The young and reemergent cannabis industry is being held back by the big elephant in the room. Let’s look into the trust and credibility factor in cannabis.
The cannabis industry has become legal and regulated only recently. In many jurisdictions, the US Federal Government’s being the clearest case, regulation is confusing and often inconsistent. As a new legal industry, trust and credibility are critical for growth.
Trust and credibility are tough subjects in an industry that is booming at light speed. The cannabis industry is growing very quickly and is expected to be worth more than $30bn in the US alone by 2025. Cannabis crops are diverse and applied in many industries. Cannabis plants and their cannabinoids have also recently been studied more thoroughly for medical potential.
All things considered, the cannabis industry’s growth is outpacing its regulatory framework. Given regulations, public image and stigma, and (in some cases) the lack of traditional financial services, the cannabis industry must overcome these challenges and foster trust and credibility to thrive.
Fortunately, there are already many solutions to these issues being explored. Let’s look at those issues and the potential solutions.
Lack of payment solutions
In some places, the cannabis industry is stuck in an awkward corner. In the US, banking is a constant challenge. Cannabis is still illegal at the federal level. All the while, medicinal cannabis is legal in three dozen states and recreational cannabis is legal in 17. Despite most of the country allowing access to legal cannabis, banking services are usually unavailable to them.
The result of this situation is that most cannabis businesses in the US are relegated to cash alone. Cash-only businesses become increasingly difficult to manage the larger they grow. Many in the US cannabis industry believe that access to banking services can’t come soon enough.
While the lack of banking services in the US cannabis industry is very strange, it’s not a uniquely American issue. Many European businesses face a similar problem but under different regulatory circumstances.
The UK may not be the largest CBD market, but it’s still a rapidly growing one expected to reach £1bn per year in 2025. The problem is that while many CBD products have grown popular, many payment processors may force businesses to clear their stock.
Finding a reliable payment processing option is difficult for cannabis businesses worldwide. Unlike other businesses, cannabis businesses can be sent an ultimatum: clear their cannabis inventory or have payment processing halted.
This all leaves cannabis businesses in a difficult situation. First, cashless payments are a trend that is only increasing. Many people in countries around the world are already almost forgoing on cash altogether. Cannabis businesses, including CBD ones, rely on e-commerce online payments and deliveries. Some payment processors have been known to cease their payment processing suddenly.
When cannabis businesses are faced with the absence of payment processing, it hurts their reputation. The cannabis industry’s reputation has been carefully cultivated. But for a public that relies on cashless payment options, this threat to cannabis businesses is very real. So, some cannabis businesses must rush to find alternative payment service providers. In some cases, they rush to sub-par payment service providers. This can cause them to have difficulties providing adequate customer service.
It’s clear that the cannabis industry needs reliable payment solutions to grow and maintain trust. At Canxchange we are proud to host a payment solution operated by the conventional banking system that we provide our members.
There are a growing number of cannabis payment services. While these cannabis-industry-specific solutions do offer an alternative, many of them still miss out on credit card processing. This depends on your jurisdiction, of course. In the US, cannabis companies cannot legally accept credit card purchases.
Options that still work and are legal include ACH payments and eChecks. Also, there is the option of a dispensary credit card, essentially a merchant account for customers. They typically use P2P technology like Venmo to facilitate card transactions.
Of course, if possible, find a reliable processor that can accept major credit cards. Fortunately, the startup space for cannabis payment processing is very active. Legal solutions to the payment processing issue are quickly establishing themselves.
Shady and illegally operating companies
Unfortunately, this factor is beyond the control of most legal and honest cannabis businesses. The fact of the matter is that many illegal cannabis businesses have emerged alongside the businesses that operate legally. Of course, illegal cannabis dispensaries do not need to follow the same rules as their legal counterparts. This is not a good look for the cannabis industry. It’s even formed a wedge between the legal medicinal and recreational cannabis communities in some areas.
The cannabis industry has already produced several scandals. The confusion surrounding regulation has allowed some illegal businesses to thrive while maintaining the appearance of complete legality and legitimacy. It’s safe to say that many cannabis consumers have likely ordered cannabis from an illegally operating business while having no idea that they have been doing so.
Also, legal cannabis businesses face the challenge of shady payment solutions providers. Most are just looking for a legal and sustainable way to enable their customers to pay them the way they want to.
These issues have several solutions that all serve to promote transparency and promote confidence in legal and ethical businesses involved in any part of the cannabis industry. “Seed-to-Sale” POS systems are developed specifically for the cannabis industry.
They enable the tracing of all transactions and actions from the purchase of seeds by a grower to the sale of finished products by retailers and dispensaries. This removes much of the “shadiness” associated with the cannabis industry in the eyes of the regulators and the consumers.
Cannabis businesses can take part in promoting trust by making licensing and certifications public knowledge. They can also provide educational materials on these topics through handouts or on their websites.
The bottom line
Cannabis is becoming more accepted by society. Whether the plant’s cultivation is for medical, industrial, or recreational use, more people want it.
However, the industry must still confront the stigma stemming from a generation of illegality. Then there’s its past, sweeping association with psychoactive drug abuse. While regulators are often slower than the general public to react to these changes, there are steps that those in the cannabis industry can take to further build up trust and credibility with both regulators and consumers.
Industrial hemp in Europe driving global market growth
A new report has projected the market to exceed $310m by 2027.
A new report has attributed the growing hemp market in Europe as a driving factor of global growth.
A once under-utilised crop, hemp is now seeing strong growth thanks to the demand for alternative products. Food, drink and personal care products are driving the growth of the industrial hemp market.
A new report from Global Market Insights has highlighted government regulations and policies associated with the legalisation of cultivation, as well as escalating demand for hemp products as a main driver of the market.
The market size was over USD$205m (~£151.09m) in 2020 and is projected in the report to reach $310m by the end of 2027.
Fibre and seeds
Hemp is utilised extensively in the pulp and paper industry as it is a considerably more sustainable crop than wood. This is due due to the fact its does not need bleaching produces more pulp per acre, offers enhanced paper strength, and utilises chemicals that are less toxic compared to wood paper.
The report highlights that government regulations seeking to limit wood harvesting and the associated harmful consequences of wood pulp and paper production, are likely to foster product uptake.
It speculates the segment will see robust growth to attain a valuation of more than $70.5m by 2027.
The hemp seeds segment is slated to surpass a valuation of around $74.5m by 2027 under food and beverages application, due to their wide use in supplements, such as protein powder and meal replacement bars and snacks.
The report has attributed a proliferating industrial hemp market in Europe as well as mounting product application in automotive manufacturing as additional drivers of growth in the global market.
It notes that the Europe industrial hemp market is projected to progress at a CAGR of approximately 5.5 per cent over the forecast period to surpass a valuation of $80.5m.
Growing consumer awareness of the plant’s therapeutic effects has also boosted product demand in recent years, according to the report.
To read the full report please visit: https://www.gminsights.com/roc/3306.
Canxchange launches new trading system for the cannabis market
Canxchange is introducing more transparency, liquidity and efficiency to the growing cannabis market through its new platform.
Canxchange, the leading physical hemp and CBD exchange, has launched a new electronic trading system for the cannabis market to simplify sourcing, buying and selling.
The new Canxchange trading system is the result of more than one year of product development and engineering work.
The platform provides electronic trading, market surveillance tools, price discovery options, data and features to enhance daily business and transactions for Canxchange members.
CEO and co-founder of Canxchange, Alex Arkentis, commented: “As we continue to improve and upgrade Canxchange, our main objective is to facilitate our members based on their feedback and market needs.
“We have spent the past two years listening closely to what our members are looking for and educating ourselves on what the industry lacks.
“With the launch of our latest platform, now our traders can focus on their strategic priorities, and rely on Canxchange to handle everything else.”
The platform has been designed based on market and member feedback, to simplify the process of sourcing, buying and selling.
New platform features include:
- Simplified processes and more powerful user experience
- Production and distribution procurement contracts
- Market surveillance tools
- Data and pricing analysis
It will leverage the expertise and proven track record of Canxchange, a European leader in physical cannabis trading with a reputation for world-class technology, cutting-edge service solutions and trading reliability and efficiency.
Canxchange has said that it plans to continue developing its operation and network of users globally, following the success seen by adopters of the platform across Europe. The company aggregates farmers, producers and extractors and a wide range of industries under one roof; offering a wide network of vetted businesses to its members.
Oxford Cannabinoid Technologies sees positive progression
Oxford Cannabinoid Technologies Holdings has begun 2022 with a positive start and has announced a new date for the start of its Phase I trial.
Oxford Cannabinoid Technologies Holdings (OCTP) had a positive year in 2021 and has begun 2022 on the same foot.
The company has reported financial results for the six-month period ending 30 November 2021 in line with expectation, during which approximately £920k of research and development costs were incurred. The costs were primarily on lead drug candidate OCT461201, which accounted for approximately £604k of the total.
OCTP and its subsidiary, Oxford Cannabinoid Technologies Ltd. (OCT) had total cash reserves of approximately £12m and no debt, having repaid a Government bounce-back loan of £50k in full. The group has noted that progress is being made on all four of its programmes.
CEO, John Lucas, commented: “We are pleased with the progress made on all four programmes during the Period. OCTP remains on time, on budget and in line with our expectations.
“This was a busy period for the company following the successful listing in May.
“During the first half, we made good strides across the board and, as such are excited by the potential as the year progresses and look forward to updating the market further in due course.”
2021 also saw the company enter into agreements with leading global cannabis company Canopy Growth Corporation, as well as with Aptuit (Verona) SRL, a subsidiary of Evotec SE (Evotec).
OCTP’s agreement with Canopy Growth Corporation gives the company an exclusive license to Canopy Growth’s cannabinoid library. This includes 335 derivatives and 14 patent families. Oxford Cannabinoids has now begun screening the drug-like compounds in multiple therapeutic areas, including pain, neurology, immune-inflammation and oncology.
OCTP is working with Dalriada Drug Discovery to screen the compounds and Oxford Cannabinoid Technology’s (OCT) existing proprietary cannabinoid library. Dalriada previously designed, synthesised, and experimentally tested all of the compounds in the Canopy library and as such, OCT will be able to leverage Dalriada’s existing knowledge and experience as it continues its experimental research.
The aim is to identify two drug candidates for pre-clinical development by the end of 2022.
A further agreement with Oxford Stemtech announced in November 2021, is supporting the research and development for all the company’s drug development programmes, with a particular focus on programmes three and four.
Stemtech’s “pain-in-a-dish” model replicates human pain using stem cells from volunteers that are re-programmed into pain neurons. This agreement also marks an evolution of OCTP’s relationship with Oxford University Professor, Dr Zameel Cader.
OCT also entered into a £2.6m contract research agreement with Aptuit (Verona) SRL, a subsidiary of Evotec SE (Evotec) in July 2021.
The company has confirmed in its update that the planning phase has been completed and “wet-work”, manufacturing process development and crystallisation development have now been initiated.
It has also confirmed that it is anticipated that Evotec will provide the OCT with a submission-ready regulatory document and an approved batch of drug product that is ready for Phase 1 clinical trials by Q1 2023.
Originally set to commence in Q3 2022, the date for the trial has been moved to Q1 2023 due to technical issues requiring additional optimisation of the crystal development for scale-up manufacturing, which has been now successfully implemented.
The OCT board has stated this will not impact time to Phase II clinical trials, there is no material cash flow impact and the time to market is currently anticipated to remain the same.
The agreement with Voisin remains on track according to the update with a roadmap ti clinical development having been generated to support the ongoing pre-clinical package for programme one.
Voisin has also undertaken activities in preparation for the commencement of the Phase I clinical trials and is providing the Group with regulatory support to address immediate priorities for filing and registration of Programme 2’s metered-dose inhaler in the UK and US market.