Turning a new leaf: 5 medical cannabis trends for 2018

Published: Jan 19, 2018

The global sentiment towards medicinal cannabis is rapidly shifting, as reflected by the changing legislative climate that’s emerged over the past few years.

With this increasingly receptive landscape also comes a budding (pun intended) market. According to Arcview Research, medicinal cannabis is expected to be a US$200 billion global industry by 2020. And according to research by the University of Sydney, medicinal cannabis in Australia alone could be worth more than $100 million a year.

Investors have clearly taken this in. 2017 has seen more highs for the ASX’s growing array of ‘pot stocks’, many of which have evolved in tandem with regulatory changes — including the Australian federal government’s loosening of restrictions around cannabis importation for medical treatment and legalisation of hemp seed food, as well as Canada’s proposed cannabis tax regime.

Riding this wave of green progress (and the innovation that goes with it), here are five emerging cannabis trends set to dominate in 2018.

1. Pet care

Humans aren’t the only ones shown to benefit from medicinal marijuana — the plant may also have positive health effects on pets, with the ability to create a calming effect, dull chronic pain, and significantly improve quality of life.

For instance, Creso Pharma’s (ASX:CPH) Swiss-approved hemp product, anibidiol®, is a natural complementary feed for companion animals, containing a standardised amount of hemp extract with cannabidiol (CBD), the non-psychoactive substance of the hemp plant. It promotes animal wellbeing by supporting immunity and moderating the pet’s behaviour. The CBD it contains doesn’t cause GI and dependency side effects, and has an excellent safety and tolerability profile.

CPH is in the early stages of development of these products, so investors should seek professional financial advice for further information if considering this stock for their portfolio.

It’s also THC-free — meaning it won’t get your pet high.

Sydney-based CannPal Animal Therapeutics (ASX:CP1), on the other hand, is developing its pre-validated lead drug candidate, CPAT-01. The drug, designed to provide pain relief for dogs as an alternative to nonsteroidal anti-inflammatory drugs (NSAIDs), is about to enter the clinical phase of the development program.

Companies like these are tapping into a sizeable market — specifically, a recession-resistant US$30 billion global companion animal drug market. There’s also a clearly receptive audience for these kinds of products, considering that 41 per cent of pet owners have considered or tried various alternative therapies, including nutritional supplements and herbal remedies.

2. Skincare and beauty

Cannabis is an antioxidant, helping to slow down damage to skin cells and prevent signs of ageing. CBD, moreover, plays a significant role in normalising unwanted skin growth, reducing inflammation and fighting off infection.

Harnessing these kinds of benefits is Perth-based Botanix Pharmaceuticals (ASX:BOT), which conducts research into CBD-based treatments of skin conditions including acne, psoriasis and atopic dermatitis. BOT uses a unique compound of synthetic CBD in its trademarked Permetrex gel which regulates skin function, growth and renewal.

Another company to hop on board this train is the Europe-based MGC Pharmaceuticals (ASX:MXC), whose Derma brand boasts three lines of CBD skincare, anti-ageing and cosmetics products. The products are produced under EU GMP and ISO supervision, and feature the company’s high-quality CBD extract, which is cultivated in its world-class facilities in the Czech Republic and Slovenia.

MGC Pharma has also recently penned an A$8 million deal with Varm Cosmo, an emerging Korean health care and beauty cosmetics company with a global distribution network.

This gives you a good idea of just how big the cannabis beauty space has become (and how much bigger it’s set to be in the not-so-distant future). The US$13 billion Korean beauty market, collectively referred to as K-Beauty, has become a leading force in beauty innovation — meaning MXC’s latest deal could see it bringing in major revenues.

3. Edibles

We’re seeing a major upswing this year in the epicurean side of the cannabis story, with a host of new cannabis-flavoured and infused food and beverage products. This market corner has a particularly strong resonance in the US, where recreational cannabis use has been legalised in eight states (29 states have also legalised marijuana for medical use).

In California alone, consumers bought more than US$180 million worth of cannabis-infused food and drinks last year (10 percent of the state’s cannabis sales), according to Arcview Market Research. Sales of pot-infused edibles like chocolates and cookies also increased 121 percent last year in Washington State, where recreational cannabis is legal.

Playing a big role in the edibles market is the humble ‘tarpene’, an ingredient which constitutes a big trend in itself. Tarpenes are the oils that give cannabis flowers and plants their unique fragrance, and interact with the endocannabinoid system in a similar way to cannabinoids.

This is a niche that is hottening up, with companies like eSense-Lab(ASX:ESE), Queensland Bauxite (ASX:QBL), and Creso Pharma all exploring products in the Edibles space.

4. CBD oil

CBD, or cannabidiol, oil could be the industry’s breakout ingredient thanks to the steady rise in its retail growth and investment.

In many countries across the world, CBD oil can be safely consumed by children and adults as a dietary supplement with very few, if any, side effects. It has considerable medicinal and therapeutic benefits for the treatment of a range of medical conditions including anxiety, inflammation and pain, and has been used to successfully treat drug-resistant epilepsy and severe seizures.

CPH as well as several other ASX-listed companies are already making use of CBD oil in their products.

5. Agriculture tech

It’s no surprise that cannabis cultivation is leading to an array of advancements in water and sustainability practices within agriculture. This, in turn, has led to a rise in cannabis companies focusing on efficient use of water, rainwater harvesting and solar power usage, innovations in hydroponics technology, alongside efforts to reduce their carbon footprint.

Two companies in particular are making a name for themselves in this space, with Hydroponics Company (ASX:THC) and Canada’s Roto-Gro International (ASX:RGI).

RGI’s fittingly named Model 420 is a hydroponic vertical growing system where seedlings rotate in a wheel around a central lamp to optimise electricity, water, food and floor space. It boasts up to ten times the production of traditional flatbed growing in the same amount of floor area, using 40 per cent less electricity.

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