Cannabis & Main: Global Cannabis Markets Only About as Big as 'a City in Connecticut'

The burgeoning global cannabis markets are the focus of the latest episode of Civilized's podcast series 'Cannabis & Main.' This week, host Ricardo Baca is joined by president and founding editor for Marijuana Business Daily Chris Walsh. Season 2 of Cannabis & Main is brought to you by Fluent Cannabis.

You can check out the latest episode of 'Cannabis & Main' below or download it or any of our past episodes for free from podcast providers like iTunes, Spotify and Stitcher.

Ricardo: Hello. Hello. Welcome to Cannabis & Main, a Civilized podcast where we extract one element from today's cannabis scape and go deep. I'm your host, Ricardo Baca, founder of Grasslands, a journalism minded agency. It's so great to be here with you today. You can learn more about this show alongside the marijuana news and cannabis lifestyle coverage you crave from Civilized, found on the world wide web at Civilized.Life.

Now, this week we're going to dive deep into cannabis and international markets with a guest whose job it is to be an expert on the ever increasing number of international markets where cannabis is becoming an economic factor. In fact, today's guest is globetrotting constantly to not only speak at events in Israel, Jamaica, Canada, Germany and beyond, but he's also traveling the world regularly studying this market for his work at one of the world's most influential cannabis business organizations. This is a great time to be having this conversation, because there's a lot of misinformation out there about where Canada is exporting to, and what's actually happening in Germany's medical marijuana market, and whatever happened to Uruguay's first of its kind recreational cannabis system, which took years to implement and has largely been overlooked, given the commercial potential of so many of Uruguay's neighbors?

This conversation truly speaks to how far this movement turned industry has come. You know, not long ago TV crews and reporters were descending upon Colorado to cover this one of a kind experiment, this wholly unique market, this thing that was happening in the Rocky Mountains and nowhere else in the world. Today, of course it's a completely different story in the US and with a federally legal marijuana market in Canada currently failing to supply enough product for its citizens while exporting to a number of different companies, cannabis has legitimately gone global. So, cannabis and international markets. Let's talk about it right here on Cannabis & Main.

Chris Walsh is the president and founding editor for Marijuana Business Daily, the cannabis industry's largest trade publication and the producer of the largest marijuana trade shows in the world. Chris, you've watched this market grow from your home state of Colorado to something that now legally exists on almost every single continent. How did this happen so fast?

Chris: I think it caught everyone by surprise, including us. I mean, you had the early days in 2009, and '10, and '11, when everyone was just focused on the medical cannabis states that kind of pioneered this. Then you had the recreational marijuana states. No one was looking beyond their home state, let alone beyond the country. What happened is in a very short period of time, just a couple years, you had companies that were starting to look outside their home states and looking to expand across this country, as they looked for licensing deals and other ways to do it.

Then what you've just seen in only the past two years is just the development of the market beyond our borders. So, with Canada legalizing recreational marijuana at the federal level and then almost three dozen countries now legalizing medical cannabis at the federal level, you've seen this creation that's happened very, very quickly across the world of a cannabis marketplace, mostly on the medical side, but as we've seen in Canada and Uruguay, you have recreational as well. It caught everyone by surprise, because lawmakers started legalizing in other countries very rapidly, and the dominoes started to fall. They all looked at other countries around them and made this move.

Ricardo: Speaking of being taken by surprise, how crazy was it to see this happen by a ballot initiative, by the people via the voting process, and then suddenly, as you mentioned, suddenly the lawmakers and the political leaders themselves are making these decisions and running on that platform to legalize?

Chris: That's one really important aspect of this trend. In other countries it's the lawmakers, the regulators, the officials, the government leaders legalizing, whereas in the US it started off mainly with the voters and then in medical shifted to, in more cases than in the past, the lawmakers actually doing this. But the global market has materialized completely differently. So, governments are embracing this. They see it as a public health issue, and they also see it as creating the potential for economic opportunities and for them to even lead a brand new industry globally. You have several companies trying to position themselves to do that.

Ricardo: So, you mentioned the economic opportunities of course, and thankfully these lawmakers are starting to see this as the public health issue that it is and not a criminal concern. But beyond that, we're still not even there in this country generally. So, why do you think that is? Why do you think that these other countries are so much more socially progressive than the US is on this subject?

Chris: That's a good question. I think it's because they are more or less really looking at this from the medical side. You have countries like Israel that are studying this, and it's legal federally, and can study it. There's veteran researchers and there are federal universities looking at this every day and studying its effects on cancer, and glaucoma, and everything else. Clearly we were following the US's lead with cannabis in the past. I mean, the US was the country that demonized it and then influenced the rest of the world. I think now what you're having is the rest of the world has realized this a lot quicker than the US, or at least Washington DC and the halls of power, that this isn't the plant or the drug that people made it out to be, the scary boogeyman that's going to ruin lives.

Here we're so dysfunctional right now in our government, and you've got two parties that are going at each other's throats. It's hard to get anything done here, and you can say that about a lot of countries, but it's been shocking at how we haven't gotten on-board yet, and all these other countries in South America, and Europe, and now even into Asia are light years ahead of us on this in terms of their thinking.

Ricardo: It's such a good point to make. I think a lot of people especially who are getting into the game more recently don't recognize that American drug policy is really largely responsible for the anti-marijuana drug policy that really infiltrated globally over the last decades. As you speak to their willingness to open their mind to this early research, but a lot of legitimate double blind, placebo controlled research as well showing us that this has legitimate medical applications. I mean, going back to the 1930s here in this country, Reefer Madness, I know it's thrown out all the time, but it seems like that really did a number on us as Americans. It seems like it's still very much lingering over the halls of power in DC that you mentioned, not to mention state legislatures across the country.

Chris: You had several generations of people in this country that grew up in an atmosphere where this was demonized, and it was demonized in every way possible, and it was demonized at the highest levels of the government. You had Nancy Reagan's War on Drugs and marijuana was a big part of that. So, people grew up with this constant reminder that this is bad. In other countries it was illegal, but there weren't big PR campaigns around it. So, I think that's part of it too. Here you had just had so many touch points that this is a bad drug that it was ingrained in so many people's lives to think that way, whereas in other countries they just knew it was illegal and maybe didn't even know why. So, there was less of a shift in mindset for an entire country that has to happen in these other parts of the world.

Ricardo: Well, I'm curious what you think, because when I think about the biggest story in the marijuana news space of the last year or two, my mind automatically goes to Canada, but you're a lot more tied into the news cycle than I am these days, especially since I stopped working in daily journalism. But what would you say? What's the biggest story in marijuana of the last two years?

Chris: It's hard to pick one, but you can pick a couple. You can absolutely say the legalization of recreational cannabis in Canada is the biggest or among the biggest, because of Canada being a G7 nation, because it was done federally, and because of how that market has developed, where Canada is now exporting particularly medical cannabis, that's what's focused on now, around the world and has become this dominant global player. So, it is Canada. It's not just the legalization of recreational marijuana. It's that they have embraced this. They've created an industry that's global, and they've really spurred the development of the international cannabis industry, and they're helping all these other countries get started with their programs.

Then I'd say the real notable trend is just the influx of investment dollars and interest from mainstream investors and mainstream companies. That we always knew would come eventually, but, again, like everything in this industry, it seemed to happen overnight. When you have Constellation Brands, a global alcohol distributor, make a $4 billion bet on a company in the industry in Canada, and then you have Goldman Sachs participating in that—obviously a major investment bank here in the US. So, it's these mainstream companies getting involved and mainstream investors. Now, the investment money is still really small in this industry compared to other industries, but you can feel it. You can feel everything starting to change, Coca-Cola teaming up with Tilray for $100 million research effort to look at CBD infused beverages. We all know what's coming, and that's the big story now, and that's going to be the big story playing out in the next couple years.

Ricardo: What's fascinating about that second big story that you're talking about, it's in some ways also a Canadian story. You're right. I'm glad you kind of corrected me there, because it's not just the legalization of adult use in Canada. It is so many other things that that has really opened up, including those markets. Now, when we see Aphria, the parent company of Philip Morris, come in and make a major investment in Canadian cannabis, we barely blink an eye, when that Constellation news two and a half three years ago was monumental with their first investment. I mean, do you remember how big that was, how crazy it was?

Chris: Yeah, that was huge. Then the massive investment, the $4 billion one, I think caught everyone off guard. We were actually hosting our international, MJBizCon International in Toronto, and had the CEO of Canopy, which received the investment, speaking the next day. He wasn't turning in his PowerPoint the day before, so I called him and said, 'Bruce ...' His name is Bruce Linton. I said, 'Hey. I'm sorry to bother you, but you haven't turned in your PowerPoint. We curate our content, whatever.' He said, 'I'm a little busy right now. We have a big announcement coming. I'm sorry. I'll get it to you.' He got it to us, but then they announced that day this massive investment, so everyone was kind of floored at the size of the deal, at the company involved, and what it would mean for the industry.

Ricardo: Well, before we dig too deep into this, Chris, tell us about your organization. I'm guessing anybody listening to this podcast is aware of the publication and the trade shows or at least one or the other, but what's the elevator pitch on what MJ Biz is and what it's grown to encompass in 2019?

Chris: I think a lot of people see us as different things. They see us as an event producer, or they see us as a news provider. Usually it's kind of combined or one or the other. They don't know the relationship between our conferences and our news. But in general what we're trying to do is provide business advice, insight, strategies any way we can to help people become successful in this industry.

That might be because we're providing news analysis on MJBizDaily.com or through our magazine, or it might be the market research we do, where we look at the size of the market and operational data for different types of companies, or it might be through our events, where whether it's meeting someone, networking, or hearing a great panel that you learn something about how to improve your business or get started in the industry, that's what we do, and that's how we see ourselves is that we're a content company facilitating people's businesses in that way, and through networking, and connections, and things on our show floor, where you can hopefully do business. So, that's what we do. We started as just kind of an online news provider for dispensary owners actually. That was our initial focus. Then it grew to what it is today.

Ricardo: As I said earlier, you were founding editor, and so you've been there from the beginning?

Chris: Yup. Our two co-founder, Anna and Cassandra, hired me once they had the business plan mapped out to launch what was Dispensary Insider. That's how I began.

So, there was no serious news coverage or analysis of the industry at all on a regular basis. It would be one off mainstream media kind of jumping in, and making jokes in the headlines, and having puns throughout, not taking it seriously. That's what we started doing, covering it like any other industry. So, I helped them launch that, and then we grew over time.

Ricardo: I'm curious, and maybe this question would have fallen more in line with when you were on our media panel at the Denver PressClub in January for that event, the Complicated Future of Cannabis Journalism. But I am curious, because your background is journalism—like mine, at daily newspapers—a very strict, up and down form of journalism. Marijuana has been ultimately slandered by a lot of journalists unintentionally who were just repeating what they were hearing from the mayor, or the governor, or the president, or whoever they happened to be quoting, who has access to a lot more information than we did as journalists. I guess I'm just kind of curious, did you have a moment in your coverage of this beat where you had to recognize that you had to get over some things that maybe were still lingering with you from those journalism days that were like, 'Oh. Wow. That was definitely wrong?'

Chris: Not really with me. I mean, that's the whole reason I decided to take this career move, because I saw it as an interesting opportunity. As a long time business journalist, I covered a lot of different industries and always approached them with the same kind of mindset. So, this industry was pretty unprofessional when we started. You know, you'd go do interviews with dispensary owners, and they would clearly be high and clearly not following good business practices either, not all of them of course. I don't want to paint everyone with that brush, but it was a different industry back then. A lot of the stereotypes were true.

From a journalism side it was just fascinating to start bringing real serious coverage, based on my business journalism background. I was earning my MBA at the time in the early days of MJ Biz Daily. So, I didn't personally, but I saw it. I saw nterviews by mainstream publications, even some of the biggest in the industry, and just them getting the whole thing wrong, just coming in with a different mindset, kind of a predetermined angle. The media's been friendly I think to the industry. I do not think they have been overly critical. If I were going to say anything, like if they had a, quote unquote, opinion, it seemed to be favorable. However, what you do see is that they didn't take it seriously until the last two years.

Ricardo: Diving back in, because I know you mentioned your market research that comes out of MJ Business Daily. I've always relied on those reports. They're just immensely valuable, especially because a lot of these state regulated markets are not collecting the data that we need as journalists and we need as communities to fully understand this industry. So, I'm curious. What is your guys' most recent market research saying that's really interesting about this construct of the international markets in the marijuana industry? Is there a factoid or a stat or two that comes off the top of your head that applies to this specific facet of the industry?

Chris: Well, one is that the US still accounts for over 90 percent of all the, quote unquote, legal sales globally. So, the global industry is materializing and developing, but these are small markets right now. They are really small. They are hampered by delays, like you see in states in the US, and they are kind of characterized by this medical focus. So, a lot of times the government's heavily involved. Sales might be through pharmacies, or they're just starting off at a sliver of what the potential market could be. We talk about this global market and all the trends, and people get excited. Then you look at the numbers that we've looked at in our reports, and the US is, again, more than 90 percent of it. Now, Canada, with the emergence of the recreational market, is performing well and is on track for it looks like at least a billion between medical and rec over the course of a year. But then there's a huge drop off.

That's one of the things that we've been noticing as we do more research. We have a European report coming out in a couple weeks. We're just consistently reminded when we do this research that these are small markets right now. Even Germany, where there's a lot of buzz and there's a lot of hype, isn't a very big market. If you compare them to the US, they would be like a city in Connecticut. Connecticut's market is already small, and you're talking about one city's sales. They're just really small right now, but growing and have a lot of potential in the long run.

Ricardo: So, why is there so much buzz behind Germany? Because it seems like that's what people talk about. Is that just one of the first export deals that Canad signed?

Chris: People talk about Germany because of the potential. It's a very large country. It's a leader in Europe. The way they've structured it, it's part of their healthcare system, so they have patients who are getting covered through their insurance, which is where a lot of the hype is coming from. When I was talking about some of these markets being the size of a sales in a city in Connecticut, I wasn't referring to Germany specifically, but some of these other ones are really small. Germany has more potential, but from a business standpoint they're not there yet. I think when you look at the population of Germany, how they've structured it, that's where the excitement comes in, but everything has to be sold through pharmacies right now. I think a lot of people are also hoping that these will open up more business opportunities down the road, maybe more types of products and consumption methods will be allowed in the long run. Then obviously they're hoping that this will eventually lead to adult use sales in some of these countries.

Ricardo: You said it yourself. You guys are known for helping people make the right decisions, especially when it comes to business and strategy. So, what are those other exciting markets, especially in Europe, the ones that have potential, even if right now they look more like a small city in Connecticut?

Chris: I mean, we're hosting an event in Denmark, in Copenhagen, our first European kind of cannabis symposium, in May. I went out and traveled around Europe and did a lot of market research, and we were looking at several countries to do it. Denmark was kind of a dark horse that came later in the process, but it made a lot of sense, because their government is embracing this from a business perspective. They want to become a hub of European medical cannabis and kind of export it to other countries there.

Ricardo: That's exciting. I heard that there was potential cultivation in line for them.

Chris: They've already started their industry, and they're really trying to position themselves as the European leader in this area, not only from a kind of scientific or progressive standpoint, but also from an economic standpoint. We actually chose them, because we thought it was the government embracing it. They're looking at it as a business opportunity for the country. So, that's an interesting one, to see where they go. You have other countries where it isn't embraced in that way or a country like Germany that is so big and has so many aspects of its economy that this is just on thing that some people are kind of focused on, but the country as a whole isn't really embracing it, like in a Denmark that's looking for a new industry to lead.

Then you have the UK, which really surprised people by legalizing medical overnight. As we've seen in other places, it was because of one case that was highly publicized, where some kid, some family needed CBD type medicine for their kids and couldn't get it. That changed people's opinion overnight, and they legalized it. I remember being in the UK six months earlier and talking to people there that were on the forefront of the cannabis legalization movement, and they said, 'We'll be one of the last in Europe.'

So, that shows you how quickly things can change, as we've seen in the US too. As that evolves, we'll have to see what that market looks like over time. But the UK, given its influence, if they loosen laws down the road, could be a big one.

Ricardo: Totally agree. We have a fun direct through line to this too, because season one we hosted a gentleman named Blair Gibbs, who's with Volteface out of England. Actually, he was living in Canada at the time when I interviewed him for season one. I definitely recommend the listeners go back to season one. The episode is Cannabis and UK Drug Policy. Of all of the European countries that we chose to focus on, it happened to be so, but he did talk about the patient who was raising hell with the government, and they made significant change. That's thrilling. I noticed you didn't say Netherlands, and I get it, but at the same time, Spain. Spain has this reputation. Of course there's Spannabis and consumption clubs that are existing on the fringes of the law, but is that exciting, or is the government there just still quite a ways away from movement?

Chris: It's hard to say. I mean, Spain in some aspects reminds me of the US, because Catalonia, a region, has legalized it, but it's not legal federally. Then you've had kind of this permissive attitude of allowing different forms of shops to where kind of collective model, or, well, you can kind of go and get it there or swap. There's been a lot of different ways that people have tried to approach this in Spain. But I think there's excitement there, but there hasn't been enough movement from a regulation and a legalization standpoint to get too excited now, especially for people outside the country.

Netherlands is another case where it's the first one that pops up to people's mind, but that's a complicated market there. The government hasn't really embraced it. Even the cannabis that you can get there, it's technically a look the other way policy. It's not that this is legal. It's we're going to look the other way.

Again, all these countries, just like in the US, are completely different from one another, how they address this, how they handle it, how they regulate it, where they are with their laws. That's one of the most complex things when you look internationally is that you have to take each country by itself and learn about it. You can't even take really a region and say, 'This is kind of the policy here.' Same in South America. Same in Asia. Now, countries in Africa are moving forward too, but they're all doing so completely differently.

Ricardo: Right. I do remember reading I think in your publication that the Scandinavian countries were expected to be more liberal outposts of, at the very least, medical cultivation or whatever that might be, but at the same time, you guys focused on Denmark. Something you said earlier got me thinking. That's really fascinating. I know I talked with you before that big European trip. What are the factors you and your colleagues considered before saying, 'This is where we're doing our first big European show?'

Chris: It's interesting, because we have just gone through the process that other companies are going through as well, like 'How do I get into the international market?' We just did that for our own company. We've been there and know the challenges. Obviously there's logistical things, like what's an easy place to get in and out of roughly, for Europeans specifically, but also for general international travelers. So, that's kind of where you start. You don't want to go in the middle of nowhere where there's 10 flights a day, but beyond that it was really finding the right fit in terms of were there people on the ground there that were eager, that would work with us? We didn't want to go into an international market and make the mistake that many companies do.

My MBA emphasis was international business, so we had case studies on this. Going into this I had my eyes wide open that the biggest mistake you make is going in and thinking you can replicate something that you've done in your country and do it there without really kind of working from the ground up again. There's cultural issues. People operate differently. They operate businesses differently. There's just a different mentality in general when you go abroad. Even when we went to Canada, it was the same thing. We couldn't just say, 'Ah. We're just going to do everything the way we do it here, and we'll be successful.'

One of the key things for us was finding people on the ground that we could work with, would help us. We didn't want to go in blindly. We didn't want to go in without any partners and people that could guide us and say, 'Hey. If you're doing a European thing, here's some of the content they might like.' We know how to do content at our events, but for your European audience it's different. One of the findings that we had, as I immersed myself over there, was that research and science side is a bigger part of their industry. That's normally something we don't really delve into, because our narrow focus has been on the business side, you know, executives, entrepreneurs, investors. That's our bread and butter, and that's what has made us successful. But we realized internationally this part of it was bigger and that if we copied our model here and went over to Europe it might fall flat, because we might get more regulators, and people in the science fields, and healthcare professionals, even though we're still aiming at the business people. So, that was one of the lessons we learned.

So, when we were looking, we found good on the ground people in Denmark who were eager, who embraced us. They were operating medical cannabis companies there and some of the biggest, including some that are aligned and have partnerships with Canadian companies, some of the biggest ones over there. Then also the government. The government, we had a guy from the Ministry of Foreign Affairs who is in Canada. He's our Canada guy. Part of what he does is on the cannabis side for Denmark. So, we had a government official who was helping us navigate the situation who was eager to work with us. That made it clear, plus the way that their government embraced this industry, wants to become a hub. Again, it's a good access point for people around Europe. So, all of that went into our decision.

Ricardo: I actually spoke at North Grow, the expo in Copenhagen, last year. What a great city for it too. Of course it makes sense that you guys, as MJ Biz Daily aren't so consumed with the fact that there's this really unique cannabis heritage in Denmark, specifically Christiania, but that has to be a nice, little bonus.

Chris: I took a little spin through there. Actually, I hadn't heard much about it until I saw something that you posted on Facebook when you went. Then I researched it a little more and was like, 'Wow.' So, when I went over there, the government official who was working with us kind of brought me through there as well. You know, they have a long kind of association with cannabis and acceptance and tolerance of it there. That's kind of a side benefit, because we're on the business side. It's not really a huge concern of ours, but it was a nice kind of like icing on the cake.

Ricardo: Maybe if we throw a Grasslands party at MJ Biz International we'll do it in Christiania.

Chris: There we go. That would be a good idea.

Ricardo: Haven't really thought about that until just now.

We've kind of covered Europe. Let's kind of expand the lens, the rest of the world. I mean, you know better than me, especially since you lived in South Korea for a while. I mean, this is now in Asia, in Africa, South America, but what are the specific countries that are of most interest to you and your readers right now, especially given that potential for business and investment?

Chris: Two of the most read stories we've had in the past year were writing about South Korea legalizing and Malta. Malta has been a big traffic generator for us as well, surprisingly. I think it's hard to determine where that's coming from. It could be it got pushed out in their local media with links to us, and it's just the average person looking, which really isn't our audience. But in general, I mean, again, it's early days in a lot of these countries, and it's hard to figure out which kind of structure is going to be great for the business person. But when you're looking at it, South Korea shocked a lot of people. I lived there. No one thought it was coming, kind of like the UK, but ten times worse in terms of the timeline of when people expected that. The reporter who broke that story for us, Matt Lamers, he's out of Canada. His wife's Korean. I knew him in South Korea.

She was shocked that this happened. That garnered a lot of interest. I think you can see why in Asia too, because of the population density in a lot of the cities and countries there, that if business markets develop that allow that industry to develop, these could be massive down the road.

South America has been interesting. You have Columbia. It kind of reminds us of Denmark, because they're trying to embrace it, and they're trying to become a regional hub for the medical cannabis industry. They've structured it. That's a little bit more business friendly than their neighbors. So, that's why we're going there. Also, I'm going to Bogota in a week and a half, because we're looking at doing something there as well in the second half of the year.

Ricardo: Seems like a very friendly government in Columbia as well.

Chris: Honestly, the jury's still out, and I don't want to steer anyone in the wrong direction, because there isn't a shining start like this is going to be a great country from the business side. This is going to be another Canada or a small US market, of that nature, of that size, of that dynamic. So, it's a lot of wait and see. A lot of these countries could take a while to really get up and running again. We found that to be the case. Denmark moved pretty quickly, as did Columbia. But I think it's more about the regional opportunities. Right? So, Asia, if things start moving there more than they already are, that's an attractive market. If Europe starts creating more of a business structure around the industry, obviously the potential's huge, but we don't know where that's going to go yet.

Ricardo: So, when you're assessing these international markets, are you assessing them specifically for THC marijuana or both THC marijuana and CBD hemp?

Chris: That's a really good question. There's a lot of confusion. Just like in the US, how states have their own definition of what medical marijuana legalization is, and what types of products you can have, and all of that, and on the hemp side what is technically hemp, and what isn't, that's very unclear in the US or it differs by state. You find that around the world too. The definition of hemp around the world is a lot different depending on where you are in terms of the concentration.

Ricardo: It's not a UN definition?

Chris: There are countries that are saying they're legalizing medical marijuana, but it's really hemp, or they're referring to their medical marijuana program as hemp, and it's actually medical marijuana or medical cannabis. So, you find a lot of different terms being used and definitions of what is what. That's really hard to get your arms around. So, when we look at the industry, we figure how can we narrow it down, so that it's not just this confusing glob of countries doing something that could be classified as something. When we do our reports, we kind of code them by kind of an advanced medical cannabis program that's similar to what you'd have here and then those who have legalized in a different way. The CBD side, we kind of keep in its own subcategory and focus on the other ones, because that gets really complex too, and it's really hard. It's hard to estimate the size of the market and the business opportunities in general. But over time we're going to develop our strategies, and algorithms, and research in all of these levels. But right now, since we're just getting into international over the last basically two years, it's kind of you take it one step at a time as you try and understanding the markets.

Ricardo: That makes sense, but I do wonder if you feel comfortable maybe assessing that global market place for hemp derived CBD right now? Especially post Farm Bill, pre-regulations from USDA and FDA here. But also Canada's a major producer, and we also know we're still importing a ton of distillate from China and Ukraine. I know you said there's no way to specifically quantify it, but where is the hot areas around the globe?

Chris: On the hemp side internationally that's where we're just starting our research. So, there are hot spots, but I don't want to mention them until we've done our thorough research, because we just started our sister publication, Hemp Industry Daily, relatively recently, you know, a year and a half ago, and are just really getting into that. I can tell you though that if you're looking at it, you have to be very careful, because there are estimates out there, and I don't know where people come up them. They sound reputable. They're from companies with well known names in the industry in some cases. Sometimes they're new.

The estimates are just crazy. It's going to be a $50 billion global industry in three years. Well, how do you know that? That's why I'm being really careful, because we don't like to talk about numbers or the size of things until we feel we have a good handle on it, and we don't yet for hemp and CBD. We don't. We're still figuring out what the Farm Bill means even for the US industry. Again, you'll see industries just for the US with between, oh, it's 1 billion or it's 20 billion. This is much like in the marijuana industry eight years ago, when we did our first market research report. There wasn't really any market research to speak of back then.

I think there might have been one report that was similar to what we were doing, but there was no data. So, a lot of things we had to come up. I was doing that report at the time for us and launched it. I had to come up with justifiable estimates. You know, how do you figure out the size of a state's medical cannabis industry if they don't even track the number of dispensaries, or how much tax they're paying, or sales obviously, or anything that you would normally use to get a handle on the size of a market? That's not quite the case internationally, because it's more government regulated, so you usually know the number or how much was produced or something. But it's just really hard to figure out where it's going and where it's at now. That's our big challenge now that we're trying to work our way through for our readers.

Ricardo: I completely see what you're saying. I've seen the same stats you're talking about, about the hemp derived CBD market in 2022, and the statistics are like $10 to $20 billion apart. It's like one of you are pretty off, if not both of you.

Chris: You know what? They're all off. We do our own estimates too. We just had our Hemp Industry Daily Investors Forum, and in the morning the editor of that, Kristen Nickels, had our slide from our research, and it had our estimate, and it had three or four others. They're all over the board. Her takeaway on that was we're probably all wrong right now. We're trying to give you an idea what this industry can be or what it is now, but if the numbers ever were to come out, which they won't, we'll all be off. This is a brand new industry that people are focusing on, and so it's in the infancy stage in terms of data and market research.

Ricardo: Well, that's a good point, but now that we are entering an era where we actually have collected data sets from the Canadian market, I'm curious. We're here talking about international markets, specifically marijuana. Let's switch back to THC marijuana. What are the surprises coming out of Canada right now from that perspective? I know I work with a client up there, and they have 10 plus licenses, and they only have three stores right now—the provinces aren't allowing them to open, because of the lack of product. I think we all anticipated certainly a shortage. I definitely didn't anticipate this, not that I'm an industry analyst or anything. What are the surprises that you're seeing from that economic forecasting standpoint?

Chris: What we're seeing is a lot of the concerns people had about the industry didn't prove out. So, nothing really shocked us about what's going on up there right now. I think that people were talking about the potential for oversupply. Some said there was going to be undersupply. People were saying both at one time. Most people said the supply issue, that there would be severe undersupply of course. I think that one of the surprises was actually how smoothly the first couple weeks went. I think what we experienced, what we're still experiencing in California is what a lot of people thought was going to happen in Canada, where it was just going to be kind of this mess. Sure. There have been plenty of problems, but it was smoother than some people thought at first.

I talked to our Canadian reporter, Matt, before he came here for sales numbers, for an update on those, but it doesn't seem like the sales are growing, what you would expect and what you've seen at the US, at the pace where it's just doubling every couple months for the first two or three years. There's just massive increases in sales month to month. You know, I think supply is probably the issue. Other provinces are still working through everything. So, I mean, I guess it's a little early so far to draw many conclusions, but we haven't been surprised by a lot of things up there.

Ricardo: What about valuations? I know that was one of the big stories of 2018. It doesn't seem like those valuations have calmed down a ton.

Chris: I mean, my thoughts have always been give the publicly traded companies a quarter or two of financial results after legalization, where recreational has been incorporated into their financial results. That's where I've been expecting the pain to come, because there was all the hype. All the valuations are built off the potential, not the existing situation for these companies. As they start releasing results, I think people are going to get a feel for the market more and see how these companies are doing. I don't think a lot of them are going to do as well as expected, because this is going to be a real indication of how that rec market is playing out there. Now, we're starting to get some of these reports.

But when it's all said and done, I think we're going to have a really good picture of whether these valuations have been justified in another couple months. Give it through the second quarter. When those earnings start coming out, we're going to have a good idea of what companies have valuations that were even remotely justified and which were all hype. I could be wrong, so making in this industry is a fool's errand, but I think a lot of these valuations were built on unrealistic expectations, at least in the near term. A lot of them were also made with the idea of, 'Hey, these are global companies, and they're expanding internationally.' But then when you're seeing the sales in these other companies are minuscule still, especially compared to what these Canadian companies are generating at home, that might cause concern among investors too that will bring down evaluations.

Ricardo: Ah, man. Well, this is Cannabis In International Markets. I want to thank our guest, Chris Walsh. Thanks so much, Chris, for joining us.

Chris: Thanks for having me on. Appreciate it.

Ricardo: This is Cannabis & Main, a Civilized podcast. I'm your host, Ricardo Baca, and we will see you next week.

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