‘They’ll Eat It, Drink It, Wear It, Take Bubble Baths In It’: How Cannabis Could Be A $1T Industry By 2029

‘They’ll Eat It, Drink It, Wear It, Take Bubble Baths In It’: How Cannabis Could Be A $1T Industry By 2029

IAfter 90 years of prohibition and 30,000 years of being used by humans
for health and wellbeing, cannabis is still misunderstood.

There’s an opportunity in that, says Todd Harrison, co-founder of CB1 Capital, an investment manager and advisor for cannabinoid-based wellness solutions, products and therapies.

Given the “tsunami of global growth” around cannabis, some people will continue to smoke it but most won’t, Harrison predicted in an Investopedia, column. “This won’t be a niche market or cottage industry … In cannabis 2.0, they’ll eat it, drink it, wear it, rub it on, stick it in and take bubble baths in it.”

Cannabis and hemp are expected to show up as ingredients in a wide array of products from cosmetics and pet supplements to animal feed, medicine, clothing and more. “We foresee a trillion dollars or more of global market capitalization in 10 years’ time vs roughly $100 billion today,” Harrison said.

“The price action could mirror the dot.com bubble and bust.”

Todd Harrison, co-founder of CB1 Capital

Most cannabis equities won’t survive the bust portion of the cycle, Harrison predicts, “as the industry shifts from front-end farming to the consumer-packaged goods, industrial use-cases and biosynthetic applications.”

However, the ones that do make it to the other side will enjoy success beyond what most of us can fathom.

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“In the next few years, we expect to see the FAANG-ification of U.S. cannabis operators, long-tail growth across an array of products and services, the onboarding of entire continents (Australia, Africa) and efficacy-driven solutions that solve an array of medical riddles,” he wrote.

Harrison expects the cannabis market to separate into several categories:

  • Consumer packaged goods (beverages and nutraceuticals)
  • Industrial use-cases (plastic composites and hempcrete)
  • Biotech

Expect to see more mergers and acquisitions like Constellation Brands, the maker of Corona beer, which partnered with Canopy Growth Corporation to create cannabis-based beverages, and Altria Group, which partnered with the Cronos Group.

Harrison estimates revenues for U.S. cannabis operators will exceed $5 billion in 2019. However, until conflict between federal and state laws is resolved, U.S. operators won’t be able to access the banking system the same way other companies do.

When that gets resolved, it will trigger several dynamics: “Wall Street will initiate coverage and institutions will accumulate equity exposure in U.S. operators, with demand that will likely overwhelm current retail holders. U.S. companies will also have access to debt financing as an alternative to dilutive equity offerings, which should help improve their balance sheets, and up-lists to US exchanges will provide exposure to a broader investor base.”