Lacuna Innovation: Cannabis Rising Report

VERSION1 / DECEMBER 2019
CANNABIS
RISING

CONTENTS CONTEXTUALISING THE CANNABIS TREND
WHERE THE GRASS IS GREENER
THE KEY COMPOUNDS IN CANNABIS
A CLOSER LOOK AT RECREATIONAL CANNABIS
KEY TRENDS RELATING TO CANNABIS
STRATEGIC MAPS
REGULATION MAP
MAP OF SELECT STARTUPS IN THE CANNABIS INDUSTRY
CANNABIS IN THE COMMERCIAL SPACE
CANNABIS RISING INSPIRATIONS
CANNABIS LIQUID PROCESSING TECHNIQUES
CANNABIS PRODUCT PACKAGING AND DISTRIBUTION
CANNABIS MARKETING AND ACTIVATIONS
SELECT STAKEHOLDER ACTIVITIES
STAKEHOLDER ACTIVITIES & PARTNERSHIPS
CANNABIS IMPACT AND OPPORTUNITIES
3
5
7
9
10
11
12
13
14
15
17
19
21
23
25
29
InspirationsTrends

CONTEXTUALISING THE
CANNABIS TREND

© Lacuna Innovation Ltd. 2019 4
INTRODUCTION TO
Is the booming cannabis industry
set to be a new global gold rush?
For an increasing number of
retailers and consumer packaged
goods companies, cannabis has
become associated with a potential
multibillion-dollar opportunity;
anchored by a portfolio of cannabis-
based products ranging from
beverages and over-the-counter
drugs to cosmetics, skincare items,
and beyond.
In October 2018, Canada became the
second country in the world (after
Equador) to legalise the recreational
use of cannabis, sparking a charge
of cannabis prospectors. Companies
like Constellation Brands, Coca-Cola
and AB InBev rushed forth to seize
the opportunity, sinking massive
investments into R&D partnerships
with cannabis producers in Canada
and beyond, paving the way for a
cannabis-infused future.
The trend of legalisation is sweeping
the world; almost every day, there
is fresh news of countries and
states proposing decriminalisation,
medical use or full legalisation. In
September 2018, our own South
African Constitutional Court ruled in
favour of private use and cultivation of
cannabis, indicating that legalisation
may not be far behind.
Now is the time to build
strategic capabilities for
a greener future.
CANNABIS
RISING

CANNABIS RISING
WHERETHE
GRASSISGREENER
According to CNBC, legal sales of
cannabis are expected to grow to
more than USD $20 billion by 2022
— from approximately $10 billion
in 2018.
Canada’s legalisation of
recreational cannabis in October
2018 caused a ripple around
the world, triggering a spate of
investment in R&D and cannabis
startups. As of December 2018,
a US Hemp Farming Act also
legalised the production and sale
of industrial hemp and
cannabidiol (CBD).
Locally, South Africa has
enacted its own historic ruling
on the private use of cannabis
in September 2018, a sign that
the country may soon make
cannabis legal for medical and/or
recreational use.
Brands in the FMCG industry
increasingly view the cannabis
industry as an opportunity to
innovate existing products or
come up with altogether new
products and experiences to
appeal to various age groups who
crave novelty within this space.
Moreover, the reported health
benefits of cannabis hold
much appeal for conscious
consumers and may see
consumers substituting
alcohol for cannabis-infused
beverages that reduce some
of the risks associated
with alcohol.
Now is the time to lay the
groundwork for future
capabilities in this rapidly
growing industry.

WHERE THE GRASS IS GREENER
This could potentially
be one of the most significant
global growth opportunities
for the next decade.
Constellation Brands CEO Rob Sands
We will be in a ready-to-go
position and, you know, one
of the first on the playing field
as the market opens up.
Mark R. Hunter, CEO and President
of Molson Coors Brewing Co.
of consumers have tried cannabis in
places where it is legal.
of US alcohol drinkers also consume cannabis.
This number is expected to grow.
40%+
37%
INTERESTING
FACTS

CONTEXTUALISING THE CANNABIS TREND
THEKEYCOMPOUNDS
INCANNABIS
Tetrahydrocannabinol (THC)
and Cannabidiol (CBD) are the
two principal cannabinoids
in the cannabis plant. CBD is
renowned for its medical
capabilities; including pain
and inflammation treatment
and anxiety management,
among others. On the other
hand, THC is psychoactive
and has enormous potential
for recreational purposes in
adult drinks.
CBD has the same chemical
formula as THC, only with
the atoms in a different
arrangement. Due to its
ability to induce mind-altering
effects in the user, THC is
still classified as an illegal
substance in most countries
around the world. THC’s
molecular structure allows it
to activate the brain’s
CB1 receptors, resulting in
psychoactive effects.
The increasing traction of
medical cannabis has led to
breeders actively seeking
to create strains with
higher CBD-to-THC ratios to
minimise the psychoactive
side effects. However, using
the entire plant reportedly
enhances the entourage
effect, a phenomenon in
which synergistic interactions
between the various
pharmacological compounds
in cannabis result in
additional beneficial effects.

Heineken:
Heineken-owned Californian
craft brewery, Lagunitas,
launched a THC and CBD
infused sparking water range
called Hi-Fi Hops.
Tarukino:
US cannabis-based company,
Tarukino, introduced Happy
Apple: a cider infused with 10mg
of THC per 120ml serving.
EXAMPLE 1 EXAMPLE 2
The potential US market for cannabis
compound-infused beverages by 2022,
according to Canaccord Genuity.
of epileptic patients experienced better recovery with
fewer adverse side effects after using plant-based
CBD extracts, according to Frontiers in Neurology.$600m 71%
THEKEYCOMPOUNDS
INCANNABIS

As the first G7 country to legalise
recreational cannabis, Canada is
expected to become the hub of
innovation and entrepreneurship
for the budding industry. The US will
soon follow suit, with cannabis now
fully legal in nine states including
Washington DC.
There is currently no consensus
between forecasted valuations of
the recreational cannabis market.
The Canadian Imperial Bank of
Commerce (CIBC), has stated that
the recreational cannabis market in
Canada alone could be worth USD
$6.5 billion by 2020. Meanwhile,
cannabis research firm Brightfield
Group believes the figure is closer
to $5 billion, and New Frontier Data
places the figure at $9 billion by 2025.
A CLOSER LOOK AT
RECREATIONAL
CANNABIS
As the first G7 country to legalise
recreational cannabis, Canada is
expected to become the hub of
innovation and entrepreneurship
for the budding industry. The US will
soon follow suit, with cannabis now
fully legal in nine states including
Washington DC.
A comprehensive audit would require
reliable data on recreational sales
over time to assess the market
accurately. This would have to be
done in each country and state where
the substance is legal and would be
dependent on the regulations of that
country or state.
Cannabis products are poised to
disrupt various industries. Hemp, for
instance, can be used throughout
manufacturing — in construction
material, paper, biodiesel and energy,
plastics, textiles, fashion and more.
Services such as e-commerce,
banking, cryptocurrencies and law are
being adapted to accommodate the
substance while it’s still prohibited
in various capacities. The chemical
component CBD will find its way into
pharmaceuticals, medicines, wellness
and beauty products.
The greatest and most immediate
impact will be felt in alcohol, tobacco
and food industries; where hemp,
CBD and THC can all be used, and
in which a cannabis use-case is the
most powerful.
increase in consumption through legal
channels is expected in Canada
of consumers who consume both cannabis
and alcohol are Millennials
35% 45%

ADVENTUROUS CONSUMER
Adventurous consumers are driven by
the pursuit of novel and unconventional
experiences; something synonmous with
Millennials. Being relatively new to the
market, cannabis-infused products are
subjects of interest and curiosity to the
masses due to their ability to enhance
social status lend prestige to
early adopters.
KEYTRENDSRELATING
TOCANNABIS
FUNCTIONAL FOODS
Consumers are increasingly turning
to functional foods and beverages
that promote health and physical
performance. Cannabidiol (CBD) in
particular is gaining popularity within
the food and drinks industry as it is
non-intoxicating and reduces anxiety
and inflammation.
HEALTH POLICY & REGULATION
Governments are proactively regulating
the causes of poor health through policy.
This has made it necessary for FMCG
companies in the alcohol and tobacco
industries to use alternative ingredients
that have fewer negative effects. The
decriminalisation and/ or legalisation of
cannabis in countries like Canada, the
US and South Africa have created an
opportunity for alternative, less harmful
ingredients in consumer products.
PROLIFERATION OF CHOICE
Proliferation of choice in the growing
number of product and service options
available to consumers has created
a need for brands to differentiate
themselves and win consumer loyalty.
In recent times, the market has seen
an influx of cannabis-infused products
like vape oil, pain-relief creams, patches,
edibles, drinks, makeup and even
infused waters.
NEW MARKETS
According to cannabis publication
Kindland, the average cannabis consumer
spends $645 a year on cannabis and
related products. The continued
legalisation of cannabis for medicinal and
recreational use has led to the creation of
new markets, as companies continuously
manufacture new consumer products.
NICHE CONSUMPTION
The emerging trend of cannabis-infused
drinks and products is leading to a
number of niche products and services.
These products and services appeal
to a specific socio-economic class of
consumers. Some parallels can be drawn
to coffee culture.

STRATEGIC MAPS
CANNABIS
REGULATIONMAP
RECREATIONAL USE DECRIMINALISED
MEDICAL USE ONLY ILLEGAL
This map highlights countries and
states where cannabis is legal or
decriminalised and to what extent.
UNITED STATES
OF AMERICA
SOUTH
AMERICA
AFRICA
CANADA
ALASKA
TEXAS
FLORIDA
CT RI
NJ
MDINDIANA
WEST
VIRGINIA
WASHINGTON
OREGON
CALIFORNIA
NEVADA
IDAHO
MONTANA
WYOMING
COLORADOUTAH
ARIZONA NEW
MEXICO
OKLAHOMA
KANSAS
NEBRASKA
MINNESOTA
IOWA
MISSOURI
ARKANSAS
LOUISIANA
MISSISSIPPI
ALABAMA
TENNESSEE
GEORGIA
SOUTH CAROLINA
NORTH CAROLINA
WISCONSIN
MICHIGAN
MAINE
NEW YORK
VT
NH
MA
DE
PENN
OHIO
KENTUCKY
VIRGINIA
ILLINOIS
NORTH
DAKOA
SOUTH
DAKOA
EUROPE
RUSSIA
CHINA
INDIA
AUSTRALIA

STRATEGIC MAPS
SELECTSTARTUPSIN
THECANNABIS INDUSTRY
Aphria
Extracting cannabis oil from
clean dried cannabis to produce
pure, safe cannabis oil products.
TECHNOLOGY/PATENT
Exclusive global preferred rights
to RDT’s QuickStrip™ delivery
technology for both medical and
recreational cannabis market.
MAJOR INVESTMENT/
MILESTONES
In January 2018 , Aphria collaborated
with UNOapp Inc. to develop tech
and analytics solutions for Canada’s
adult-use cannabis industry.
Sprig
Crafted CBD soda drinks made using
high-quality, all-natural agro hemp.
TECHNOLOGY/PATENT
CBD-infused soda.
MAJOR INVESTMENT/MILESTONES
Has raised $210 000 investment from
various unnamed investors.
CanopyGrowth
One of the largest startups
producing a variety of medical
cannabis products.
TECHNOLOGY/PATENT
Proprietary genetic hemp and THC-rich
cannabis breeding programme.
Received USD $4 billion investment
from New York-based Constellation
Brands in November 2018. various
unnamed investors.
RadientTechnologies
TECHNOLOGY/PATENT
Patented Microwave Assisted Processing (MAP) extraction technology.
Received $12 million investment from Aurora Cannabis in 2018 to
expand its range of extraction-based cannabis products.
HighStyleBrewingCo.
Hand-crafted THC-infused non-
alcoholic beer for the US market.
TECHNOLOGY/PATENT
Proprietary de-alcoholising technology
CeriaBrewingCompany
Non-alcoholic craft beers that include 5mg of THC.
TECHNOLOGY/PATENT
Proprietary de-alcoholisation technology prior to THC-
infusion.
Investment/funding details not publicly available.
Cannabiniers -TwoRoots
BrewingCompany
Non-alcoholic, cannabis-infused
active ingredients that evenly
disperse in beer and are absorbed
rapidly in the bloodstream.
TECHNOLOGY/PATENT
Proprietary de-alcoholising technology
Recently embarked on a $25 million Series
B round to fund further expansion.
CannamedicalPharma
High quality cannabis varieties, cannabinoid oil and
marijuana grinders, to treat conditions including
cancer and chronic pain.
Raised €15 million in a Series A round from Orkila Capital
in January 2019.
RCKMedicalCannabis
Breeds repeatable & stable cannabis hybrid-seeds for the medical &
recreational markets.
TECHNOLOGY/PATENT
Proprietary toolbox include various cannabis-specific biomarkers.
Recently embarked on a $25 million Series B round to fund further expansion.
PoisonCityBrewing
Hemp CBD-infused ‘Durban Poison’ craft beer
with intense aromas and flavours of cannabis
sativa balanced by notes of hops.
TECHNOLOGY/PATENT
Sold close to a million units of its hemp lager
between October and December 2018.
TheCannabisCompany
Producer of world’s first gin
distilled using myrcene terpenes.
CannaCulture
Provides cannabis oils as an alternative treatment
to illnesses including lung and liver cancers.
VerveDynamics
Vegan-friendly manufacturer of highly
purified botanical extracts.
TECHNOLOGY/PATENT
In-house customised phyto-extractions and
nutraceutical ingredients.

CANNABIS IN THE
COMMERCIAL SPACE

CANNABISRAISING
INSPIRATION
Cannabis appeals to consumers’ sense of
adventure and desire for unconventional
experiences. This, in addition to its
associated medical benefits, has given it
a foundation within commerce. However,
legislation has denied businesses access
to funding from financial institutions,
resulting in cannabis being the least
branded mass-consumed product. Once
cannabis startups can use banks and
trade stocks like any other business, the
cannabis economy will drive innovation
and development of new products to
service a growing consumer base.

CANNABISRISING
INSPIRATIONS
Using hydroponics in cannabis
production speeds growth and
produces higher concentrations of
active compounds.
Different cannabis production methods impact
the quality of the crop. However, the extensive
requirements may affect the quantity produced.
The quality of cannabis crops depends on a
multitude of variables, such as temperature,
lighting and humidity — all of which affect
cannabinoid concentrations.
The Trichome Institute in Colorado
is dedicated to cannabis
science, education and training,
producing cannabis ‘sommeliers’.
Consumer perceptions of cannabis is skewed
as the narrative has been directed toward
the negative impacts of the substance after
longstanding prohibition.
The awakening of the commodity has created a
need for industry experts theequivalent of wine
sommeliers, to provide the knowledge and skills
to be cannabis connoisseurs.
In December 2018, the UK’s first
cannabis restaurant, Canna
Kitchen, opened in Brighton.
Entrepreneurs are capitalising on the
underground popularity of cannabis
and its rise into the limelight, which is
particularly attracting Millennials and Gen
Z consumers.
The plant’s taboo reputation helps to
attract curious consumers to the vast array
of emerging products and experiences
associated with it.

CANNABISLIQUID
PROCESSING
TECHNIQUES
The cannabis industry is witnessing
massive investment in research and
development into areas such as dose
consistency, methods of extraction, and
maximisation of health benefits. There
has been a surge in interest in companies
and equipment that facilitate vital
processes like terpene extraction and
trichome agitation.

CANNABISLIQUID
PROCESSINGTECHNOLOGIES
Butane terpene extraction creates
the most concentrated end-product,
compared to supercritical
CO2 extraction.
Terpene extraction presents unique challenges
because of its delicate and volatile nature;
however, it’s immensely valuable because it’s
responsible for the smell, taste and
physiological effects of cannabis.
The terpenes myrcene and beta-caryophyllene
have anti-inflammatory properties and help with
pain, while limonene is known to have an
anti-depressant and anti-anxiety effect.
Ohio-based tech company Apeks SuperCritical
manufactures a wide range of mechanical
systems for terpene extraction and processing.
Ceria Brewing Company introduced
a Belgian ale dubbed ‘Grainwave’
which is infused with 5mg of THC.
US companies like Ceria are turning to vacuum
distillation, a method developed around 1978,
which reduces the alcohol content to less than
0.5% ABV.
The vacuum distillation method perfectly
retains the drink’s odour, taste, and
properties, while removing the alcohol.
Closed-loop extraction
is considered cleaner for
applications in commercial
cannabis and medicinal
facilities.
Closed-loop extraction’s sophisticated
method collects more butane hash oil
(known as shatter), which has a stiff
glass-like appearance and, at highest
quality, can cost $40 per gram.
Increasing analytic testing and more
stringent regulations on acceptable
residual butane levels have limited the
method’s applications, especially for
medicinal products, making closed-loop
extraction a better choice.

CANNABISPRODUCT
PACKAGINGAND
DISTRIBUTION
Packaging of cannabis products will
certainly be subject to strict government
policies and regulations that promise
to constantly evolve and vary regionally.
Producers of cannabis products need to
innovate their packaging while being
mindful of laws that impose conditions
such as that packaging be child-resistant,
opaque and transparent, tamper-proof
and resealable.

CANNABISPRODUCT
PACKAGINGANDDISTRIBUTION
In October 2018, the state of
California introduced new
packaging regulations for
cannabis products.
An increase in government and state regulation
around packaging cannabis-related products is
focused on ensuring the public’s safety and
clearly communicating the product contents.
New regulations also aim to eliminate white
labelling from the industry, requiring companies
to either modify their business models or get
licensed in order to remain compliant.
Edible pastilles and cannabis
vaporisers brand, Beboe, targets
design-savvy professionals with a
premium line of packaging.
Businesses need to produce quality products
that appeal to the consumer while navigating
regulations that can restrict innovation.
To appeal to first-time users, designers will
have to create non-threatening packaging and
choose between premium options or simple
styles, depending on their target market.
‘Potshotz’ by Prohibition Gold
are pre-measured powdered
marijuana servings that can be
mixed into drinks or food.
Since regulations differ in each country,
state or province, companies are having
to adapt to the individual laws in
each jurisdiction.
Unit dose formats that allow the user to
determine how much additive is mixed
with their drink, have been tipped as a
flourishing theme in cannabis packaging,
due to its strong use-cases.

CANNABIS
MARKETING
ANDACTIVATIONS
The legalisation of cannabis means
the new industry requires a perception
change to position the substance and
related products as more customer
friendly. In order to appeal to cross
generational consumers whose curiosity
fosters healthy enthusiasm for cannabis
and related products, companies need to
reframe cannabis in order to remove the
stigma associated with the plant.

CANNABISMARKETING
ANDACTIVATIONS
Cannabis tech company, American
Green, sells cannabis through its
ZaZZZ vending machine which
accepts cash and Bitcoin payments.
The ZaZZZ vending machine uses biometric
technology as a way of regulating sales of its
cannabis products and accepts cash and
Bitcoin payments.
American Green speculates that smart kiosk
dispensing is a potential solution to deliver
all age-restricted products such as alcohol,
tobacco, cannabis and pharmaceuticals.
Super-premium cannabis lifestyle
brand Ignite Cannabis Co. offers
THC and CBD products entirely
through e-commerce sales.
Consumers’ affinity for premium products —
as well as easy access to them — has gone
untapped in an industry that has long been
underground due to a lack of
suitable regulation.
The infancy of the cannabis industry presents
an opportunity for modern purchasing methods
like e-commerce, delivery on demand and
subscription models.
MOCA (Modern Cannabis)
hosted a three-day pop-up
display called ‘Yes We Cann’
to educate consumers about
medical marijuana.
Companies committing to cannabis
products will have to manage new to-
market consumers with the aim of
removing stigmas and ensuring a
positive experience.
In the phase between the launch of a new
market or product and mass adoption,
consumers’ curiosity and need to explore is
a powerful force for businesses to leverage.

SELECT
STAKEHOLDER
ACTIVITIES
A number of companies in the beverage
industry are investing in research
and development, forming strategic
partnerships with cannabis producers
and specialists. These organisations are
seeking a first-mover advantage in
countries and states where recreational
cannabis has been legalised, or is
about to be legalised, by building future
capabilities today.

SELECTSTAKEHOLDER
ACTIVITIES
Constellation Brands invested USD
$4bn in Ontario-based cannabis
company, Canopy Growth, bringing
its stake up to 38%.
Canopy Growth CEO Bruce Linton hinted to
CNN that a potential product could be a
calorie-free drink infused with cannabis,
designed to help fight depression.
Canopy Growth provides a single platform for
Constellation to address all global markets and
product formats, including both CBD and THC.
Molson Coors Canada (MCC) and
HEXO Corp have formed a joint
venture called ‘truss’ to develop
cannabis-infused beverages.
Molson Coors has announced that it will be one
of the first brands to launch a cannabis-infused
beer, as soon as the Canadian market opens.
The formation of Truss has been regarded as
a creative play into the marijuana industry as
it offers investors low-risk marijuana exposure
without moving for front-runners, Tilray and
Canopy Growth.
AB InBev have teamed up with
Canadian cannabis company,
Tilray,to research cannabis-
infused drinks.
Due to its large market share, AB InBev is
considered to be most affected by
declining beer sales across the US.
AB InBev’s partnership with Tilray signifies
that the brand is considering bringing
more appealing non-alcoholic alternatives
to market.

STAKEHOLDER
ACTIVITIES &
PARTNERSHIPS

STAKEHOLDER
ACTIVITIES AND PARTNERSHIPS
Key stakeholders in the cannabis and beverage industries
are forming strategic partnerships an attempt to corner
the medical and recreational cannabis market.

ABINBEV&TILRAY CRESOPHARMA&LGCCAPITAL
PROVINCEBRANDS
&LOSTCRAFTBEER
FORMFACTORYINC.&
VERTICALCOMPANIES
MOLSONCOORSCANADA
&HYDROPOTHECARY
HILLSTREETBEVERAGE
COMPANY&LEXARIA
BIOSCIENCE
ABInBev and Tilray, a global pioneer in cannabis
production and distribution, have announced a partnership
to research non-alcoholic beverages containing
tetrahydrocannabinol (THC) and cannabidiol (CBD). The
partnership is limited to Canada and decisions regarding
the commercialisation of the beverages have yet to
be made.
In April 2018, Australian-Swiss cannabis company Creso
Pharma announced the production of its new line of
cannabis-infused beers and tonics. The beverages are being
developed through Creso’s joint venture partners, Baltic
BeerCompany and LGCCapital.
In November 2018, Canadian cannabis company Province
Brands partnered with Ontario-based LostCraftBeer to
produce beer brewed from cannabis as a substitute for
barley. The collaboration permits the latter to use Province’s
patent-pending technology to mash and ferment cannabis.
In August 2018, FormFactoryInc. and VerticalCompanies
of California entered a joint partnership where Form Factory
is scheduled to build a full production facility at Vertical
Companies’ licensed Needles, California campus to co-pack
an array of new infused products for the California medical
and adult recreational cannabis market.
MolsonCoorsCanada is collaborating with Canadian
Hydropothecary to make cannabis-infused, non-alcoholic
beverages for the Canadian market. Following the
legalisation of recreational marijuana in Canada in
October 2018, cannabis has become the most exciting
and rapidly-growing consumer segment, especially in the
beverage industry.
Canada’s HillStreetBeverageCompany has collaborated
with Vancouver-based LexariaBioscience to develop a
cannabis-infused, non-alcoholic wine. This collaboration
involves the use of Lexaria’s innovative DehydraTech to
quickly add Tetrahydrocannabinol (THC) to drinks without
compromising wine’s original taste and odour.
STAKEHOLDER ACTIVITIES AND PARTNERSHIPS

PROVINCEBRANDS&YUKON DIAGEO
VERTICAL
&FORMFACTORY CANOPYGROWTH,DADDY
CANN&HIGHLANDS
BIOMEGROWINC.&CBD
ACRESMANUFACTURERINC. COCA-COLA
In November 2018, Canadian beverage company Province
Brands signed a deal with craft brewer Yukon to sell its
cannabis-infused pilsner. Unlike Province’s developing
products, which are infused with tetrahydrocannabinol
(THC) and other phytocannabinoids, Cambridge Bay
Imperial Pilsner is a hemp-based alcoholic beer.
In August 2018, Canadian media house BNN Bloomberg
reported that alcoholic beverage company Diageo is in
talks with at least three Canadian cannabis companies
with the eye to introduce marijuana-infused drinks to
its portfolio. Although Diageo has refused to comment,
shares in Canadian cannabis companies have surged
dramatically. Acres using its unique Nano lipid,
solventless extraction process.
In September 2018, US cannabis-based companies
Vertical and FormFactory announced a partnership to
create more than 25 cannabis product brands for the
Californian market. The brands will work together to
develop new cannabis-based products and packaging at
a dedicated production unit in Needles, California.
In May 2018, CanopyGrowth announced its entry into
the African market with the acquisition of a Lesothobased
cannabis company DaddyCann, trading as Highlands,
which holds a license to cultivate, manufacture, supply,
hold, import, export and transport cannabis and its resin.
In February 2019, BiomeGrowInc. announced a
Memorandum of Understanding providing Biome with
preferential access to a high quality and low-cost supply
of Cannabidiol (CBD) concentrate from CBDAcres
ManufacturerInc. The MOU is for a period of five years
pursuant to which Biome may acquire up to 20,000kg per
year of sun-grown, hemp-based CBD extract from CBD
Coca-Cola says it is monitoring the nascent industry
and is interested in using CBD in beverages as soda
consumption slows. The Atlanta-based soft drinks maker
is in talks with Canadian marijuana producer Aurora
Cannabis to develop the drinks, according to a report by
BNN Bloomberg.
STAKEHOLDER ACTIVITIES AND PARTNERSHIPS

CANNABIS
IMPACT AND OPPORTUNITIES
Two competing perspectives are
present when discussing the impact
of cannabis on the alcohol industry.
One describes cannabis as a major
disruptor that addresses the global
decline of alcohol sales as consumers
lean toward moderation and the rise
of healthy alternatives. The other
argues that cannabis-infused drinks
do not meet the same consumer need
that alcohol addresses and so is not a
suitable substitute — or threat.
It is generally agreed that there
is overlap between alcohol and
cannabis. However, because they
have vastly different psychoactive
effects, each serves a different
function. As such, each fulfils a
different consumer need state. It
is yet to be determined whether
the various occasions for alcohol
consumption can be adequately and
entirely addressed by cannabis. One
clear overlap, however, is the wind-
down occasion.
Cannabis-infused drinks are an
interesting product, with built-up
enthusiasm and curiosity bound to
cause an initial trial surge. However,
the need the product addresses is
not yet clear. The future structure of
the cannabis industry is dependent
on how consumers will decide to
ingest their THC and CBD. This will
determine whether consumers prefer
their refreshment separately from
their legal high.
A January 2019 report by the Distilled
Spirits Council titled ‘The Impact
of Retail Marijuana Legalisation
on Alcohol Sales in Colorado,
Washington and Oregon’ — US states
where cannabis is legal — found that
per capita alcohol sales were in line
with national trends.
However, the impact of cannabis
cannot be ignored. Canada’s Horizons
Marijuana Life Sciences Index ETF
(HMMJ), passed the CAD $1 billion
mark in assets in September 2018.
Many investors support companies
that have adopted a cautious
experimental approach (such as
Heineken and Molson Coors),
compared to those that have major
direct investment in cannabis, such as
Constellation. It is left to businesses
to decide on the level of threat and
the level of opportunity it presents.
Distell has determined that the
impact cannabis could have on
business operations is substantial,
and addresses the Cannabis Shift
within Distell’s 2025 Transformational
Growth Strategy.

CANNABIS IMPACT AND OPPORTUNITIES
CHALLENGES
of consumers say they use
cannabis to improve their mood.
of consumers say they indulge
to have fun with friends.
48%
1. 2. 3. 4.
58%
While governments work
to define policies aimed
at conducting safe trade
of cannabis products, it is
up to beverage companies
themselves to promote
responsible consumption.
As the segment opens,
brands will have to educate
consumers on how much is
too much.
The fat-soluble nature of
cannabinoids means their
effect is dependent on what
a consumer has digested
before intake. This makes
the experience somewhat
unpredictable. Beverage
companies need to assess
the metabolisation rate and
inform consumers of what
they might expect from
the product.
As cannabis can be
consumed in various
formats, those beverage
companies choosing to
produce a cannabis product
would need to either tap
into the existing cannabis
culture or define a suitable
occasion for consumers to
enjoy their product, or face
the risk of being rejected
for an alternative
delivery method.
Strict regulation may hold
restrictions for brands
marketing cannabis
products, limiting access
to advertising platforms
and impeding packaging
designs. The market is
currently unpredictable,
and the rules could suddenly
change. Brands will need
creative solutions to
connect with consumers
that seek reliable
information about
cannabis products and
their properties.

FUTURE PROOF YOUR BUSINESS TODAY.
DISCLAIMER
This report is provided for information purposes only and should not be copied or redistributed. Trademarks, logo designs and/or
brand names featured in this material and not owned by Lacuna Innovation are owned by the relevant proprietor of the particular
trademark and/or brand name in question and are referred to in this report for informational and/or illustrative purposes only.
GETINTOUCH
+27 21 422 2033 | hello@the-lacuna.com
CAPE TOWN JOHANNESBURG BAMBOUS LONDON BERLIN

Lacuna Innovation: Cannabis Rising Report

Recommended

Recommended

More Related Content

Similar to Lacuna Innovation: Cannabis Rising Report

Similar to Lacuna Innovation: Cannabis Rising Report (20)

More from Lacuna Innovation

More from Lacuna Innovation (10)

Recently uploaded

Recently uploaded (20)

Lacuna Innovation: Cannabis Rising Report