Lift a Glass to Legal Cannabis’ Next Big Trend — and Opportunity

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You’ve probably never heard of Lowell Café. It is located in West Hollywood, California, and earlier this month it became the first business of its kind in the nation.

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According to media accounts, the restaurant has a modern look, with a copper bar, exposed brick walls, and a farm-to-table menu featuring dishes like vegan nachos, tamarind wings, crispy chicken, and Cobb salad.

You can’t order a cocktail before dinner or a beer or glass of wine with your meal. Alcohol is not permitted to be sold on premises. But that’s not what makes it unique. Instead, cannabis in all manner of forms — from high-quality flower to concentrates, edibles, and beverages — is allowed.

The front section of the neighborhood cafe is off-limits to cannabis use, for those who just want the food. Then there’s a cannabis consumption lounge, where customers can order pre-rolled joints or sip from THC- or CBD-infused sodas alongside their nachos or ice cream sundaes ordered from the restaurant section of the business.

The operational gymnastics are simply a function of the newness of this type of establishment. But make no mistake, places like Lowell Café represent the changing face of the industry.

In a legalized world, cannabis consumers no longer have to hunker down in their basements to partake or worry about the social stigma that comes with public consumption.

Now friends can enjoy one another’s company in public over a cannabis beverage of their choice, as they’ve been able to do with alcohol in just about any similar establishment across the country.

And they can still do so while trying to maintain a healthy lifestyle.

For instance, many people, including yours truly, take CBD supplements to reduce stress without getting “high” from cannabis’ intoxicating cannabinoids, like THC. Others take CBD to relieve symptoms associated with epilepsy, for aches and pains, and to relax or lift their mood. Even the Arthritis Foundation recently released its first guidance for consumers and medical practitioners regarding best practices for CBD sourcing, usage, and dosing.

According to High Yield Insights, 40% of U.S. consumers surveyed said they would try CBD, while 34% said they’d try it based on a physician’s recommendation.

The situation has some of the industry’s biggest corporate backers salivating over the potential profits from cannabis beverages. We’re talking everything from soda, beer, and “mocktails” to coffees, teas, sports drinks, and more.

That makes a lot of sense when you consider that the estimated 32% profit margins for cannabis beverages is vastly superior to beer’s 18% margins and nearly triple that for plain old soft drinks.

Tilray (NASDAQ:TLRY), one of the world’s largest cannabis producers, and beer giant Anheuser-Busch InBev (NYSE:BUD) have chipped $50 million each into a joint venture (JV) called Fluent Beverage Company, which plans to sell non-alcoholic, CBD-infused beverages in the Canadian market. The JV hopes to have cans on shelves for Legalization 2.0 north of the border.

That’s now. More cannabis products, including edibles and beverages, officially become legal in Canada on Thursday, October 17. The products themselves should hit the stores sometime in December.

HEXO Corp. (NYSE:HEXO) has invested approximately $120 million in a JV called Truss with Molson Coors Brewing (NYSE:TAP) to create non-alcoholic, cannabis-infused beverages.

New Age Beverages (NASDAQ:NBEV) is partnering with Docklight Brands to develop and distribute CBD-infused beverages throughout the United States.

And of course, Constellation Brands (NYSE:STZ), one of the world’s largest alcohol distributors, was the first-mover in this space and now owns a 38% stake in Canopy Growth (NYSE:CGC), the biggest marijuana company on the planet.

These alcohol juggernauts, stung by a decline in alcohol sales and shifting lifestyles, are vying for a piece of what Zenith Global anticipates will become a $1.4 billion market in U.S. CBD-infused drinks by 2023, up from more than 500% from just $227 million this year.

The overall global cannabis beverages market could reach $4.4 billion by 2025, according to Zion Market Research.

Yet the fragmented nature of state-only legalization in the U.S. has shaped this market to date, with many products like flavored sodas becoming a favorite just in the states where they’re sold. But remember, cannabis beverages are still a product in their infancy. At their peak, they’ve comprised 1.42% of total cannabis sales, according to a study by Headset.

Legalization’s Impact

Legalization 2.0 in Canada will soon start to show us what products consumers like, and which ones will be weeded out (pun intended).

At this early stage, taste has been a negative for some cannabis beverages, with people saying they experienced unpleasant grassy flavors and greasy mouthfeels. No thanks. But the industry is already making improvements by using tasteless, odorless, water-soluble powders in drinks.

Organigram Holdings’ (NASDAQ:OGI) proprietary technology uses what’s called nano-emulsion, which helps deliver cannabis in a quicker, more uniform manor to the body. It can be turned into a tasteless powder that can be used in beverages.

BevCanna Enterprises (BEV) recently announced its own tasteless, odorless, water-soluble powder ingredient, Deeper Green, which can be used to help stabilize the delivery of cannabinoids in specific doses — a win for the precision dosing movement. The company is now planning to use the product in a number of ready-to-drink cannabis formulations.

I see no way that Canada remains the only North American nation to fully legalize cannabis and derivative products like beverages.

The United States is barreling toward full legalization. I truly believe it’s only a matter of time before the market opens up fully, from sea to shining sea. When that happens, it would instantly create the world’s biggest cannabis market.

Getting in now, before such an event happens, is when investors will make the big money on legal cannabis. By the time the news hits the front page of the New York Times or Fox News, the profit runway will have narrowed considerably.

Matthew McCall left Wall Street to actually help investors — by getting them into the world’s biggest, most revolutionary trends BEFORE anyone else. The power of being “first” gave Matt’s readers the chance to bank +2,438% in (STMP), +1,523% in Ulta Beauty (ULTA) and +1,044% in Tesla (TSLA), just to name a few. Click here to see what Matt has up his sleeve now. Matt does not directly own the aforementioned securities.

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