In another historic milestone for the development of the legal cannabis market, yesterday Cowen and Company became the first Wall Street investment bank to initiate coverage of the cannabis industry by publishing a research report on the near and long-term prospects for the sector along with its implications for the alcohol and health care industries. The 110-page “Ahead of the Curve: Cannabis Compendium” draws insights from ten consumer, regulatory and health care analysts within Cowen and Company’s equity research division.
“Why are we publishing this note right now? Well, cannabis clearly has gained a lot of momentum. Today there are 25 states that approve medical marijuana and another four states that approve recreational use. We estimate that formal market is already $6 billion. What’s more, when you factor in the illicit market, we think total cannabis spending in the U.S. is already north of $30 billion. That number is only going to grow. This November there are five states, including California, with ballot measures to approve recreational cannabis and another four states voting on medical," said Cowen and Company Beverages, Tobacco and Cannabis Analyst Vivien Azer in a video that accompanied the report. “While this evolution will take time, we think that with federal legalization this category can generate over $50 billion in the next ten years. That’s a staggering nine-fold increase."
In the report, Leafly and Tilray are identified as leading companies shaping the future of the sector in their respective segments.
“Perhaps no other company embodies the meteoric growth of the cannabis sector as well as Leafly,” according to the report. “Seattle-based Leafly has leveraged powerful web- and app-based analytics to become the dominant digital meeting ground for buyers and sellers in this fast growing marketplace. Leafly is ideally positioned not only to keep riding the growth of the retail cannabis sector, but to help fuel that growth. As retail cannabis grows more competitive and complex, with more strains and branded products, even mom-and-pop cannabis retailers now realize that data is key to survival.”
Tilray’s clinical research program is discussed at length and the company is identified as one of four companies with “major efforts in the clinical development of cannabinoids” and as “the only producer of pharmaceutical grade, GMP-compliant cannabis formulations that are available in Canada.”
The report also estimates an 80 percent chance of passage of California’s ballot measure legalizing recreational cannabis consumption, which it says would triple the size of the legal market in the U.S.
Read more about the report in this article from Bloomberg.