Elixinol Global Ltd (ELLXF)

[RavenStu52]

Good info on explosive CBD market metrics compared to THC

https://grizzle.com/the-untapped-potential-of-cannabidiol-cbd/?ck_subscriber_id=295616597

The THC Market will Ultimately be Less Than Half the Size of the CBD Market

The THC market may be the first target for licensed producers because demand is more easily defined, but longer term the CBD market is where the real money is.

According to Canadian government estimates, recreational and medical cannabis demand could reach $10 billion in the first year of legalization.

But according to cannabis industry analysts The Brightfield Group, the hemp CBD market could be generating $22 billion a year by 2022.

Grizzle thinks this number is conservative.

In only four years the medically driven CBD market will be at least twice the size of the market for recreational cannabis.


CBD Pricing Compares Favourably to THC

To truly understand the economics of cannabis vs. hemp we have to compare the pure active ingredients only and exclude the parts of the flower that have no health or psychoactive qualities.

Consumption of cannabis flower is decreasing rapidly in favour of oils and vapes and the industry will soon be pricing cannabis products based on weight of active ingredient only, excluding the rest of the cannabis plant.

For example, when you’re quoted $10 per gram for flower at a legal dispensary, the flower by weight only contains 20% pure THC, so you are actually paying $50 per gram of THC.
Growing Costs /gram Wholesale /Gram Retail /Gram
Pure CBD Concentrate $0.08 $6.50 $97
Pure THC Concentrate $16.00 $40.00 $100
Dried CBD Flower $0.002 $0.16 $1.40
Dried THC Flower $2.00 $4.00 $7.50
Retail

Medically licensed cannabis oil from the 6 largest licensed producers sells for $100 per gram of THC on average.

CBD oil sells for a very similar price at $97 per gram of pure CBD.

In the US, Charlotte’s Web, a Colorado-based hemp grower, cultivates their own proprietary strain of hemp from which they extract, process, and distribute CBD-based products.

Their isolates sell for as high as $220 per gram of CBD but most products range from $32-$111, slightly lower than prices in Canada.
Wholesale

If we look at wholesale prices there is more of a difference. 100% pure THC cannabis oil sells for $40,000 per kg while CBD hemp oil only sells for $6,500 per kg.

The difference in market prices are at least partially explained by the big differences in growing costs which we explore below.


Growing Costs for CBD from Hemp are Far Lower than for THC

Based on extensive data from farms in Alberta, the cost of growing hemp is $400-$500 per acre or less than a cent per gram of hemp.

The cost of producing 100% pure CBD oil, which is much more concentrated, only increases growing costs to $0.07 per gram.

In contrast, licensed producers grow THC-rich flower for $1.00-$3.00 per dry gram with the extra flower required to produce a gram of pure THC pushing the cost up to $16.00, 200x more costly than growing hemp.
Hemp Growing Costs per Acre

Source: Alberta Agriculture and Forestry
CBD Demand Per Person Could be 3x-10x Higher Than THC
In the future, the average CBD user could be spending double or triple what the average Canadian spends on THC-rich cannabis today.

A powerful driver of CBD profitability is the increased consumption per person compared to psychoactive THC.

CBD lacks the intoxicating effects of THC allowing a much higher dose to be taken with no serious side effects.

According to Yasmin Hurd, an experienced CBD researcher, doses of 200mg of CBD or more are needed to achieve real health benefits, compared to 5mg to achieve a satisfactory effect for THC.

Product labels and online medical marijuana resources such as Greenrelief.ca and CanniMed Therapeutics confirm the difference in dosing, with a starting dose for CBD at 10-25 milligrams while a starting dose of THC is only 1-5 milligrams.

The average medical marijuana user in Canada spends $3-$6 a day on cannabis flower or oil according to Health Canada data, which means the average CBD user could be spending 3x-7x more, or up to $10,000 a year at current prices.

CBD oil could be a very lucrative new segment for the legal market.
Potential Revenue Opportunity 7x Higher with CBD
THC Oil CBD Oil
mg Consumed per Day 56 200
Grams per Year 20 73
Retail Price per Gram $50 $97
Yearly Revenue Per Person $1,018 $7,060