Cannabis legalization has been a pivotal point for the Canadian economy. Three years into legalization, there are over 750 licensed companies selling or processing cannabis, and catalyzing billions of dollars each year, while generating thousands of jobs under the legal framework.
Currently a $4.1 billion market, experts note that the cannabis industry will continue to progress, becoming a $7.4 billion market by 2024, and a $8.6 billion one in 2026.
Now, the industry foresees a paradigm shift in the legal cannabis market, as the Cannabis Act — which legalized the recreational use of cannabis in 2018 — is under review by the Canadian federal government at the three-year mark. Changes are, however, already underway in the shape of Cannabis 3.0.
Unlike the industry’s second iteration, commonly referred to as 2.0, which included a growing variety of edibles, vape flavors, and beverages, Cannabis 3.0 will redefine the existing business models and mainstream supply chains, while bringing in advanced technology and integration tools to lower the cost of extraction and production; and enable a better understanding of consumer preferences.
“Having more exposure and less stigma associated with the [cannabis] industry and having more traditional brands entering the market will enable more sales and opportunities for us, being able to create partnerships and unique manufacturing capabilities,” Igal Sudman, CEO of B2B post-harvest solutions provider Ayurcann Holdings Corp told Proactive.
The further mainstreaming of the cannabis industry will be majorly led by technology: through biosynthesis and genetic modification; advanced processing and extraction methods for better quality cannabis products; and new data-driven strategies.
In other words, the new phase will be beyond cultivating cannabis.
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For Canadian cannabis extraction company Nextleaf Solutions Corp, Cannabis 3.0 is about the development of therapeutic products using its patented processes around the acetylation of cannabinoids (THC-O-Acetate and CBD-O-Acetate) and specialty molecules such as cannabinol (CBN) and cannabigerol (CBG), CEO Paul Pedersen told Proactive.
CBG is a rare non-psychoactive molecule with properties similar to CBD, which holds a strong potential to lead the third wave of the cannabis market with its therapeutic benefits.
Pedersen told Proactive that the upcoming changes in trends are about the “normalization of cannabis and it being a natural option to improve everyday life for people and their ailments.”
“We plan to commercialize novel compounds including CBN, the manufacturing of CBD-O-acetate and THC-O-acetate for innovative and purposeful therapeutic and wellness products at accessible price points that make the world a better place by helping with daily problems people have, such as addiction (opioid, tobacco), PTSD, sleep, anxiety, and pain,” added Pedersen.
Another company placing its bets on CBG is Willow Biosciences Inc, which is having success in producing high-purity, affordable CBG through biosynthesis. The Canadian company is hoping to produce commercial quantities of the rare cannabinoid for the consumer and pharmaceutical markets.
"From our vantage point, we can see the larger players in the consumer-packaged goods ecosystem becoming increasingly more bullish on the health and wellness aspects of the cannabis industry,” Willow CEO Trevor Peters told shareholders recently. “It has been our view all along that these entities need an ultra-pure, sustainably sourced ingredient supply to meet their long-term demands, and Willow's technology platform enables their entrance into this space."
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Blockchain-secured cannabis tracking technology is going to be another major breakthrough intervention in the market. Companies like TruTrace Technologies Inc are working to improve the cannabis supply chain while ensuring traceability and authenticity.
Its proprietary cannabis-tracking platform StrainSecure allows digital documentation systems, making it easier to understand consumer patterns.
In a recent move, the company entered into a strategic partnership with Australia-based technology company, Laava to collaboratively work on product provenance and traceability.
“Over the past several months we have seen significant stress within the global supply chain and with these significant delays and challenges it has become imperative more now than ever to ensure that products are safe and consistent,” said TruTrace CEO Robert Galarza in a recent statement.
“Our strategic partnership helps fill many of the gaps by combining the best features of our software platform with patented, next-generation, optical Fingerprint technology which serves as ‘on package’ authentication to provide a unique customer experience driven by blockchain, traceability, and testing.”
But it is hard yet to see how the much-anticipated changes play out in the cannabis industry as it heads into its next phase.
“It will be unprecedented new territory because there is no analog in other situations, like with the de-prohibition of alcohol,” said Klee Irwin, founder of Irwin Naturals Inc, a Canadian nutraceuticals company soon to leverage its retail channels with CBD and THC products. “Specifically, as I wrote about in my book, 'Pain Nation', cannabinoids help with thousands of unrelated disease conditions because of how they act on the master health regulating system of the body – the endocannabinoid system. These are truly remarkable molecules.”
Irwin concluded: “The industry will evolve in a way where wave after wave of newly discovered health conditions treatable with cannabinoids are discovered and how they will work their way into cosmetics, foods, beverages, and nutraceuticals. It is a deep mine of unexplored treasure.”
Contact Ritika at ritika@proactiveinvestors.com