Group 5 First of all, a Happy New Year from Leafwell to all of our readers (and our non-readers as well, even though they’ll not see our message). We hope you had a good 2018, and that 2019 will be even better. 2018 was a momentous year in many respects for cannabis. Canada legalized the use and possession of recreational cannabis, several other states have started to establish a medical marijuana program and there has been a move towards making medical cannabis available on prescription overseas in countries such as the UK (although some argue that the new rules make getting a hold of prescription cannabinoids even more difficult). Epidiolex has been approved by the FDA, and there has been more and more scientific research being published on using cannabinoid-based medications for various conditions. Yet, for all the exciting things happening, the response has been generally quite subdued, and just a little over 1 year of legalization cannabis sales are not what were expected. Whilst the legalization of recreational cannabis perhaps did bring in a few more customers, the boom many expected was quite tempered. Cannabis stocks started plummeting in the last quarter of 2018. Of course, many said that such a thing would happen, as the regulations still need to be sorted out, and there are still many cities across California that don’t have legally operating dispensaries. At the moment, recreational cannabis in California is in a legal quagmire. Another issue that could be affecting cannabis sales is the amount of tax legal farmers need to pay on it, meaning many may well still prefer to buy from the black market. Marijuana/cannabis. From https://libreshot.com/marijuana/ Will this be sorted in 2019? Of course, as time goes on, we should expect to see a better-defined legal framework for the cannabis industry in California. This will likely take longer than one year, so it is perhaps best to hold onto your hats and sit tight for this bumpy ride, because it’s probably going to be a few years before we have a set of workable rules and regulations for the recreational cannabis market in California. Certainly, the costs of setting up a legal cannabis operation and the fact that other states do not have legal cannabis means that there is still a profitable black market in operation in California. So, what will be the response to this? How will people operate in such a market? Well, it is likely that there will be several shops and dispensaries who will carry on operating in a grey market. Home deliveries are likely to become more normalized. There are a not-insignificant number of people who (understandably) still don’t trust the authorities in charge, and see the current mess of regulation as evidence for maintaining their stance. Such people are unlikely to take heed of current legislation and carry on operating in a black/grey market. This will either cause a huge clampdown by law enforcement and/or force lawmakers to draw up reasonable regulations due to it being economically unfeasible to enforce the current rules. Again, it is unlikely that this will take 1 year to do, but expect a whole host of “emergency” legislations being drafted and enacted. 2018 also saw what we might call the “bonfire of the cannabis products”, as many were taken off the shelves for not passing the state’s lab tests. In many ways, this is a good thing, as it is of course hugely important that products are safe to consume as well as accurately labelled. However, we also have some sympathy for the producers of these products. Cannabis is a hugely complex plant with hundreds of cannabinoids and terpenoids. You can send in samples to three different labs and get three different results, as their tests detect different cannabinoids and terpenes. This means that, for all the bad products getting recalled, there are also a few products from very good producers being recalled. This trend is likely to continue until products are sufficiently quality-controlled and standardized. New Years Eve bonfire, by Gary Houston. From https://commons.wikimedia.org/wiki/File:New-Years-Eve-Burnie-Bonfire-20151231-003.jpg So, whilst we are probably going to see a continuation of messily- and roughly- enacted policies on cannabis, we are also likely to see other areas of the market heat up. The sale of raw flower is likely to be unappealing to anyone except those who like to make their own products and those who prefer to smoke – a decreasing percentage of the population. Edibles, tinctures, vaporizers and extractions of all sorts are becoming the preferred methods of ingestion. The potential profits that can be made from cannabis are huge, so bigger players are getting involved. Big alcohol and tobacco are teaming up with various players in the cannabis market to develop various THC- and CBD- containing products. Pharmaceutical companies are also a massive player, and are also developing and patenting cannabinoid-based medications. The huge surge of interest in CBD as a treatment for chronic pain, anxiety and general wellness has also seen hemp-derived products made available in pharmacies across the world. Big companies have higher purchasing and (sadly) lobbying power, meaning 2019 will probably see smaller companies being bought by bigger ones, who are intent on consolidating their markets. They are also more able to afford the costs of navigating a complex legal landscape, and big companies are definitely interested in getting a foothold in cannabis whilst the industry is still in its infancy. Whilst the cost of raw cannabis flower is likely to go down as it becomes more abundant and available, there are huge opportunities in associated industries such as farming equipment, medical applications for hard-to-treat conditions as well as general wellness, recreational alternatives to alcohol, banking and more besides. For better or for worse, this will probably lead to some form of “gentrification” of the cannabis industry. For many who have been criminalized by past laws and/or who have been the main advocates of medical cannabis for many years, this process is still a sensitive issue. Although growing acceptance of cannabis use is obviously generally positive, it does for many feel as if those who did all the initial groundwork are now being shouldered out of the industry. Yes, some are doing well out of the current arrangements (sometimes rightfully so), and there are certainly some bad elements that are being weeded out by the more reasonable regulations, but there are still a lot of issues that need to be resolved. Perhaps now more than ever, those who are concerned about the future state of the cannabis industry should look to buy from independent companies and those who take the concept of “medical cannabis” seriously. Picture by torbakhopper. From https://www.flickr.com/photos/gazeronly/24815775093/ Will there be more FDA-approved medications available on prescription in 2019? Whilst it is difficult to say for sure with regards to the U.S. alone, expect to see countries worldwide including medications containing cannabinoids on their lists. There will likely be variation in terms of which type of medication is available and for which condition/s, but it would not surprise us here at Leafwell if more and more medications are developed with affecting the endocannabinoid system in mind. This could include treatments for chronic pain, cancer, multiple sclerosis (MS), irritable bowel disorders (IBDs) and a whole host of autoimmune and neuroinflammatory conditions. Whether all of these will be available in 2019 we cannot say for certain, but there will certainly be a greater amount of scientific literature laying the groundwork for the development of such medications over the next several years. In the meantime, it looks as if 2019 will be the year of “figuring things out”. We are one year into the legalization of recreational cannabis, so it is imperative that California gets a workable regulatory framework sooner rather than later, as the current legal framework is very difficult for even the most scrupulous of operators to navigate. Not getting it right this year could cost California severely in the future, and there are certainly companies from other states, Canada and the Latin American countries who would be keen on displacing smaller Californian companies who are held back by bad regulations.