Lots of people find the cannabis industry intriguing and promising and they decide they want to invest, but when they begin to do their research it becomes overwhelming. The industry breaks down into so many specific areas and if you aren't an insider you may not know which sector is the best. Who knew cannabis could be so complicated? Do you play it safe and stay with the ancillary businesses that don't touch the plant or is the agriculture side the easiest to understand?
Cannabis investment company Invictus MD (OTC: IVITF, CSE: IMH) simplifies it by targeting three specific zones within the cannabis industry that show the most promise for investors. These include cannabis cultivation in Canada, the agriculture play that includes fertilizer and nutrients and then the service category of data and delivery.
Medical marijuana became legal in Canada in 2001 and the country is currently creating legislation to legalize and regulate recreational marijuana. A report from Deloitte Canada forecasts that retail sales of marijuana in Canada could reach $6 billion by 2021. At this level it rivals Canada's spirits market. Total cannabis demand is expected to increase from 500,000 kgs in 2016 to 800,00 in that same time frame with the total cannabis supply keeping pace and rising to almost 900,000 kgs by 2021 in order to meet the demand.
It's cheaper for cultivators to grow outdoors, but that also brings less consistency. Indoor growing facilities are more expensive but provide a consistent product which is becoming more important as branded products need to deliver repeatable results for their customers. In Canada, these licensed producers are expanding current grow operations and new companies are applying to enter the space.
A bonus is that Canada's growers aren't limited to just the country's borders. Invictus is focused on a new licensed producer AB Labs in Ontario and licensed producer applicants like OptionCo. located in Alberta and PlanC BioPharm in British Colombia. AB Labs has licensed 16,000 square feet and is seeking more property for expansion. It will be able to produce 5,000 kg in 2018, but has plans to increase to 25,000 kgs by 2020.
Similarly Plan C and OptionCo. Have plans to establish their grow facilities and expand in phases. Of course all this agriculture will need products to support it. Cannabis cultivators in many areas are licensed for a limited amount of square footage and so they are motivated to maximize that space. While Miracle-Gro is the most famous of fertilizers, many in the industry complain about its affect on their plant's taste. Also, many cannabis growers have ethical issues with Miracle-Gro because the company also produces powerful poisons for weed killing.
Instead many master growers prefer the products of up and coming fertilizers and nutrients designed specifically for the marijuana market. It's also critical for growers to be able to trust the products they add to their plants since many of these harvests ultimately end up being consumed by people. Invictus is taking ownership in a company called Future Harvest that has been in the hydroponic and indoor growing industry for over 20 years. 95% of what the company sells is their own proprietary product.
The data and delivery vertical offer numerous choices from the software technology employed at the growing facilities to seed-to-sale technology. These ancillary businesses as they are called usually don't “touch the plant” affording a lower risk to the investment. While these businesses depend on marijuana for their growth strategies, they could also use their products for other industries. The growing facilities mentioned earlier often use technology in timing plant watering, feeding, temperatures and lighting.
Seed-to-sale technology is used for regulatory compliance purposes and tracks the plant from its beginnings to its consumption. This type of product is in demand from states seeking tight controls on the industry with Ohio being the latest state to accept applications for its tracking system. These products also have a great deal of stickiness once a state or company decides to use their software.
The delivery sector refers to the method of cannabis delivery like vaping products. Consumers are increasingly turning to methods other than smoking joints to consumer cannabis. Whether it's vaping or edibles, the sales of marijuana flower for smoking are decreasing as the sales of edibles and concentrates for vaping are rising. Invictus has chosen to put its investments towards a startup vaping company called Poda Technologies that combines bluetooth connection to an app for a smart approach to vaping.
As with any investment it is best to do lots of research and become educated before committing your hard earned dollars to an industry that has a high level of risk. The good part is that many of these companies are passionate about their industry and their product.
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