CANNABIS MARKET
CANNABIS MARKET DISRUPTION
Cannabis can be traced back to ancient times for its numerous
beneficial properties from fibers and ropes to food and medicine. Today, cannabis is being increasingly
legalized and decriminalized by countries around the world. As a result, the market is headed for expansive development and is projected to hit $66.3B by the end of 2025 at a CAGR rate of 23.9%6. The primary factor for cannabis’ market explosion is its recognition as a legitimate medical solution by modern societies; holding the leading market share 70.3% in 2018. While the world at large is seeking higher quality cannabis, introducing NovaGreen™’s disinfecting technology will cause a market disruption worldwide by shifting the current structure of current value chain; growers will no longer rely on third party facilities for their disinfecting services, rather this process will occur in house
THE NEED FOR DISINFECTED CANNABIS
Nowadays, there are no optimal solutions for cannabis disinfection.
The lack of an appropriate solution affects all parties along the value chain, including growers, producers and consumers (patients). Cannabis buds may harbor harmful pathogens which can be a matter of life and death for consumers of medical cannabis. The cannabis plant, like any other, is attacked by various pests, mold and fungus such as aspergillus fungus. When aspergillus fungus reaches the lungs of a patient, especially those with a weakened immune system (i.e., chemotherapy), it can lead to complications and risk the patient’s life in various ways:
Researchers at the University of Davis found that medical marijuana contains a number of pathogens and
fungal pathogens that can cause serious and even fatal infections. They warn that smoking and inhalation of marijuana can pose serious danger to patients, especially those with leukemia, lymphoma, AIDS or conditions that require immune suppressive therapy. Furthermore, In June 2017, a disturbing and unusual report from a California hospital was published about a cancer patient treated with cannabis, who found his death due to a rare fungal virus caused, according to doctors’ estimates, by the consumption of mold infected cannabis.
Currently, there is lack of reliable solution to ensure that patients receive pathogen-free cannabis while most of the cannabis worldwide is highly infected with bacteria and mold. The need of the consumers is straight forward; ensure high quality, healthy, safe and pathogen free cannabis to prevent contaminated cannabis usage that can lead to serious side effects and possible life-risk complications.
THE IDENTIFIED NEED OF CANNABIS GROWERS (NOVAGREEN™’S DIRECT COSTUMERS) Cannabis growers are
obligated to maintain high regulatory standard as required today by a growing number of states around the world which reflects in a substantial loss of unauthorized crops and a huge revenue loss for cannabis growers.
As a result, growers must send their crops for purification facility, then to an authorized lab facility for testing before commercializing their crops. Irradiation methods used by purification facilities are not suited to use onto organic materials, and are associated to have a negative effect on the natural qualities of the flower. In light of the cases of contaminated cannabis consumption, recent published studies and enhanced regulatory requirements in various countries (Germany, Canada, etc.), there is a growing awareness among cannabis growers for disinfecting cannabis and are currently seeking an effective solution that will be easily integrated into the production process and will not impair plant qualities. Due to the risk of fungal and bacterial infections, regulation has defined the amount of yeast / mold and bacteria allowed in order to commercialize the cannabis crops. Despite maintaining very rigorous growing conditions that include humidity control, plant isolation and more, growers find it very difficult to reach the standards set by the enhanced regulatory standards. As a result, growers use sterilization methods that such as Gamma and beta beam radiation which associated with harming the unique properties of the flower and require highly expensive logistics. According to the company’s estimations , the global cannabis growing industry may lose up to $ 5B a year by 2025 due to non regulated contaminated crops. Current disinfection methods are unsatisfactory; approximately 20% – 30% of the total crop fail to pass the regulatory threshold, and the defected crops sent either for disposal or to oil extraction in states that allow it. Hence, due to regulatory non-compliance. vast crop yield is lost, resulting in significant loss of revenue.
The regional landscape of the medical cannabis market comprises of North America, Europe, and Rest of World (RoW). Owing to the presence of a large customer pool and legalization of medical marijuana in U.S. and Canada, the demand from North America is expected to remain the highest. As of 2017, the legal cannabis market in North America is valued at $9.2B and by 2027 the market will grow to $47.3 billion at an
annual growth rate (CAGR) of 18%. Of this amount, 35 billion is associated with the recreational market
and 12.3 billion with the medical market. Particularly in the US, of the 50 states 10 legalized recreational marijuana and 33 legalized medical marijuana— and the trend continues to expand. Contrastingly, Canada announced legalization of both medical and recreational marijuana in the last quarter of 2018. As a result of many financial benefits the cannabis market brings, the rest of the world is also attempting to participate in the expansion of the market. Overall, RoW have the estimated market value of 52M in one year and is expected to grow at an annual rate of 47%, reaching 2.5B by 2027. Countries of particular interest are, South American countries (Brazil, Argentina, Uruguay, Peru) and Australia, which currently stand at 776M a year and 1.2B, respectively.
GEOGRAPHICAL MARKET SPLIT
EUROPEAN MARKET OPPORTUNITY
Analysts agree that the current position of Europe on cannabis resembles the situation from Canada
just a few years ago. Despite a highly fragmented legal landscape, cannabis progressively becomes
legal and carves new markets ready for investments. With a legal cannabis market predicted to grow to
€123 billion by 2028, Europe is set to become the most important cannabis frontier. In contrast to
north America, Europe is going in the obvious direction of medical cannabis market which presents
a great opportunity for NovaGreen™. Most European countries, are not officially speaking about legalization but rather, are preparing for the opening of the medical cannabis market- including pharmaceutical products sold to license holders. France, the UK, and Spain are reviewing current legislation, while Germany, Italy, and the Netherlands – countries considered industry leaders – are focusing on expanding existing medical programmes Due to certain constraints, a significant part of the European market is based on imported cannabis which has received legislation in Britain, Holland, and Austria. There are currently only 2 countries with significant exports of legal cannabis: Canada and the Netherlands, although more countries are soon expected to start exportation such as Israel
MARKET STATE-OF-THE-ART ALTERNATIVE TECHNOLOGIES
Currently available solutions for disinfecting cannabis are few, inconvenient, expensive, and alter the unique properties of cannabinoids and terpenes found in the buds. Today, approximately 80%-90% of licensed producers and growers are using irradiation methods to sterilize their crops which have proven to have negative effects on the natural properties and quality of the flowers; Recently, a study was published in the Frontiers of Pharmacology stated that;
“irradiation had a measurable effect on the content of various cannabis terpenes, mainly on the more volatile monoterpenes. In general, reduction of affected terpenes was between 10 and 20%, but for some
components, this may be as much as 38%3.” As NovaGreen™ is the first and only company to apply cold-sterilization HPOV technology to disinfect cannabis, it has no direct competition, however there are other methods for cannabis disinfection which are unsatisfactory in terms of the level of efficacy, regulatory compliance and costeffectivenes as NovaGreen™’s device provides. Below is a summary of current market state-of-the-art technologies:
