The cannabis market is flourishing with many opportunities. At the same time the cannabis industry is surrounded by stigma, misconceptions, and unanswered questions. However in the past years Cultivators has seen positive movement towards a clear cannabis landscape. Cultivators created years ago a market segmentation and is delighted to see that it that has been adopted by leading industry professionals.
Cannabis is a highly versatile crop, finding its way in multiple industries. Our model acknowledges the following cannabis segments:
- Industrial hemp
- Daily care / Wellness products
- Recreational / adult use
- Medicinal cannabis production
- Pharmaceutical application
This model represents the segmentation of the cannabis market in its most basic form, therefore easily understandable at a glance. For the sake of providing a basic overview this is a simplification of the complex reality. Next to this, the cannabis industry is continuously developing.
The starting point: CBD and THC
The most widely acknowledged cannabinoid components of cannabis are CBD and THC. In order to understand of cannabis basic understanding of these components is necessary:
- THC – The psychoactive substance of cannabis used for recreative purposes
- CBD – The component known as a panacea for a wide range of conditions
These compounds can mainly be found in the flower of the crop. However, the cannabis plant also has multiple uses as a fibre, with no focus on the forementioned compounds. For each of the defined segments a description will be provided.
Industrial hemp (very limited THC and varying focus on CBD)
Industrial hemp is a field grown cultivar of cannabis that is predominately cultivated for its fibre E.g. ropes, textiles, food, paper, bioplastics, insulation and even biofuel. Industrial hemp normally contains very low THC levels (<0,2%) due to legal limitations. Hemp was one of the first crops traditionally being cultivated for its strong fibrous properties used as textile fibre. It has a long history and is gaining renewed interest because of its features.
Features of hemp fibre:
- Very strong fibre material
- Easy cultivation with limited crop work
- Positive impact on CO2 reduction
- Sustainable production with no / very limited use of pesticides
For the valorisation of the hemp plant in some cases the flower is being separately harvested to the compounds such as CBD. Important note is that allowance depends on the local legislation.
Daily care/ Wellness / Health (containing CBD, very low content of THC)
Daily care products containing cannabis compounds can be found in many stores in different countries. These products contain very low levels of THC (<0,2% or lower) due to legal limitations; CBD levels can be up to 20%. The legal framework on CBD is often ambiguous. The majority of these products can be found in the wellness segment.
The wellness products range from consumables such as CBD oils and capsules to cosmetic creams, gels and even shampoo containing cannabis compounds. In stores products can be found with a cannabis leaf or CBD written on it. In principle they are legally limited to make any health claims. For consumables the question is what type of legislation is applicable; especially those containing CBD. Regardless a large range of products can be found online and on the shelves.
Features of daily care products:
- An expanding market with wide range & an increasing number of products
- Cannabis derivates ranging from plant material to cannabinoids (mainly CBD)
- Cannabis compounds coming from field and/or indoor production
- Claimed beneficial use by consumers; no medical claims allowed
- Unclear regulatory landscape / landscape under development
Recreational / Adult use (containing high levels of THC, limited CBD)
Even though the recreational market of cannabis is illegal in most countries the market is evidently present. Recreational cannabis focusses predominantly on the psychoactive effects of THC; in most cases classified as a narcotic drug. In recent years Uruguay, Canada and various States in the United States have fully legalized recreational cannabis and more countries are to follow.
The legalization of cannabis is opening up investments and development in new products in this area. Methods of consuming cannabis are changing to new products such as edibles, extracts, vapours and drinkables. They are becoming increasingly more popular as opposed to the traditional way of consuming cannabis, smoking the flower. As a result cigarette and beverage companies are investing in cannabis companies and products. Also other companies are eyeing on the legalisation of this leisure market.
Features of recreational products:
- Existing illegal market with, traditionally, a strong focus on smokables
- Cannabis use and content focussed on psychoactive substance THC
- Cannabis content coming from, mainly, indoor production
- Multiple countries are looking into legalizing recreational cannabis
Medicinal (containing mix of cannabinoids)
Medicinal cannabis cultivation and use are both regulated in medicinal cannabis programmes of national governments. Medicinal cannabis is cultivated for its’ therapeutic and medical uses. Medicinal cannabis predominantly contains high CBD levels, however other compounds including THC and CBG are being used. The regulatory framework is defined by national governments and laid-out in medicinal cannabis programs. Governments enable the production and use of cannabis for medicinal purposes under (strict) conditions.
Ongoing research is taking place researching the (beneficial) effects of cannabis for treating ailments such as; spasms, seizures, nausea and nerve diseases. Pending national legislation, companies can apply for licenses to cultivate medicinal cannabis.
Features of medicinal cannabis products:
- Already legalized in multiple countries and more countries are following with medicinal cannabis programs
- Cannabis use and content is focussed on the compounds in the flower
- Cannabis used for patients to treat various illnesses, discomfort and pain relief
- Cultivated and produced in a controlled environment to meet quality requirements
Pharma (containing mix of cannabinoids)
Manufactured cannabis product that has surpassed all stages of clinical trials in order to be categorized as pharmaceutical product. In this case the cannabis content is used as Active Pharmaceutical Ingredient (API) for a medicine. Various cannabinoids of cannabis are being used for the development of API’s and medicines.
Features of pharmaceutical cannabis:
- Only limited number of pharmaceutical cannabis products on the market
- Pharmaceutical cannabis surpassed all stages of clinical trials (multiple years)
- Cultivation of cannabis under high pharmaceutical, quality standards under strict Standard Operating Procedures (SOP)
- Acknowledged as medicine, not as cannabis product
The learnings
The segmentation shows us the following learnings on the cannabis industry:
- Cannabis is way more than just ‘smoking weed’
- Cannabis is a multiple use and multiple purpose crop applicable in many industries
- Cannabis cultivation and production has to meet different legal & quality criteria
- Cannabis regulatory landscape is under continuous development and complex
- Cultivation of cannabis should be planned keeping the final product in mind
- The market opportunity of cannabis is a multi-billion euro industry
For more information:
Cannabis Cultivators
info@cultivators.nl
cultivators.nl