International Cannabrands Challenges Current Estimates of US Market Potential for the Industry

International Cannabrands Inc.

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Primary Exchange: OTC PINK
Under the Symbol: GEATF

International Cannabrands Challenges Current Estimates of US Market Potential for the Industry

Thursday, November 8, 2018 9:00 AM

CALGARY, AB / ACCESSWIRE / November 8, 2018 / International Cannabrands Inc. (CSE: JUJU) (the "Company") is pleased to share observations and remarks from its Senior Advisor, Neal Pomroy on the veracity of current estimates for the market potential of cannabis in the US.

The U.S. Cannabis "Green Wave" - Is Market Potential Underestimated?

The US midterm elections are now complete and represented another victory for the legal cannabis industry. Michigan, which is estimated to be the third largest US market, voted to allow full recreational use. Utah and Missouri additionally approved medical cannabis use. The total is now 33 medical use states and 10 full recreational states. The "green wave" is undeniable.

Despite this momentum and growth, there remains a broad spread of expectations about how large the global and US cannabis market can become. International Cannabrands strongly believes that the US market potential is materially larger than many sources currently believe and that we will witness a number of upward revisions in the coming years.

At the beginning of the year, ArcView Market Research released a report projecting global legal cannabis to grow to $57 billion by 2027 with North America representing growth from $9.2 billion in 2017 to $47.3 billion by 2027. New Frontier estimates US legal cannabis revenues as a $30.6 billion market by 2025 when likely new state entrants are included. A new set of high profile financial institutions are now weighing in as well. The venerable Bernstein Research released a report this week with a $70 billion US cannabis market estimate which they then walk back, as the total "errs on the optimistic because per capital spending in legal states is driven by tourism". They then randomly adjust their estimate down 43% to $40 billion to account for this affect and, in their opinion, no evidence of any impact on alcohol consumption! The global investment bank Credit Suisse reportedly has set a $96 billion US target. Obviously there are numerous other sources as well.

So in summary, we are seeing estimates of $30 billion to $100 billion for the US market over the coming decade.

International Cannabrands believes these estimates may be understated by 100% and that the US market may exceed $100 billion to $150 billion over the coming years. As cannabis becomes mainstream, it is entering non-traditional categories from beauty products to beverages to supplements. The basis for our more aggressive market perspective is that research analysts are taking a too narrow view on how cannabis use may disrupt consumer product categories and growth and will: (1) replace more traditional pharmaceutical categories, (2) cannibalize alcohol sales and (3) grow faster amongst less recognized consumer segments such as women, professionals and the pre-retirement/retired community.

Cannabis research is under-developed, although this is rapidly being addressed through an increase in studies ranging from concussion protocols to oncology to Tourette's syndrome to cardiac disease and others. There are a number of other large treatment categories that also may favor cannabis over traditional prescription alternatives. The University of Georgia conservatively estimates that cannabis may capture more than $4 billion of pharma sales in the interim term.

The global pain management therapeutics market is expected to exceed $83 billion by 2024. In the US, there were reportedly over $10 billion worth of prescription opioids sold in 2017. Oxycontin, a drug under intense focus, exceeded $1 billion in sales alone. An early study by the Journal for American Medical Association (JAMA) noted material reductions in opioid overdoses in states with medical marijuana programs. Going forward, research on and increased chronic pain treatment protocols that consider a cannabis solution have significant potential to add to growth.

The US "sleep market" is estimated to be worth $28.6 billion in 2017 and forecast to exceed $35 billion by 2023. The prescription brand giants – Ambien, Lunesta and Belsomra – are declining as they come off patent and are being replaced by cheaper generics and an explosion in over-the-counter solutions. The Center for Disease Control and Prevention estimates 4% of US adults use a prescription sleep aid with prescriptions topping $2.8 billion. IBISWorld estimates that in 2017, sleep labs generated $7.1 billion in revenue and is forecast to exceed $10 billion by 2020. Research to clinically establish the commonly held belief that THC/CBD and CBD only contributes to improved sleep are reportedly underway.

In the US, estimates are that up to 40 million adults or 18% of the population suffer from an anxiety disorder. This total includes PTSD, OCD, panic disorders, social anxiety and phobias. The prescription drugs Paxil and Zoloft are the 7th and 8th most prescribed medications in the US. Similar to the pain and sleep categories, there are reportedly a number of cannabis-related studies planned to establish its potential role to alleviate symptoms for specific syndromes and consumers.

These large markets hold real opportunity to alleviate issues for consumers and generate associated revenues. A recent report by Chicago-based High Yield Insights found that cannabis consumers used 27% less over the counter pain medications and 22% less sleep aids.

Second, the impact of how alcohol consumption moderates after the introduction of legal cannabis is still in its early stages. As context, the US alcohol market is estimated at $231 billion in 2017. Obviously the substantial investment by Constellation in Canopy Growth and reported options being considered by Diageo confirm that where "there's smoke there may be fire". The same High Yield report mentioned above noted cannabis consumers' use 21% less alcohol spirits and 20% less beer versus states that have not legalized adult-use marijuana. A University of Connecticut study of medical marijuana counties in the years up to 2015 experienced a 12% reduction in alcohol consumption. While data and studies emerge, there is a common sense basis that personal budget and recreational patterns may support the theory that cannabis use may reduce alcohol use.

Third, new consumer segments are rapidly expanding. The recognition of CBD and THC/CBD as part of a "health and wellness" lifestyle is gaining traction. Millennials now exceed Baby Boomers as a percentage of the US population and more fully accept cannabis as a lifestyle alternative with 84% supporting legalization. As but one other example, BDS Analytics recently released a study revealing that 12% of consumers 50 years and older had used cannabis in the previous six months and that another 40% were considering it. The primary reasons were pain relief and to relax. Eighteen percent of respondents say they personally know someone who uses marijuana for medical purposes. "I'd say this is a tipping point for medical marijuana," noted Alison Bryant, SVP of research at AARP in a recent article. "As more of a person's acquaintances use it, it becomes more normalized."

In summary, the potential for traditional market disruption and a much greater role for cannabis in both recreational and medical categories supports a dramatically higher US market size perspective. How fast growth happens and how high it goes will be revealed over the coming years. We recognize that change or non-change in US Federal regulations, new state adoptions, banking changes and other macro factors will have substantial impact on both size and speed of legal cannabis growth. However, we believe that ultimately the "green wave" that has been released in the US will wash over many obstacles and become a larger business than the current conservative estimates.

About International Cannabrands (ICI)

ICI acquired the exclusive rights to Julian Marley's JuJu Royal™ brand. ICI currently generates revenue from licensing brands to growers, edible manufacturers, oil extractors, producers of ancillary products and apparel in the United States where cannabis has been legalized at the state level, as well as products containing CBD in the US and internationally. ICI intends on acquiring micro brands with highly profitable operations in the cannabis space. The Company believes as the market becomes saturated with products varying in potency and quality, that the branded products will rise to the top and the Company intends to exploit all opportunities available to realize the full value of the Julian Marley brand and other brands.

About JuJu Royal

Julian Marley conveys his message of legalization, freedom, and love through the JuJu Royal brand, a line of naturally produced medicinal herbs using the best solventless technology. One percent of proceeds are distributed for the benefit of veterans using cannabis through the Weed for Warriors Project. More information about the brand and various products can be obtained at www.jujuroyal.net. International Cannabrands Ltd is continuing to work with Julian Marley to identify and develop future strains of marijuana that meet Julian's exacting standards. The Company is continuing to conduct research and development with certain origin genetics to produce additional signature Julian Marley strains for the JuJu Royal Premium Marijuana collection. The intent is to make these strains available to dispensaries and caregivers on a worldwide basis where it is legal.

Market and Industry Data

This press release includes market and industry data that has been obtained from third party sources, including industry publications. The Company believes that its industry data is accurate and that the authors believe their respective estimates and assumptions are reasonable, however, there is no assurance as to the accuracy or completeness of this data. Third party sources generally state that the information contained therein has been obtained from sources believed to be reliable, but there is no assurance as to the accuracy or completeness of included information. Although the data is believed to be reliable, the Company has not independently verified any of the data from third party sources referred to in this press release or ascertained the underlying economic assumptions relied upon by such sources.

International Cannabrands Contact:

Steve Gormley CFN Media Contact:
Chief Executive Officer Frank Lane (206) 369-7050
1045 Lincoln Street, #106 [email protected]
Denver, Colorado 80203
Ph: (323) 828-4321 or [email protected]
Media Inquiries: [email protected]

NEITHER THE CANADIAN SECURITIES EXCHANGE NOR THEIR REGULATION SERVICES PROVIDER HAVE REVIEWED OR ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

SOURCE: International Cannabrands Inc


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