Despite the expectations that the legal California cannabis market would rank amongst the highest in the world, a research agency has lowered its sale projections for the state by US$2 billion.
New Frontier Data, a firm issuing reports on business intelligence for the cannabis space announced on Monday (May 22) it has lowered the sales projection it previously held for the state from US$3.8 billion to US$1.9 billion due to “lower than expected cannabis excise-tax revenues for Q1 2018.”
Giadha Aguirre De Carcer, New Frontier Data founder and CEO said in the statement that the adult-use regulations in the state have made it “more difficult than anticipated” to establish the legal market compared to the existing illegal operations.
“Given the number of local government bans on cannabis businesses, we are not seeing the same kind of conversion rates that we have seen in other legal markets,” Aguirre De Carcer said.
According to New Frontier Data, California collected US$33.6 million in excise-tax revenues between January 1 and March 31, “which put them significantly behind pace to meet original expectations for collecting US$175 million within the first six months of 2018,” the agency wrote.
California sales projection lowers to over US$4 billion in 2025
This decline has caused the firm to now reevaluate its estimates all the way up to 2025. Instead of the originally forecasted US$6.7 billion in sales for the state, New Frontier Data now calculates that value to reach US$4.72 billion by 2025.
According to the statement, New Frontier Data evaluated two aspects when it came to rebalancing its projection. The firms’ analysts redefined what exactly a legal medical patient is while lowering the conversation rate for black market consumers transitioning to legal ones.
New Frontier Data estimates the total value for 2018 in the cannabis legal market will be US$1.92 billion and it is expected to grow at a compound annual growth rate (CAGR) of 13.7 percent from now until 2025.
The research firm is also expecting to see a 5.4 percent decline in the medical market throughout 2025, reaching a value of US$760 million, compared to the US$1.12 billion estimated current value.
During the same period, adult use sales are projected to grow at a “25.5 [percent] CAGR, from US$805 million to US$3.96 billion,” New Frontier Data wrote.
In February, Business Insider wrote on a BDS Analytics report placing its estimates for the California cannabis market at US$3.7 billion in 2018 and US$5.1 billion in 2019.
Statista, a provider of market and consumer data, offered its own prediction for the growth of the cannabis industry, projecting the marijuana sales value would reach approximately US$6.59 billion in California in 2025.
A new potential roadblock for legal consumers is starting on July 1 when cannabis producers in California will be required to obtain a seal of approval from a verified testing facility.
William Waldrop, CEO of EVIO Labs (OTCQB:EVIO) told the Investing News Network any cannabis product sold in California dispensaries is expected to have been tested and obtained a certificate confirming it.
While market prediction isn’t an exact fact, especially with potential catalysts such as federal decriminalization of the drug in the US, this projection does indicate the volatility of the cannabis industry.
Don’t forget to follow us @INN_Cannabis for real-time news updates!
Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.
CanBud Distribution Corporation Closes 2M Second and Final Tranche of its Oversubscribed Private Placement Offering
CanBud Distribution Corporation (CSE: CBDX) (FSE: CD0) (“CanBud” or the “Corporation”) is pleased to announce that it has closed the final tranche of its oversubscribed non-brokered private placement for aggregate gross proceeds of approximately $4,730,000 (the “Offering”).
The Corporation issued a combined total of 39,409,346 units (each a “Unit“) at price of $0.12 per Unit, with each Unit comprised of one common share in the capital of the Corporation (each a “Common Share“) and one common share purchase warrant (each a “Warrant“). Each Warrant entitles the holder to purchase one additional Common Share at an exercise price of $0.22 within 24 months of the closing of the Offering (the “Warrant Term“), provided, however that if the closing price of the Common Shares on the Canadian Securities Exchange (the “CSE“) (or any such other stock exchange in Canada as the Common Shares may trade at the applicable time) is $0.25 or greater per Common Share for a period of five (5) consecutive trading days at any time after the closing date of the Offering, the Corporation may accelerate the Warrant Term such that the Warrants shall expire on the date which is 30 days following the date a press release is issued by the Corporation announcing the reduced warrant terms.
Thoughtful Brands Inc. (CSE:TBI)(FSE:1WZ1)(OTCQB:PEMTF) (the “Company” or “Thoughtful Brands) announces that the letter of intent with Franchise Cannabis Corp. (“FCC”), previously announced in January, has been terminated. The previously announced European joint venture with FCC will continue and allow the Company to launch and tailor its products to European consumer demands
In connection with termination of the merger transaction with FCC, the Company has agreed to pay FCC $100,000 in cash and to issue FCC 5,000,000 common shares of the Company at a deemed value of $0.05 per share. The common shares will be subject to a four-month-and-one-day statutory hold period in accordance with applicable securities laws.
Mergers and acquisitions (M&A) in cannabis space have helped boost the industry to new levels.
Strategic sale of non-core assets by Lobe adds non-dilutive capital and shareholder value
Lobe Sciences Ltd. (CSE: LOBE) (OTC Pink: GTSIF) (“Lobe” or the “Company”) is pleased to announce, further to its press release dated February 23, 2021, that it has completed the sale to Ionic Brands Corp. (“Ionic Brands”) of Lobe’s non-core cannabis assets relating to Washington-based Cowlitz County Cannabis Cultivation Inc. (“Cowlitz”) held by Lobe’s subsidiary vendor, Green Star Biosciences Inc. (the “Transaction”).
Seattle Area Grocery Chain Metropolitan Market to Begin Carrying KOIOS and Fit Soda on March 22, 2021
Adding to its existing presence on the west coast of the United States, all five KOIOS™ flavours and all four Fit Soda™ flavours will be carried in Metropolitan Market stores beginning on Monday, March 22, 2021. Serving the Seattle-Tacoma area (population 3.87 million), Metropolitan Market is one of five chains under its parent firm Good Food Holdings, which has a total of 51 stores in California, Oregon, and Washington State.
Koios Beverage Corp. (CSE: KBEV; OTC: KBEVF) (the “Company” or “Koios”) is pleased to announce that beginning on Monday, March 22, 2021, Koios’ entire line of canned beverage products will be sold at all locations of Metropolitan Market, an urban format supermarket chain in the Seattle-Tacoma area of Washington State. In Q1 2021, the Company announced multiple placements of its beverage products with regional grocers in markets on the west coast of the United States including Market of Choice in Oregon Jensen’s in Southern California and major natural grocery chain Sprouts Farmers Market which has a substantial west coast presence with over one third of its locations (360+ stores across 23 states) in California as well as Washington State 1 . The Company has also recently announced other developments relating to its expansion efforts being undertaken in 2021 such as an in-house beverage canning facility and distribution agreements with regional and national wholesale partners.