Think of a world where there’s exploding demand for a “new” product. Demand that spans generations. Seniors, adults, young adults. Ubiquitous. Global.
For some, a rational and efficacious new standard of care.
For many, a reconnection to simpler times.
For most, a safer “better-for-you” alternative.
From the grandma who finally gets relief from her arthritic, creaky hand.
To the veteran battling nightmares or chronic pain—who turns to the plant instead of opioids that numb, addict and destroy.
To the intense, Type-A professional who drives extremely hard, but refuses sleep meds, painkillers, Xanax, or SSRIs (🙋♂️).
To the young parent who realizes the 3rd glass of wine makes them slower, fatter, and grumpier, especially the next morning.¹
To the athlete or meditating yogi who consumes—on occasion, and with intention—to test their endurance, strength, and focus while aiding recovery.
And to the Gen-Z who wants to “chill out” but still needs to be up at 6am to surf.
The point is: cannabis demand has been exploding—and the wave is still building. More consumers, more patients, more use cases, more frequency per existing consumer, and of course, more (relative) spend of wallet.
On one hand, this market wasn’t created out of thin air—it lived in the shadows for 80+ years. Today, it’s undoubtedly stealing significant share from existing markets, while inventing new ones that offer new standard of care solutions.
On substitution, we’re talking enormous markets. Just in the U.S., cannabis is “ankle-biting” the:
$600+ Billion OTC/Pharma industry, including the $20BN opioid and $20 BN OTC/Rx sleep med markets. Worth pointing out that despite the decline in opioid usage, the cost per pill has increased 2x since 2015 (creating a powerful feedback loop, much like cigarettes);
$250 BN Alcohol industry, of which 1/3rd is beer ($122BN) which is now showing the worst annual shipments in 25 years, and 1/3rd is wine which is now pacing the lowest global consumption in 64 years. Spirits? You’re next.
Or maybe it’s the $110 BN Tobacco market, that isn’t as relatively exposed—in fact, it’s highly complimentary—but it’s an industry desperately trying to find growth with its old horse—cigarettes—now 75% off from the peak hit in 1965. Like entering the new $5-7BN white pouch segment, that ironically doesn’t contain any tobacco.
Whether it’s a dispensary, headshop, smoke shop, liquor store, bar, restaurant, convenient store, cash-and-carry, pharmacy, gas station, or an airport duty-free—just to name a few—all of these stores and distribution pipes are watching with intense paranoia (“Wtf is happening?”) and euphoria (“Does this come in other flavors?”).
You really think these highly strategic, deeply established distribution networks—reaching over 1.2 million stores—aren’t paying attention?
Get real.
When you step back from all the noise, and all the drama: this is the foundational tenet for any cannabis investor and operator to understand:
In the end-state, this industry will be massive.
Don’t lose sight of the forest for the trees.
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¹ Also me, it’s been 5+ years since I’ve had more than 1-2 drinks per month. I used to love drinking wine and beer. I still do, but it does not love me back.