FinancialBuzz.com’s latest Buzz on the Street Show: Featuring Our Corporate News Recap on “Pasha Brands Sees Silver Lining Amidst Downturn in Global Cannabis Sector.”
Pasha Brands Ltd. (CSE: CRFT) (OTC: CRFTF) (FSE: ZZD). Between 2014 and 2018 global sales of legal cannabis more than tripled from $3.4 billion to $10.9 billion, according to the State of the Legal Cannabis Markets report from Arcview Market Research. BDS Analytics calls for a near-quadrupling from 2018 levels to $40.6 billion by 2024 at an annual growth rate of 21.9%. This has led many people to wonder, why the recent market downturn in the cannabis sector?
Based in Vancouver, British Columbia, Pasha Brands is a vertically integrated organization that is firmly rooted in BC’s craft cannabis industry, which boasts an international reputation. With proven capabilities in cannabis cultivation, genetic research and development, product, processing, and retail, Pasha is uniquely positioned in the new legal cannabis market through its network of hundreds of craft cannabis suppliers under the Pasha umbrella.
Pasha’s subsidiary, BC Craft Supply Co. Ltd., is developing a craft cannabis campus, which is dedicated to bringing craft quality into the newly legal cannabis market in Canada. BC Craft Supply Co. Ltd. is driven to assist craft growers in obtaining security clearance and licensing to grow as micro-cultivators, specializing in education and compliance to bring growers into the regulated cannabis supply market.
Over the past several years, alcohol consumption rates have declined rapidly, leaving consumers to find new alternatives. Notably, the cannabis industry is directly correlated with declining alcohol consumption rates; Investment-bank firm Cowen & Co. reported that as of 2016, legal adult-use cannabis U.S. states witnessed binge drinking rates fall by 9% below the national average, and 11% below non-cannabis states. However, newly added states such as California and Nevada had higher rates of alcohol consumption and lower rates of cannabis use. Regardless, Cowen expects the rates to shift in both alcohol and cannabis consumption in those specific states. And as a result, Cowen said it is reasonable to assume that as more states continue to legalize adult-use cannabis, alcohol binge drinking rates will continue to falter. Furthermore, the Centers for Disease Control and Prevention estimated that 17% of the U.S. population engaged in binge drinking, meaning that 1 in 6 reported doing so 4 or more times a month. In states that legalized adult use, the number of binge drinking sessions per month was 9% below the national average. For instance, the state of Washington, which was the first state along with Colorado to legalize recreational use, has seen alcohol consumption rates decline over the past several years. As of 2018, Washington reported that just under 15.6% of adults were reported having four or more drinks on one occasion in the past month compared to the national average of 17.4%, according to America’s Health Rankings UnitedHealth Foundation. In particular, many millennials have opted to consume cannabis over drinking alcohol. And according to a MarketWatch article, a millennial said that she prefers to consume cannabis over alcohol because it saves her more money and doesn’t cause the intoxicating effects of alcohol. According to a Yahoo News poll in 2017, it was concluded that the majority of the 55 million recreational marijuana users in the U.S. are millennials. And as the number of alcohol consumption rates decline, the cannabis industry is expected to directly benefit as more users turn towards cannabis-based alternatives. According to data compiled by Grand View Research, the global legal marijuana market is expected to reach USD 66.3 Billion by the end of 2025 while expanding at a CAGR of 23.9% during the forecast period.
While the U.S. is experiencing declining rates of alcohol consumption, Canada seems to be unchanged. Canadian provinces with the highest rates of legal cannabis consumption don’t appear to be drinking less under legalization, according to Global News. However, the key to cutting alcohol consumption rates is making cannabis drinkable, says Brock University business professor Michael Armstrong. He notes that the reason alcohol consumption is still relatively high in the country is that consumers are used to the characteristics associated with drinking. However, having beverages that are based on water-soluble THC would better drive the marketplace forward. Nonetheless, many consumers still tend to prefer consuming traditional flower or vaping extracts and concentrates instead of imbibing cannabis-based drinks. And according to Statistics Canada, 5.3 million or 18% of Canadians ages 15 years and older reported using cannabis in the first quarter of 2019 compared to 14% who reported using just one year earlier. And while cannabis-infused beverages are expected to be a large market driver in the near future, the flower segment is still projected to account for the majority of the market. Notably, “craft cannabis” producers have come into the spotlight after Canada legalized adult use. Craft cannabis is known to come from the attentive procedure of tending to each individual plant to ensure premium and high-quality buds. The tedious process requires growers to constantly examine each plant to avoid molding or infestations and, while the process may be laborious and tiresome, craft cultivators are able to achieve a premium end product that large-scale companies are just unable to replicate. “A lot of the licensed producers right now, their goal as publicly traded companies is producing the cheapest cannabis possible for the commercial market,” said Lisa Campbell, Chief Executive Officer of Lifford Cannabis Solutions. “A lot of people say hand-trimmed buds is craft, so the trim is really important. If it’s dense and not fluffy, it’s great, and obviously, smell and flavour are factors … It’s like getting a bottle of wine for thousands of dollars – there will be certain products that will fetch a premium.”
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