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Colombia is synonymous with cannabis farming, but are there more challenges creating cannabis regulation than it would appear?

For Canada’s leading cannabis producers, Colombia has emerged as the choice location for outsourced production. With an equatorial climate and mountainous topography, the country provides a steady 12 hours of sunlight per day as well as a wide range of growing altitudes. An inexpensive and plentiful labour force – many with experience in a world-leading flowers-for-export industry – means that companies estimate future Colombian production costs of $0.50 (~€0.45) to $0.80 per gram of dry cannabis flower, compared to over $2 in Canada. So, where does cannabis regulation come in to play?

What do you know about cannabis regulation in Canada?

Canada’s three largest pot firms – Canopy Growth Corp, Aurora and Aphria – have all acquired licensed producer (LP) companies in Colombia and many mid-tier international players are following suit. Colombian owned companies including PharmaCielo and Khiron Life Sciences have tapped Canadian stock markets to super-charge their own growth and marketing strategies whilst hundreds of smaller LPs seek international finance and expertise.

In May 2016, Law 1767 – allowing for the cultivation, processing and export of medicinal marijuana – passed Colombian congress by a wide margin. To prevent the diversion of product into the recreational market the law prohibits the commercialisation of flower; all cultivated cannabis must be processed and an end client must be established early in the licensing process, usually by a letter of intent (LOI) for purchase.

By opening the door to exports – a recognition of the commercial potential of the industry – Colombia’s regulation has been deemed amongst the most attractive in medicinal cannabis world and has become a reference point for other Latin American countries developing their own legal marijuana framework.

The challenges

However, Colombian cannabis entrepreneurs are coming to discover what oil and mining investors have known for some time: that laws are subject to frequent change and the country lacks the institutions to implement and enforce regulations. By making licences relatively cheap to apply for, the government gave the impression that the barriers to entry, in general, were low. Licence requests were filed well in excess of the government’s capacity to process them. The lucky first-movers sold out their projects for tens of millions of dollars, the licensing rush increased, the line grew longer. By mid 2019 there were over 1000 applications awaiting approval.

The Colombian cannabis industry is like an assault course in which the next obstacle is harder than the last. In addition to applying for licences Colombian firms had to register their existing, supposedly endemic, cannabis strains in the Colombian seed bank before the end of 2018. It’s an open secret that many of those strains were North American in origin and brought into the country. Now the regulatory body responsible for registering new seeds and strains faces an unprecedented wave of work, with thousands of strains needing to be checked and catalogued.

In addition, while climactic conditions might be prime, soil conditions in Colombia could be a looming challenge for the country’s growers. Anecdotal evidence suggests that north American strains have struggled to adapt to soils tainted by previously unencountered pesticides and tropical pests. The country’s most skilled geneticists are working hard to breed more resistant strains that lose none of their potency. At the same time master growers have to ensure that their facilities – from greenhouses, security systems, processing facilities and transportation – are up to local and international quality standards.

The regulatory framework

LPs also have to navigate various strata of political and regulatory risks. At the local level, new guidelines require companies to conduct prior consultation activities with local communities prior to establishing the project and 10% of the total flower processed in fabrication facilities must be sourced from small growers. Establishing long-lasting relationships with such growers and ensuring the quality of product will be key to successful projects.

At the national level, last year’s election of a right-wing government with a more stringent anti-recreational drugs stance makes it difficult to promote the medicinal industry without being accused of double standards. Meanwhile a resurgence of guerrilla violence and organised crime in certain rural areas is a reminder that the country’s 2016 peace deal still has a rocky road ahead.

These challenges should be borne in mind when one reads press releases relating to Colombian cannabis companies. While those projects backed by ‘big weed’ firms now have the finances and expertise required to plan and develop expandable low-cost production centres designed for their own medicinal products, a second tier of companies is clamouring for investor attention. Some, such as Khiron Life Sciences, have invested heavily in marketing across the region, boosting brand recognition through the release of CBD infused cosmetic products. Others, such as Clever Leaves, have exported limited quantities of product abroad for scientific research, while others have focussed on the B2B market, with the goal of producing reliable extracts for various medicinal customers, such is the case with Plena Global.

The future of the Colombian cannabis industry

However, none of the projects are currently in commercial production – that will have to wait until production quotas are doled out by the government in the coming month – and only around 30 strains have currently been approved by agricultural authorities. The coming year will be the litmus test for Colombian cannabis companies. If the first-mover companies can navigate the regulatory and technical challenges and successfully export product at their forecast production costs, investment in the industry could boom. With the country’s oil production stagnating and coffee prices at record lows, cannabis could provide a vital source of jobs and tax revenues. The country has vast tracts of underutilised agricultural land. Already the country’s palm oil producers and sugar cane farmers are rumoured to be investigating the possibility of switching over to a more profitable crop.

That would provide a powerful political impetus for the industry. As the country’s powerful business families recognise the potential of cannabis and hemp production they are likely to lobby hard for further pro-business reform. Already in Antioquia, one of the country’s more socially conservative areas where marijuana still suffers from a negative reputation, the local university and regional development office has established its own LP.

For small and mid size growers, however, the outlook appears more murky. Adjustments to the regulatory code proposed in June 2019 increase barriers to entry and many fear that they will be unable to source the finance necessary to bring their projects to fruition under the necessary international standards for export.

It could take upwards of $100m to build a competitive cannabis project capable of exporting to the EU or Canadian for medicinal production. Some may try to wait for congress to save them. In June an opposition senator proposed a bill to legalise adult recreational use of cannabis.

While the bill is unlikely to pass the right-leaning congress, a future change of government, continued shortages in Canada and a powerful domestic lobbying group could mean that legal exports of Colombia’s famous marijuana could be a less distant prospect than many currently think.

The future looks bright for the Danish medical cannabis industry, but speaking to Rikke Jakobsen, CEO of Cannabis Denmark, there is still work to be done.

The Danish medical cannabis industry is a dynamically evolving world, with this in mind, Health Europa spoke with Rikke Jakobsen, CEO of Cannabis Denmark in late 2018 to discuss the pioneering medical cannabis pilot and development programmes the country had recently launched, along with the impact this was set to have on patients, growers and healthcare professionals.

The Danish medical cannabis pilot programme was developed with a view to allowing doctors to prescribe cannabis products to vulnerable patients who have failed to respond to traditional therapies. The information and evidence collected during the trial will form the basis of more permanent legislation, which will be implemented at the end of the 4-year pilot scheme based on the findings.

Here Jakobsen updates us on the progress of the trial, along with how this will impact the economy, increase the availability of products and what the rest of Europe can learn from Denmark’s example.

Now that the medical cannabis trial is underway how will the research carried out within Denmark be affected by the results? Do they pose any new challenges?

Cannabis Denmark are not currently conducting any new research as we are fundraising to try and facilitate this. We do have around 15 studies in progress of which 4 or 5 are clinical trials. Unfortunately, none of the clinical trials are being conducted on the products being prescribed as part of the trial so we don’t yet have any results on the individual cannabinoids – only CBD and THC in combination.

We do hope to see more research in medical cannabis cultivated in Denmark within a year or two, but it does depend on the researchers. I’m sure that funding won’t be a problem because of the industries willingness to invest in research.

Prescriptions for cannabis increased over the course of 2018 with domestically cultivated cannabis expected to reach the market and be exported this year. What impact is this anticipated to have on pricing and the Danish economy as a whole?

Yes, we did see a dramatic rise in prescribed medical cannabis in the last quarter of 2018 after the introduction of oils, as before only dried cannabis was available. The most up to date figures from late April 2019 shows 429 prescribing doctors and over 2000 patients have been prescribed medical cannabis. With the introduction of Danish cultivated cannabis in September and October 2019 we expect to see another dramatic rise once again which should hopefully drive prices down.

In the next 2 years we expect that the all Danish patients will be swimming in medical cannabis products because a stipulation is that suppliers must ensure that the Danish market is fully equipped before they are permitted to begin exporting. Of course, this will have a huge impact on our economy and medical cannabis patients both within Denmark and across Europe.

As a not for profit organisation we care about all patients having access to medical cannabis as a treatment, and clearly there are problems and barriers to access all across Europe. This is why we hope that Denmark can set the highest standards for medical cannabis within the EU. At the same time, we hope that the EU will find a way to harmonise medical cannabis legislation across the Member States and acknowledge the compounds such as THC as having medicinal properties, so it becomes easier for counties to trade across borders within the EU. This way patients will benefit from easier access, low prices and the highest quality.

How will the results of the trial drive innovation and influence the variety of products available in Denmark, and by extension the medical conditions which cannabis can be treated with?

The trial itself won’t facilitate much innovation, but the framework has been designed to be liberal enough that it can promote research, innovation and development. Cannabis Denmark also plays a key role in pushing innovation forwards so that eventually patients will have access to a variety of high-quality cannabinoid-based products of with multiple delivery systems which are affordable. We know that medical cannabis has the potential to treat and alleviate symptoms and help solve many different medical problems in the future, and we remain devoted to push medical cannabis in the direction of being a recognised medical tool.

You have talked before about your ambition to establish a cannabinoid and terpene research institute, how close is this to becoming a reality and what would you like to see this achieve?

Establishing a cannabinoid institute is really the only way to keep up with the demand for medical cannabis. Research into its use is very far behind where it would usually be in terms of developing medicine. Furthermore, we know that we have a variety of cannabinoids and terpenes which can be used to manage symptoms in all kinds of medical conditions.

It is much easier to do the ground research in one unit and on that basis different companies can develop many kinds of medicines. I am very aware of the cost to create the facilities required, and it will require public funding and co-operation between all involved in the industry. Conversely, it is the only path to consider if you are completely serious about developing medical cannabis operations. I’m also aware that Denmark probably cannot do it alone and would need assistance and co-operation from other counties.

The beauty of it is that I think there is a strong desire for countries to work together between researchers, politicians and private companies. Nobody can walk alone when medical cannabis is still in its infancy and very much a private affair of the pharma industry. We are trying to work with and co-operate with all of the different sectors in Denmark, but we must also broaden this approach and do the same across the whole European Union.

What lessons can the rest of Europe learn from Denmark’s example? How do you anticipate the industry across Europe will develop over the next 5 years?

The best example other countries can learn from Denmark’s approach is our willingness to simply take the leap and act on this. I also think that every country needs a not for profit organisation like ours which keeps fighting for everyone to work together.

This is Cannabis Denmark’s task – to help the march of progress, push on, and facilitate co-operation until we reach our goals. Imagine that medical cannabis is Denmark is the way to illuminate the best path to healthy and successful life sciences and pharmaceutical industries.

As for the future of the industry we will most likely see it mature and different companies will find a way to develop medicine tailored to treat different conditions with a more personalised approach. Medical cannabis is not necessarily a suitable treatment for all conditions, but we can investigate further and develop certain strains and compounds to combat symptoms and conditions more specifically.

Cannabis has been decriminalized in New York State after Governor Andrew Cuomo signed off on the new legislation last month.

The new law has converted the possession of under two ounces of cannabis from a misdemeanor into a violation. As a result,  offenders will receive a ticket to appear in court, followed by a $50 fine if convicted of possession of less than one ounce, and a $200 fine if convicted of possessing less than two ounces.

Although the drug is still considered an illegal substance per New York state law, if caught, individuals will have their stash confiscated and marked as evidence. Unlike before, the charge will no longer create or show up on a criminal record.

Governor Cuomo released a statement about the new legislation:

“For too long communities of color have been disproportionately impacted by laws governing marijuana and have suffered the life-long consequences of an unfair marijuana conviction. Today is the start of a new chapter in the criminal justice system. By providing individuals a path to have their records expunged, including those who have been unjustly impacted based on their race or ethnicity, and reducing the penalty for unlawful possession of marijuana to a fine, we are giving many New Yorkers the opportunity to live better and more productive, successful and healthier lives.”

What about New Yorkers convicted before the new law took effect? They can rest a little easier — especially the ones who had minor pot convictions before August 29.

“Being that this new legislation decriminalizes marijuana and changes it from a misdemeanor offense to a violation level offense, it would not appear on your criminal history,” Captain Kate Newcomb with the Broome County Sheriff’s Office told WBNG.

The changes come on the heels of the state’s failed attempts earlier this year to legalize the drug. “This law is long overdue, and it is a significant step forward in our efforts to end this repressive cycle and ultimately mend our discriminatory criminal justice process once and for all,” stated Cuomo.

Despite sweeping cannabis law reforms at the state level, cannabis remains prohibited under federal law and continues to be classified as a Schedule I drug by the DEA.

For years, promises of growth had been more than enough to send marijuana stock valuations higher. However, things changed when Canada legalized recreational marijuana and opened its doors to adult-use weed sales on Oct. 17, 2018. No longer are promises sufficient to send cannabis stock market caps higher. Instead, Wall Street is looking to marijuana stock operating results and allowing sales growth to do a lot of the talking.

Considering that Canada is struggling with early stage supply issues, and most recreationally legal U.S. states are battling persistent black markets because of high excise tax rates, cannabis sales growth has mostly been disappointing this year. But according to Wall Street, four pot stocks are on track to grow their top lines by a minimum of 355% next year.

Auxly Cannabis Group: Sales growth of 3,056%

In terms of the fastest-growing cannabis stocks, there's Auxly Cannabis Group (OTC:CBWTF) and everyone else next year. Auxly, which has more than one dozen streaming deals in place, as well as a notable joint venture with Sunens, is expected to grow sales from an estimated 5.8 million Canadian dollars in 2019 to CA$184.3 million in sales.

You're probably wondering why Auxly Cannabis will only generate CA$5.8 million in full-year sales after Canada legalized recreational marijuana. For starters, Auxly's production is expected to come from its streaming partners and its Sunens joint venture. Most of these streaming partnerships aren't yet licensed and producing, while the Sunens joint venture won't begin production until the second quarter of next year. Most of its revenue in 2019 will likely come from contract revenue via wholly owned subsidiary KGK Sciences.

The other reason is that Auxly's management team has clearly stated its intention to hold back dried flower production with the intent of transforming this product into high-margin derivatives (e.g., vapes, edibles, and concentrates). Dried flower is a relatively low-margin products, so Auxly is forgoing low-margin sales now for higher-margin derivatives later, which will begin hitting dispensary shelves in mid-December.

The Green Organic Dutchman: 582%

Small-cap Canadian grower Green Organic Dutchman (OTC:TGODF) also has an opportunity to knock Wall Street's socks off next year. The consensus suggests that sales could surge from CA$39.1 million in 2019 to CA$227.9 million in 2020.

When fully operational, Green Organic Dutchman projects as a top-five producer in Canada, with 219,000 kilos of peak production. And like Auxly Cannabis, TGOD, as the company is known, plans to focus a lot of its attention on derivative products. It has facility space devoted to beverage and edible production, and signed a three-year extraction-services agreement not too long ago with Neptune Wellness Solutions that'll cover an aggregate of 230,000 kilos of cannabis and hemp biomass. With the company's flagship Valleyfield campus recently receiving its organic certification, and commercial production set to ramp up, it's easy to see how TGOD's sales could skyrocket next year.

Then again, it's also important to understand that TGOD was very late to the party in terms of getting its product to market, which is why its sales are set to soar so dramatically in 2020. Even with a focus on high-margin derivatives, it's still a toss-up as to whether or not this surge in sales will lead to the company's first-year of profitability.

HEXO: 452%

Keeping the Canadian grower theme going, Quebec-based HEXO (NYSE:HEXO) stands to see its sales grow from CA$59.7 million in 2019 to CA$329.5 million in 2020. However, it should be noted that management has repeatedly suggested that CA$400 million in sales is plausible for 2020, meaning Wall Street's consensus may need to creep higher, assuming countrywide supply issues work themselves out.

As is the theme so far, HEXO is also waiting for the official launch of derivative products. HEXO has more than 600,000 square feet of facility space set aside for processing and derivative production, as well as worked out a two-year extraction agreement with Valens GroWorks that'll result in 80,000 aggregate kilos of hemp and cannabis biomass being extracted for high-quality resins and distillates that can be used for derivatives. It's worth noting that HEXO also has a joint venture with Molson Coors Brewing -- known as Truss -- that'll see infused beverage sales begin by mid-December.

This is also a company that benefits from having what could be the most lucrative marijuana supply deal in history on its books. In April 2018, HEXO signed a five-year deal to supply cannabis to its home province of Quebec with an aggregate of 200,000 kilos of weed. Inclusive of its Newstrike Brands purchase, this should work out to about 30% of the company's output through 2023 already spoken for. Suffice to say, 2020 should be a big step forward for HEXO.

Flowr Corp.: 356%

The fourth and final stock offering incredible sales growth next year is small-cap British Columbian grower Flowr Corp. (OTC:FLWPF). According to Wall Street, Flowr should see sales catapult from CA$23 million in 2019 to CA$104.6 million next year.

Unlike Auxly, TGOD, and HEXO, Flowr hasn't been lumped in with major growers, at least in terms of production. Flowr's focus is on its flagship Kelowna facility, which is capable of at least 50,000 kilos of output when operating at peak capacity. But unlike most growers, Flowr is focused entirely on premium and ultra-premium dried flower and derivatives at Kelowna, meaning it should face little in the way of supply or pricing issues for its product. This Kelowna campus should see a healthy bump in production next year.

Furthermore, Flowr recently acquired the 80.2% interest in Holigen that it didn't already own. Holigen's outdoor Aljustrel grow farm in Portugal spans 7 million square feet and could yield 500,000 kilos of marijuana when fully operational. Even though outdoor-grown cannabis won't meet the exceptionally high-quality standards found at Kelowna, it'll be perfect to create derivative products for Europe's medical marijuana market.

Long story short :You'd struggle to find cannabis stocks with faster-growing top lines than these four next year.

According to an interesting new study, when CBD is taken along with fatty foods, absorption rates are increased up to 14 times.

The study, published in June in the Epilepsia Journal, was entitled “Food effect on pharmacokinetics of cannabidiol oral capsules in adult patients with refractory epilepsy.” The study looked at the difference between taking CBD in oral form with a high-fat meal as compared with fasting. While some research has been carried out on the relationship between CBD and various conditions, only a small amount of research is available when it comes to CBD absorption.

The new study, carried out by scientists at the University of Minnesota, looked at eight patients. They found that the absorption rate of CBD, when taken with fatty foods, was much higher than in a fasted state. From the results of the study, “On average Cmax was 14 times and AUC0‐∞ 4 times higher in the fed state. The 90% CI for the ratio of fed versus fast conditions for Cmax and AUC0‐∞ were 7.47‐31.86 and 3.42‐7.82, respectively. No sequence or period effect for Cmax and AUC0‐∞ was observed. No adverse events were reported.”

The study could prove vital for the future of medical cannabis and specifically CBD. The study also looked closely at CBD absorption rates when taken in capsule form. The researchers also found that CBD delivered via capsules absorbed better than liquid formations. CBD levels in the blood were measured during fasted states as well as when taken within 30 minutes of a fatty meal containing at least 800 calories total. The authors also noted that the increased absorption had no knock-on effects in the subjects in terms of cognitive or psychoactive results. 

Lead author of the study, Angela Birnbaum, said about the research, “For epilepsy patients, a goal is to maintain consistent blood concentrations of drugs. This study shows that CBD concentrations could vary significantly if patients take it differently, sometimes with or without food. Variations in blood concentrations could leave a patient more susceptible to seizures.”

The conclusions are also limited, specifically when it comes to the question of the actual fat content in a meal. As only eight patients were followed and tested, the conclusions of the study are a little underpowered and open to debate. However, other research exists to suggest that fat content in food affects absorption rates of compounds like CBD.

With that said, the conclusion of the study noted that “Administering CBD as a capsule rather than a liquid allows for more precise determination of pharmacokinetic parameters and is more representative of CBD swallowed products.” That fact alone is something exciting for those developing medical CBD products as much as it is for patients who take them.

New companies tend to cultivate similarly. Build a winning team and culture. Plan and establish your vision of success – but maintain flexibility. Structure an advisory board or shadow cabinet full of successful professionals, both inside and outside your industry. Stay lean and nimble, but hungry. Think like a customer. Find a problem, hire a solution.

Any start-up business can be riddled with challenges. Launching a start-up business in an undeveloped industry can be nearly impossible. The cannabis industry is one of those spaces. Applications that could assist in getting your company off the ground simply don’t exist. Anticipating solutions for problems that have yet to arise can be arduous at best.

Days are filled with grueling work and endless hours, makeshift solutions to new problems and thinking of ideas that put you yet another step ahead of the competition. Ultimately, advertising comes into play. Without proper marketing and advertising strategies, progress will stall. In the cannabis industry, advertising has become one of the bigger challenges facing businesses. Cannabis is a highly restricted and exceedingly regulated industry, and as a result, brands must align themselves with experts who can help to navigate marketing tactics with stealth precision.

You don’t know what you don’t know

It is paramount for businesses to understand the resources and components needed to survive in this complicated space. Many companies don’t have enough capital and don’t recognize why they need it or how to apply it, while others have huge infusion of capital and may not understand exactly where to allocate it. Couple this with the restrictions that have been put in place pertaining to how a company can express their brand via creative and messaging, and options become increasingly limited. How can a company operating in a very tenuous space reach their target consumer? Not having enough channels to share your brand messaging is frustrating enough, but not being able to reach much of your target audience can be devastating to a brand.

Navigating the cannabis advertising landscape

Sometimes it is hard to see the green through all the red tape. Cannabis remains federally illegal and advertising restrictions vary by state. Limited access to inventory, creative restrictions and distribution limitations are just a few of the challenges faced by brands looking to advertise.

Platforms like Twitter Inc TWTR 1.1%, Google and Facebook Inc FB 1.47% have banned all ads for the plant. In California, for example, radio, cable, print, and digital ads can only be shown where at least 71.6% of the audience is expected to be over the age of 21. Colorado maintains similar rules. However, in Delaware, no person may advertise medical cannabis sales in print, broadcast, or by paid in-person solicitation of customers.

As a result, many brands have taken to advertising on billboards. This is currently a preferred method, but there will soon come a time when consumers experience billboard fatigue and begin tuning out. Another big drawback to billboard advertising is the lack of ability to track customer conversions.

This begs to ask, how can brands cut through the noise of competitors and create meaningful campaigns to project to their target consumer?

1. Find your voice. What is your “why”? Make sure that you have a story to tell and that you are telling that story through the proper channels to reach the intended audience.
2. Be creative. Find the appropriate channels for your brand. Publishers are becoming increasingly open to running cannabis ads both in print and online. Align yourself with an advertising and marketing company well-versed in the cannabis space, adept at utilizing data and technology solutions to help boost your brand recognition.
3. Be selective. Use good, clean data to make sound decisions. Try creative solutions like geo-targeting and making use of data analytics to gain deep perspective on your marketing campaigns and their effectiveness.
4. Be realistic. Create realistic expectations and allot adequate marketing budgets to achieve expectations around sales and other KPI's. Understand that there is an entire journey and process that you must endure to get to the heart of your brand.
5. Stay humble and remain focused. Stay resolute in promoting yourself and your brand. Don't waste time, energy and money on "taking out competition". Use your efforts and resources to elevate your brand and proliferate your story. There is tremendous opportunity in the cannabis space coupled with few true competitors. Focus on yourself.

Digital marketing is a must

Digital marketing includes all web-based or electronic communication stemming from the brand, reaching directly to the intended consumer. The creation of blog posts, contributed content to partner sites or web-based publishers, compelling videos and engaging infographics will all help to grow your brand while touching new audiences.

SEO (search engine optimization) is another critical tactic intended to position your company at the top of the search engine crawlers. By using keywords to rank your webpages, your brand will rise to the top on Google search platform and other search engines. Providing links to other reputable sites within your copy will help to further increase your authority.

Cutting through the conference clutter

There are hundreds of cannabis conferences and events being hosted around the world. While it is important to actively participate in these events, it is equally critical to understand which will be best suited for your brand and goals.

It will never be enough to simply set up a 10x10 booth at a show and hand out business cards. As the industry has evolved, so must our marketing strategies. Creating a memorable experience for your target is invaluable. Place your brand in a premiere location, employ brand ambassadors, and generate meaningful engagement with those around you throughout the event. Follow-up is key as well. Reach out to those you engaged with during the event, give a subtle reminder as to where or how you met, and initiate a conversation for moving forward.

If your brand is looking to engage with consumers, consider staging an activation at events like the Emerald Cup or HempCon. For B2B engagement, there are countless reputable events that consistently draw the best and the brightest in the space. New West Summit, MJBizCon, and Cannabis World Congress and Business Expo are all good options when looking to generate business while digging deeper into specific verticals.

Pay keen attention to up-and-coming events, like Green Market Summit. The two-day conference will take an introspective look into the economics of cannabis brands. MJMicro is an invitational networking forum that joins publicly traded cannabis companies with next-level, high-net-worth investors.

Continually position yourself and your brand amongst key leaders in the space, always keeping in line with your business model and goals.

Where are we now, and where are we going

There are many effective marketing channels for cannabis brands to explore in this moment in time. It remains equally important, however, to not only capitalize on those experiences but to keep looking ahead.

A year from now we will see a much higher level of understanding and much of the frustrations surrounding advertising and marketing in the industry should be alleviated. While we may not get to a free open place in terms of where we want to be with digital advertising, at least potential partners will be open to the discussion. We are witnessing increased appetite for data related to the cannabis industry from household brands like Dominos, Coca-Cola, and McDonald’s. This is highly encouraging and should serve to move the industry forward.

Regardless of what marketing strategies you plan to adopt, make certain you are working with people who know what they are doing. It can be a very expensive lesson to learn, in terms of time and money lost, if you enter partnerships without a full understanding of the journey.

You've no doubt heard that the global cannabis market is poised to skyrocket. Thirty-three U.S. states have legalized medical cannabis, along with over 40 countries. Canada's recreational cannabis market is picking up momentum, while 11 U.S. states have legalized recreational pot, with more potentially on the way. Some observers predict an annual global cannabis market of $150 billion or more.

But some investors remain uneasy about putting their money into cannabis stocks. If you fit into this category, there are alternatives you might want to consider. Three great ways that you can profit from the cannabis boom without actually buying pot stocks are to instead buy shares of Constellation Brands (NYSE:STZ), Shopify (NYSE:SHOP), or Square (NYSE:SQ).

1. Constellation Brands

Constellation Brands is best known for its premium beers Corona and Modelo. But the alcoholic beverage company dipped its toes into the water of the cannabis industry in 2017 by buying a 9.9% stake in Canadian cannabis producer Canopy Growth (NYSE:CGC). It then jumped in headfirst last year by investing another $4 billion in Canopy, increasing its ownership to 38%.

In addition to its big stake in Canopy Growth, Constellation also owns warrants that, if exercised, would give the company majority control of the cannabis producer. It already exerts a significant influence on Canopy: Four of its nominees serve on Canopy's board of directors, two of which are executives at Constellation Brands.

Meanwhile, Constellation's primary focus is still on alcoholic beverages. The company's premium beers continue to enjoy strong sales momentum. Constellation ranks No. 1 in the U.S. alcoholic beverage market, contributing almost 25% of the total market growth.

The only negative in the company's beverage business has been in wine and spirits. However, Constellation recently sold several of its lower-priced wine brands to E. & J. Gallo. This deal enables the company to focus more on its premium wines.

2. Shopify

You might not think of Shopify as a cannabis play. The company provides an e-commerce platform for small businesses. But guess what? Quite a few of those small businesses operate in the cannabis industry.

Shopify scored a major coup last year when Ontario selected its platform for all online retail sales of recreational cannabis in the province, which is the largest in Canada based on population. The company also signed deals to power the e-commerce business for Canopy Growth, HEXO, and The Green Organic Dutchman, three of the top six biggest Canadian cannabis producers ranked by production capacity.

Most of Shopify's revenue, however, doesn't stem from the cannabis industry. In fact, the word "cannabis" or anything related to it wasn't even mentioned in Shopify's latest quarterly conference call. But there was plenty of discussion about a new product that could fuel the company's growth for a long time to come -- its new fulfillment network.

Shopify is basically enabling small businesses to compete with Amazon.com by taking care of all of the logistics involved with fulfilling customers' orders. It even allows small businesses to ship their products to customers within two days. Cannabis is important to Shopify, but its new fulfillment network could be the most critical factor that drives the company's long-term growth.

3. Square

Shopify isn't the only fintech company that serves the cannabis industry. In the past, payment processing and financial technology leader Square shied away from working with cannabis-related companies. But things have changed.

Square quietly launched a pilot program a few months ago to offer credit card processing to companies that sell cannabidiol (CBD) products. For now, it's still an invitation-only beta program for a limited number of CBD products. However, the U.S. legalization of hemp in late 2018 paved the way for massive growth in the hemp-derived CBD market. This appears to have opened the door for Square to inch into the market itself.

These initial steps by Square into the CBD market aren't significant enough at this point to move the needle for the stock. However, there are plenty of other reasons to consider buying Square. For one thing, the company's current ecosystem, which includes payment processing, business lending, and its Cash App for sending money, has a lot of room to grow.

Even better, Square's current products and services give it a launching pad to expand into plenty of new areas. It's easy to envision the company offering high-yield deposit accounts or investing products in the future.

Shades of green

None of these three stocks are pure-play pot stocks, but each of them could benefit from the expansion of the global cannabis industry. For investors looking for the strongest tie to the cannabis market, Constellation Brands is the best choice. Right now Square has the smallest connection to cannabis, with Shopify falling somewhere in between. But while these three stocks provide varying levels of closeness to the cannabis industry, I think they'll all deliver solid growth over the long run for patient investors.