reaching new highs: Australia’s cannabis industry If you aren’t already, then it’s high time “...cannabis, a plant with you get clued up on the controversial cannabis legalisation and innovation an ancient history, is a that’s taking place around the globe $20.1 billion dollar legal right now. industry worldwide and
It’s a trend that shows no signs of is expected to more slowing: Governments are relaxing than double in size over cannabis-related legislation. Consumer the next five years.” mindsets are shifting. Manufacturers are investing in research to support – Smart Company claims of the plant’s many benefits.
Has the booming cannabis market got you green with envy? Are you wondering how your business can get involved, or what all the hype is about? Fear not! We’ve got you covered with a PLAYful deep dive into the Australian and US cannabis markets, key future opportunities, plus some tips for MARIJUANA 101: leveraging the trend today. Cannabis lingo, made easy.
THC: Tetrahydrocannabinol is the chemical in marijuana that gets you high.
Marijuana vs. Hemp: Both are types of cannabis. Hemp is generally cultivated with very low levels of THC.
CBD: Cannabidiol is a non- intoxicating compound that can be derived from hemp or marijuana.
www.playmr.com.au 02 state of PLAY: the Australian cannabis market.
“The passage of this legislation is an Australian first… It will work to reduce the harm of drugs in our community by reducing the stigma of drug use and encouraging people to seek help without fear of arrest.” – Michael Pettersson, Labor Party Lawmaker
03 “In 2017 the Food Standards Australia and New Zealand (FSANZ) approved the sale of low-THC hemp foods, opening the floodgates for what could be a multi- million dollar industry in just a few years.” – The Medium
Cannabis laws have historically been food products, wellness solutions, and very strict in Australia. Although the even fabrics sold in mainstream stores, use of medicinal cannabis for patients countrywide. with chronic illness was given the green light by the government in 2016, As demand for both everyday hemp recreational use has always remained products and medicinal marijuana punishable by law - until just recently. booms, the evidence is mounting in favour of legalising cannabis and Following the lead of countries like cannabidiol (CBD) across Australia. Canada and the US, in September 2019 the ACT became the first state to legalise the recreational possession and cultivation of marijuana.
Hemp products, on the other hand, have been legal to produce and sell in Australia for a couple of years. Their popularity continues to go from strength to strength. As the adoption of hemp spreads across a wide range of industries, you can now find hemp
www.playmr.com.au 04 “Cannabis entrepreneurs are On Shopper Social, cropping up all over the place in Australia as early movers get ready to cash in on what could % become a $1.2 billion 45 industry over the next agree that marijuana should be legalised. 10 years, according to figures put together by prohibition partners last year.” – Smart Company
Almost half (45 percent) of our online When we spoke to our Shopper community, Shopper Social, agree Social community about the topic, we that marijuana should be legalised in found that most Aussies (61 percent) Australia. Their reasoning? Cannabis will purchase CBD if it is legalised. relieves pain and provides relaxation as However, only a quarter of people will well as helping to regulate and prevent not purchase any cannabidiol-based disease and treat depression. products.
You’ve probably heard a lot about CBD One thing is for sure: although slow on lately; it’s certainly having a moment. the uptake, the Australian cannabis CBD oil has been found to relieve pain industry is set to expand alongside the and inflammation, reduce anxiety and global trajectory of exponential growth. depression, assist with sleep and even alleviate cancer-related symptoms, amongst other impressive benefits. The best bit (for those not so keen on the cannabis highs and lows)? CBD isn’t psychoactive, so it doesn’t produce On Shopper Social, the same mind-altering effects as marijuana. 61% will purchase CBD if www.playmr.com.au 05 it is legalised. the US and international cannabis markets.
“...62% of Americans believe the use of marijuana should be legalised. This is double what it was in 2000 (31%), and five times what it was in 1969 (12%).” – Investopedia
06 A few steps ahead of Australia, the global cannabis movement made some serious strides in 2018. Canada blazed the trail as the first industrialised country in the world to legalise recreational marijuana, second only to Uruguay in the worldwide race.
The United States was next to make a throughout the US and this has PLAY. Cannabis has now been legalised sparked a global CBD buzz. Products for recreational use in 11 US states and such as skin-care creams, balms, for medical purposes across 33 states. dietary products, supplements, bath Colorado and Washington made the bombs and even dog treats have been first move but the biggest market, flooding the US market - a wellness perhaps unsurprisingly, is California. industry that is predicted to be worth almost USD$22 billion by 2022. In fact, “CBD gummies” was the third-most The growing interest in cannabis searched food-related term on Google in the US is perhaps not surprising in the US last year. when considered in the context of its reported health benefits. Health and wellness is the fastest growing market According to Bloomberg, investors are in the US. Cannabis-related products now pouring money into huge CBD- are quickly becoming viable options extraction facilities and processing to replace many pharmaceutical plants in the US, preparing for the drugs, tying into the shift towards day that Coca-Cola, P&G and other preventative, alternative and plant- consumer goods giants get on board based medicines. the cannabis train; the day that cannabis truly goes mainstream. CBD products can now be sold
www.playmr.com.au 07 the future of cannabis in Australia.
“Legalising marijuana would boost the public coffers to the tune of $3.5 billion, according to a costing of the Greens’ recently proposed marijuana legalisation policy. This includes direct taxes and reduced law enforcement spending, as well as an influx of “marijuana tourists”, ready targets for fancy cannabis package deals.” – Sydney Morning Herald
08 Although some worry about an Once cannabis products go increase in cannabis use, particularly mainstream locally, Australia can as a “gateway drug”, many say that make its mark as a premium product legalising cannabis-related products supplier in the global marketplace, too. would benefit Australia, from businesses and consumers, right through to government. “In Australia, we see The relaxing of local cannabis laws the emergence of “craft will open a raft of opportunities across a wide range of industries. We can growers” delivering expect echoes of US trends such as high end, premium hemp-based fashion items and CBD- infused beauty products. brands that gain rapid market share. Although the majority of brands “Beauty and fashion will come from the brands are hitching a North American ride on the skyrocketing markets, Australia has cannabis bandwagon a history of producing – an industry that is premium grade exports predicted to be worth (fruit, wine, etc.) and $63 billion within five we see this history as years…. Estimates peg repeating itself in this the hemp industry to sit new commodity.” at $3 million by the year – Business Insider Australia 2023, which hardly puts a dent in America’s $150 million hemp industry. Though given Australia’s population size, $3 million isn’t anything to snark at either.” – Australian Financial Review
www.playmr.com.au 09 And while we wait for the legalisation “The other big of cannabis in Australia, why not leverage the existing hemp trend to opportunity is composite help your brand “go green”? materials, such as biodegradable plastic… Industrial hemp production requires little to no pesticides, produces oxygen, We have contacted doesn’t contribute to topsoil erosion LEGO and they’ve and can even replace environmentally informed us they harmful products. It is a great way for businesses to up the ante when it want a biodegradable comes to developing sustainability- product… Companies focused initiatives. have to solve their environmental problems and greenhouse emissions, and hemp is the solution.” – Charles Covess, CEO of Textile and Composite Industries Australia
www.playmr.com.au 10 how can you leverage the trend?
11 So, cannabis is set to disrupt the 2. Entry-level products. Australian consumer landscape and While many consumers are still a we bet you’re wondering how you can little green to the idea, focusing on get involved (as a business, of course!). palatable low-dose products, such as infused edibles, beverages and vapes, 1. Joint ventures (no pun intended). can help bring new consumers into the Want to dip your toe in the water? cannabis space. Cannabis beverages Joint ventures can be a good place to are set to be a $600 million business in start in order to minimise risk. the US by 2022 and Australia is likely to follow the trend.
As the industry develops and matures, it is already increasingly difficult for “Successful cannabis budding entrepreneurs to compete with big businesses, due to cost and offerings will need to complexity. This has already led to have an acceptable taste, consolidation in market. accurate dosage levels, a For example, beer giant ABInBev predictable time of onset, (owner of the Budweiser brand), has and sufficiently long already put $50 million into a joint venture with the cannabis company shelf life. A product’s Tilray to research weed-infused image may also play a beverages, something that Coca-Cola role in its acceptance, has also reportedly toyed with. especially if it is used in social settings.” – SP Global www.playmr.com.au 12 3. Innovation. The future involves extracting concentrates from cannabis plants using nanotechnology and water- soluble oils to create consumer “The trends are pointing products that can be absorbed directly into the bloodstream, rather than away from flower. smoked. Although still a very big component of the Products such as cannabis-infused marketing (60-70% of skin lotions, bath soaks, essential oils and pet balms (yep, you read that the market), the fastest- right!) can produce fast and effective growing segments results for digestive issues, anxiety or inflammation. of the market are oils and edibles, which will 4. More functional wellness, continue to grow very less flower power. quickly. If you take a A good first step into the cannabis- look at the marketplace, related product market could be a move into everyday wellness products, you see less “stoner- marketed towards women and type branded products.” families. This can include anything from functional food and luxury The cannabis industry is beauty right through to natural health headed into a branded, products. functional product direction with edibles and oils.” – Andrew Glashow, President, COO, and Director of Cannabis Life Sciences
www.playmr.com.au 13 “...CBD’s unique balancing properties are believed to be much more powerful when all the different components of the cannabis plant are together, working synergistically. The end result, as the science goes, is greater than what any one of those components can help us achieve alone.” – Mind Body Green
5. Beyond CBD. This means that by producing broad- CBD products are where it’s at right spectrum CBD products (rather now, from Baby Boomers who use than CBD isolate), you’ll be able these products to treat chronic to maximise the potency of your medical conditions to young people offering and generate more powerful looking to optimise their sleep or results for consumers (hello, glowing skincare routines. Research supporting reviews!). Be sure to focus on purity the health benefits of CBD products by including third-party testing and is growing, and this makes it a more prioritising clean extraction processes viable option for large brands. to help minimise toxins and pesticide exposure. However, moving forward, it’s likely the debate around the “entourage effect” will also gain traction.
www.playmr.com.au 14 An important point to remember, as with any hot trend, is to get to know your consumers inside and out. Many brands that follow “the next big thing” end up falling at the first hurdle, as everyone races to grab a piece of the pie. Do your research and have a solid understanding of consumer needs to ensure you’re hitting the spot for consumers. “...consumers will have A final question to consider: Would you a pick-me-up cannabis like to be part of a future where your brand is key component of consumers’ beverage when they healthy daily routines? wake up, jump in the shower using cannabis toiletries, take a cannabis supplement with lunch, consume cannabis sports nutrition after the gym, head out in the evening for a non-alcoholic THC drink and go to bed at the end of the day with a THC or CBD sleeping aid.” – Euromonitor for CStore Decisions
www.playmr.com.au 15 over to you
So, for now, we’ll THC-you later! If your business is considering entering the cannabis product space anytime soon then remember, our PLAYful team can use our in-house sensory facility, consumer and shopper research to:
> Understand and identify opportunity areas in the market. > Refine your product and pack. > Establish likely shopper and consumer behaviours.
For more information visit www.playmr.com.au.
You can catch us on 02 8097 0200 or hello@ playmr.com.au anytime.
Now, consider this report your green light – and go!
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