This is Why Cannabis Companies are Making More Money in 2020

It has been a rocky road for cannabis companies since the legalization of marijuana in Canada on October 17th, 2018. In some provinces, the rollout was excellent, providing licenses to the masses and engaging the free market quickly. In others, a less than stellar rollout left a lot to be desired and a lot of would-be retail store owners holding their buds in their hands, waiting for the next round of lottery draws.

Since then, the market has had time to adjust and make the changes necessary to push the frontier of the sector, allowing many companies to come in and take a piece of the pie. As demand grew, it seemed to many like the time to get into the game. 2019 saw even more growth, as many users made the change toward legal cannabis purchasing, and saw the cannabis industry contribute ​$8 billion to Canada’s GDP in August of 2019​.

In the early part of 2020, however, cannabis wasn’t growing as expected. Take a look at Aurora Cannabis, who posted ​dismal Q2 numbers​, and this was even before COVID-19 slammed the industry. The supply was just not there, and companies were scrambling to turn it around. CEOs were getting fired left and right, and it seemed like the industry was headed in the wrong direction.

Enter COVID-19, the end of hundreds if not thousands of businesses, creating shockwaves that could be felt all over the world. This wrench in already struggling supply chains did not help the situation for a lot of businesses. For a budding industry, this could have spelled the end of growth.

But there was a ray of hope for the cannabis industry. And that ray grew into a steady beam of sunlight. People were at home, and consuming more cannabis.

A ​survey of cannabis vaporizer users​by Canadian vaporizer giants has shed some light on this issue. Afternoon and morning consumption doubled since the beginning of quarantine, and more people were ordering online so as not to leave the house. “​In the short term it’s going to be a little bit of a shot in the arm for the growth of the sector,” ​said Theo Zunich, CEO of YSS & Sweet Tree, a cannabis retailer out of Alberta and Saskatchewan. Their sales have been steadily increasing over quarantine as more people try to fill the time with activities that don’t require going outside.

Not only does the study cover consumption levels, but methods as well. Interestingly, and not at all surprisingly, people seem to be moving toward vaporizers as a less harmful way to consume. Especially when the majority of people are staying indoors and could possibly be worried about the lingering smell traditional smoking offers - not to mention the fact that with more consumption comes more worries about health effects

TVape sat down with Theo Zunich, Afzal Hasan, former President and General Consul of Origin House, a Cannabis Investment Group, and Matei Olaru, CEO of Lift & Co, a publicly traded infotech company modernizing the cannabis industry, to discuss the results of the survey in detail, and add their insights to the data. You can find the full video ​here​.

The cannabis vaporizer marketplace is another area of increasing growth, as companies like TVape try to keep up with the demand of users worried about the health risks associated with smoking cannabis. Afzal Hasan stated that, “​(he) think(s) it’s natural, once you start to ramp up the amount that you are consuming that you’re just going to notice what that does to your body.”

But there are many areas of the cannabis market, not just vaporizers, that are growing at a steady pace. The Canadian CBD market is expected to reach ​over $1 billion in sales​over the next five years. CBD, or ​Cannabidiol (​CBD​) oil is a product that's derived from cannabis. It's a type of cannabinoid, which are the chemicals naturally found in marijuana plants. Even though it comes from marijuana plants, ​CBD​doesn't create a “high” effect or any form of intoxication. It is typically used as a natural pain and inflammation reducer.

It is an excellent way for users who do not want any intoxicating effects to consume a natural alternative to traditional pain-killers, and the market is there. All sorts of companies are scrambling to join the fray, as even big brands try to squeeze into an already saturated marketplace - with Molson Coors at the forefront.

But it doesn’t seem like the marketplace is overcrowded. In fact, it seems to have rebounded from the usual growing pains of a relatively new market and turned the corner to grow into one of Canada’s leading industries. From a ​dismal rollout​in parts of Canada to the current climate, cannabis seems to be on fire.

Monthly sales rose to ​$154.2 million​in January of 2020, up from $54.9 million the previous year. It might not be the growth it was expected to be, but it’s certainly nothing to laugh at. With the introduction of “Legalization 2.0” in October of 2019, more and more aspects of the cannabis sector are becoming increasingly attractive to investors. Edibles, concentrates, oil pens and beverages are hitting the market in droves, driving even more business into the sector. COVID-19 was the “shot in the arm,” as Theo Zunich says, that continues to push cannabis sales and increase what was set up to be a less than perfect year for the industry.

CIBC cut almost $1 billion​off of their forecasted cannabis sales for 2020. They see it hitting $2.5 billion dollars, instead of the estimated $3.4 billion they predicted.

Last year, the sales were $1.2 billion. The sales have more than doubled in a year.

The cannabis industry might have taken a hit, but it’s still out there swinging. As more and more companies enter the ring, the sector will only grow, and it doesn’t look like it’s going to stop anytime soon.