As we approach the mid-point of the year, we want to highlight some of the most significant themes in the cannabis industry that could prove to be important catalysts for the entire sector.
Going forward, we expect the market to be highly focused on these 7 themes and believe that our readers need to be aware of these potential catalysts.
- Federal legalization in the US – we consider this to be most important potential catalyst for the cannabis sector and expect to see legislation advance in the back half of the year. A few weeks ago, Amazon (AMZN) and Uber (UBER) provided some commentary on the cannabis sector and has urged the US the legalize cannabis at the federal level.
- The legalization of recreational cannabis in Mexico – many companies and analysts have been highly focused on the Mexican cannabis market. Earlier this year, legal cannabis legislation hit a roadblock in the Senate and this is a market we are highly focused on. Mexico’s president has voiced support for the legislation and this is a market to be aware of.
- The cannabis opportunity in the European Union (EU) – with a population that is substantially larger than North America, the legal cannabis opportunity in the EU represents an attractive growth market. Countries like Germany and the United Kingdom (UK) are two key markets to be aware of an expect the passing of recreational cannabis in either of these markets to start a domino type effect in the EU
- Tilray’s cannabis study in France – earlier this year, Tilray Inc. (TSX: TLRY) (Nasdaq: TLRY) announced that it was approved to conduct a medical cannabis study in France. This is a large market and we expect positive data to play a role in the legalization of medical cannabis in France.
- Consolidation in Canada – one of the most significant trends in the cannabis industry is related to a spike in mergers and acquisitions (M&A) in Canada. So far this year, several mid-tier and large-scale Canadian Licensed Producers (LPs) have announced major transactions and this is a trend that we expect to continue
- The growth of the cannabis market in South East Asia – Australia is one of the largest cannabis markets in South East Asia and the region has been slow to advance. Over the next year, we expect to see additional markets legalize medical cannabis and will monitor how Australia’s market continues to grow
- Increasing demand for cannabis derivative products – consumers have showed strong demand for cannabis infused products and vape pens and this is a vertical that we are bullish on. During the last year, we have seen more large scale alcohol companies enter the cannabis industry and we expect the cannabis beverage vertical to continue to be an attractive growth driver for companies that are levered to this aspect of the industry
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