Dec 19, 2024
From medicinal use to widespread legalization, the cannabis industry has undergone significant transformation. During the War on Drugs era, starting in the early 1970s, marijuana use was severely repressed by law enforcement, and lighting up was seen as degenerate and antisocial. Now, nearly a third of Gen Z uses marijuana, and it’s only becoming more popular. Edibles, concentrates, and wellness products are rapidly gaining consumer traction, especially for those who fall outside of the stereotypical demographic of a cannabis consumer. As these categories grow, they present new opportunities and challenges for investors. As an industry, cannabis can be quite diverse, as there’s a range of cannabis products on the market, which is only helped by the fact that the legalization of marijuana products and usage is being widely embraced. However, marijuana is not federally legal in the United States and has inconsistent legalization status across the globe, which can make the market more volatile. A younger consumer base could also impact the types of products that are successful.
Benefits
Diversification Of Product Offerings:
Investors can benefit from the diversification of product offerings in the cannabis space. Edibles, concentrates, and wellness products cater to a wider consumer base, including recreational users, medical patients, and those interested in wellness benefits. This creates multiple revenue streams for cannabis companies, reducing risk and increasing the potential for steady profits. A well-rounded portfolio of these products allows investors to tap into different consumer needs, from those seeking potent concentrates to others who prefer the wellness and therapeutic effects of CBD.
Expansion Of Legal Markets:
The expansion of legal cannabis markets globally provides a prime opportunity for investment. As more states and countries legalize cannabis for recreational and medical use, demand for cannabis edibles, concentrates, and wellness products will rise.
Challenges for Investors:
One of the biggest challenges for cannabis investing is the regulatory environment. These inconsistencies create risks for investors, as changes in laws could impact a company’s ability to sell certain products or operate in certain markets.Additionally, the cannabis industry, in general, has experienced significant volatility. Stock prices of cannabis companies often fluctuate due to regulatory changes, shifts in consumer preferences, or broader market conditions. Edibles, concentrates, and wellness products are no exception. The cannabis market is also still relatively young, and consumer education is essential for growth. Edibles and concentrates, in particular, can have delayed onset effects, which could lead to overconsumption or dissatisfaction among first-time users.
The Rise Of Edibles
According to an NYU study, more than half of all cannabis users consume edible cannabis, with younger users even more likely to do so. Edibles satisfy the preferences of both recreational and medicinal users by being more discreet to use as well as there being a variety in tastes and flavors of edible products. Evidently, this can boost consumption rates, which means there’s more possibility for the edible market to grow. Right now, the edibles market is projected to observe a CAGR of 16.5% from 2023 to 2032, showing huge potential to grow into a viable investment. A major factor in the market growth of edibles is the variety of edible cannabis products now available to consumers. Not only do edible cannabis consumers get to choose from a variety of flavors, but from a variety of cannabis-infused products, including sparkling water and energy drinks, as well as baked goods, chocolate, and gummies. While the infamous ‘weed brownies’ might still be a staple, the market has expanded to suit different tastes. Many of the markers surrounding edible cannabis products, while new, are expected to grow exponentially in the next decade. For example, the cannabis-infused drinks market is expected to reach a value of $8.3 billion by 2032, according to Future Market Insights. Aside from the variety of flavors and products, edible cannabis users can rest assured that dosages are accurate and consistent. Due to advances in extraction technology, consistent dosing is more possible than before, which increases the appeal of edibles for both new and experienced users.
The Growth Of Concentrates
Instead of flavor or taste, some users look for products that are more potent. Concentrates, such as wax, shatter, and live resin, have become popular for users seeking stronger effects. Concentrates are generally becoming more popular, and as such, the market for them is continuing to grow. The concentrates market is projected to grow significantly, with projections of at least a 6% CAGR in the next decade. Wax, shatter, and live resin, which are all considered cannabis concentrates, are made using different extraction methods, each producing varying levels of potency and flavor. In general, all concentrates are very potent, with average THC concentrations around 60%-90%. THC vape cartridges are among the most accessible and popular forms of concentrates, attracting both recreational and medicinal users. Vape pens are also particularly popular amongst Gen Z and millennial users.
Cannabis Wellness Products
There is already a range of cannabis products on the market, aimed at both recreational and medicinal users. However, products specifically geared towards health and wellness are beginning to take off. With promises of bliss, relief, and anxiety management, cannabis wellness products like topicals, tinctures, and even bath bombs and body lotion are thriving. The global CBD market was valued at nearly $8 billion in 2022, and is expected to grow at a 15.8% CAGR from 2024 to 2030. Generally, cannabis wellness products like oils and tinctures, can be used for stress relief and pain management, while CBD lotions and infused creams can be used for more localized pain relief or skincare. Additionally, CBD gummies and other products can be used as sleep aids.
As consumer interest in wellness increases, cannabis-infused products are being marketed as alternatives to traditional pharmaceuticals for insomnia and anxiety.
The Future of Cannabis Investing
With the rising popularity of cannabis and cannabis products, investors should focus on companies that are innovating and scaling in these sectors. Investment in extraction technologies, production facilities, and distribution channels is also essential as these markets expand. As more regions legalize cannabis, investment in cannabis-related companies will grow. The SAFE Banking Act, for example, could open up more traditional financial services to cannabis businesses. However, investors will need to navigate the complexities of publicly traded cannabis companies versus private start-ups and innovation hubs.
For those looking for a long-term investment, Greenhouse Lifestyles offers the opportunity to invest in a growing luxury cannabis business. Through regulation crowdfunding, Greenhouse Lifestyles allows the everyday cannabis user to invest a small amount in an industry valued in the billions of dollars. While investing in the cannabis industry is projected to have high returns, cannabis stocks have shown significant volatility due to regulatory uncertainties, market sentiment, and competition. Unlike traditional industries, cannabis requires a long-term investment perspective due to evolving laws and consumer behaviors.
Conclusion
The growing demand for edibles, concentrates, and wellness products is reshaping the cannabis industry and providing new avenues for growth. The future of cannabis investing looks promising, with many opportunities arising from innovation, market expansion, and increasing consumer acceptance. For those looking for an easy way to invest in the cannabis industry, investing in a company like Greenhouse Lifestyles is accessible and low-cost. With such high projections, investing in the cannabis industry is likely to give investors strong ROI.
