We spoke with Eoin Keenan from Prohibition Partners about
the stance of the cannabis industry in the current climate.
Eoin provided us with a lot of information and discussed global
positioning, where Prohibition Partners is looking to progress
and how COVID-19 has greatly impacted consumer demand.
Harriet: The cannabis market seems to be thriving at the moment compared with other markets, for example property. Why would you suggest that now is a good time to get involved?
Eoin: What we have seen globally is that a lot of consumers and medical patients have been stockpiling, both before and during the lockdown, so we’ve seen a huge surge in terms of cannabis purchases, which helps the industry as a whole. We’ve seen before lockdown that demand for cannabis increases and it appears to follow the same trend during lockdown.
We ran a consumer research analysis last month in the US, UK and Canada and found both medical and recreational consumers intended to increase their usage of cannabis. In fact, they were four times more likely to increase their usage, so demand has clearly increased.
There’s a question around how we give a stimulus to the economies most affected by COVID-19 and, for me, legalisation is a viable option. In the 1920s and ’30s, we saw this in the provision of alcohol, which was legalised in part because there was so much unemployment. Once all of this has died down, public opinion may swing in favour of legalisation but whether governments act on that is another question.
Harriet: What’s your opinion on how the recreational versus the medicinal market is doing at the moment? Do you think one is progressing faster than the other?
Eoin: There is no legal recreational market yet in Europe, just limited CBD and medical markets; however, these markets are expanding within Europe. In terms of product format, we are moving towards cannabis as an API and away from smokable herb. We have a much more regulated and controlled medicinal supply chain in Europe than you have in North America, so I don’t think the dispensary model will be replicated here in Europe.
Eoin: I think, in the short term, medicinal will be the big word in Europe. However there is a strong adult-use cannabis culture in leading European markets such as the UK, France and Spain, with over 10% of the population having used cannabis in the last 12 months.
Harriet: Could the current economic climate benefit the industry long term, due to the obvious demand?
Eoin: I think there’s huge demand there. As I’ve mentioned, our consumer research shows that both recreational and medical users are interested in cannabis prior to this lockdown. Then you’ve also got the potential for CBD products to be very popular during the lockdown – a time of high stress and anxiety.
Look at the last 10 years, we’re seeing a shift in the population in terms of attitudes towards liberalising the cannabis market. There are two factors I think should be considered with regards to this: demand will probably increase for cannabis consumer goods and public and political attitudes will swing in favour of legalisation.
Harriet: The whole health and wellness aspect of it – people are now trying to look after their immune systems more and have to make a real effort to be healthy, so I think a lot of those people who haven’t been consumers before might go down this route.
What are some of the key insights you feel people in the industry could learn from this crisis?
Eoin: I imagine we are going to accept a totally new world after this. We’re going to look at things differently, whether it be supply chains, in terms of travel or whatever else. I think businesses need to be able to adapt to digital – that’s been true for the last 20 years but cannabis has been slow to capitalise. It’s still an immature industry and it will progress that way but maybe it will need to become much more digital and tech savvy.
We’re a little bit lucky in terms of where we sit – as a consultancy, data and strategy platform, as well as a digital conference platform, we all come from tech backgrounds and the transition has been quite swift for us, whereas I know a lot of cannabis businesses are going to struggle and potentially go under.
There is a wider conversation there; we saw 18 months ago that the cannabis market went through a lot of turbulence in terms of being over-leveraged in their evaluations. Companies had a lack of actual solid revenue and profits, so they were already at risk. Whilst having an economic shock like this puts them at severe risk, I think there’s an argument there to have a potentially slower, more sustainable build in terms of the industry. That’s a real conversation that I think needs to happen.
Harriet: How does Prohibition Partners plan to continue exploring the cannabis industry and can it weather the storm in this uncertain time?
Eoin: We are very fortunate in terms of our team, our culture and our business model. We are from technological and digital backgrounds, we work online between three cities (Barcelona, Dublin and London) and we have a large network internationally, so we are globally focused and not particularly dependent on one market.
Fortunately, our business model and strategy is robust. We’ve seen a huge demand for data, insights and strategy at a time like this when firms are looking to reevaluate, understand and plan. In addition, our digital conference is experiencing a huge amount of interest. Travel is naturally disrupted, but attendees are still looking for high-quality content and education and a way to interact with the global community online. We provide that.
If you’re looking for a high growth opportunity in the thriving medicinal cannabis market, please visit Investors to learn more about Eco Equity’s offering.