBD products.
THE ROAD AHEAD
There are strong opinions and positions which the federal government and DEA have against Cannabis, which so often is referred to as marijuana; however, there is strong evidence of physiological and psychological benefits which result. Further, physicians and pharmacists are often offering this as an alternative to traditional medication; plus there is strong evidence that cannabis products are in fact reducing addiction and overdosing with more dangerous and addictive drugs, such as opioids.
There are differences in opinions as to whether the cannabis market is in a growth mode, and new growers, and processors entering the business will continue for a period of time; or if the market is saturated. There are broad opinions both ways, from those who see the market as expanding beyond what is even considered. Others say, in part, due to federal acceptance, and banking regulations, the market is even more finite; and some claim it is saturated with supply.
An article in Forbes states that in California alone, in 2021, some 5 billion worth of legal cannabis products are being sold; and the recommendation is to start from the bottom up, namely begin growing operations. The legitimate storefronts are competing with poor quality, illicit weed being sold as a form of competition. Consumption is on the rise, and many more states could eventually allow medical and even recreational use.
I believe it is a combination of the blue sky opportunity ahead, and supply and consumer markets being more balanced; with growth opportunities ahead. More than likely, the demand will continue, and the key to growing the legitimate market is quality, from the farm to the processor. Further, with support of the medical community supporting usage of cannabis, and further expansion among states allowing medical and even recreational use, the future is bright.
THE APPLICATION IN GROWTH ENHANCEMENT
As for the actual application of CO2 for crop growth enhancement, the application is extremely popular to increase plant yield. When I recently investigated the greenhouse market in southwestern Ontario, as one example; I found most or all of the growers to use CO2 for such growth enhancement. This being very common for an expensive crop, such as cannabis. Further I found usage to occur ‘on the vine’, outdoors, when applied from the top of the plant, allowing the gas to gently drop to the bottom, given CO2 is heavier than air. The producers indicated the enhancement of the crop was working well in this case. As to the application itself in a greenhouses setting, for example, when enriching the CO2 content to 700 ppm, this can increase growth up to 40%. Of course, a substantial application for sCO2 is extraction of CBD oil; please see the accompanying side bar for more on this topic.
About the author: Sam A. Rushing is president of Advanced Cryogenics, Ltd., a CO2 and cryogenic gas consulting firm, with extensive, diverse experience in all aspects of carbon dioxide.
Tel. 305 852 2597 Email: rushing@terranova.net Web: www.carbondioxideconsultants.com
Category: Thought Leadership
