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Cannabis investments ‘recession proof’ says industry data firm

The designation of the drug as an essential product in key markets as well as an 150% increase in UK medical cannabis prescriptions means the industry finds itself on strong footing as the coronavirus pandemic continues

Zoetic International PLC - Cannabis investments ‘recession proof’ says industry data firm

The cannabis market looks et to become a “recession proof” investment after its classification as an essential good in the US, Canada and the Netherlands, according to new intelligence from an industry data firm.

Prohibition Partners said the classification of the product as essential in the three key markets alongside a 150% increase in UK medical cannabis prescriptions over the last year meant that the drug was “not only weathering the storm” caused by the coronavirus pandemic but thriving in both recreation and medical use.

The group said the data indicated that most cannabis users expected the coronavirus to have either no impact on their purchase habits or to increase their consumption, particularly in categories related to health and wellness such as medicinal cannabis and cannabidiol (CBD) in the form of oils, tinctures, gummies and other products.

“Overall the US and UK are expected to use more, not less CBD/hemp infused consumer goods in the next three months, possibly as they turn to alternatives to other intoxicating substances, or for products that can help ease stressors of the prolonged lockdown”, Prohibition Partners said.

UK CBD demand surges

Some firms are already reaping the benefits of this coronavirus-induced upswing in CBD demand from UK consumers, with HandpickedCBD.com reporting record online sales in May.

The retailer said it had sold more than twice as many CBD products during the month than any other prior to the pandemic, adding that May’s sales were 124% higher than February before lockdown measures came into force.

“While CBD sales have been soaring since the country went into lockdown, this nascent market was already seeing exciting growth before [coronavirus] struck. A great deal has been written about the benefits of using CBD with many advocates using it to help relieve stress and anxiety. And that could explain why sales have been so strong during April and May, as large swathes of the country have been house-bound, and stress levels may well be at breaking point”, said George Vincent, director of Handpicked CBD.

“CBD is one of the most exciting products to enter the wellness market in years and we expect to see rapid growth in the next few years. And while the impact of the [coronavirus] pandemic is providing a welcome boost in sales in the short term, raising awareness and educating people on the benefits of CBD is more important if this market is to thrive long after the virus has gone”, he added.

READ: Zoetic surges as it predicts substantial increase in sales of Chill products in US market

The US market is expected to follow a similar trajectory, with Zoetic International PLC (LON:ZOE) predicting a “substantial increase” in sales of its Chill brand of CBD products in a trading update in May.

The company said the Chill brand’s focus on the tobacco replacement market is expected to be “especially attractive” as health concerns are exacerbated by the pandemic, adding that it hopes to conclude “further significant distribution contracts” in the first quarter of its current financial year.

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