Will cannabis be the light that shines through the recession?

The research suggests cannabis is on track to become a “recession-proof” investment around the world as the post-COVID downturn spins into motion.

Data and intelligence firm Prohibition Partners polled cannabis product consumers globally and found a resilience in buying habits, partly aided by the fact that they have been classed as an essential good in the US, Canada and the Netherlands.

The UK market too is weathering the storm, says Prohibition Partners, at a time when consumer confidence in the UK, according to the latest GsK index, remains “battered and bruised”.

The poll found that most wellbeing and medical cannabis product users either expect coronavirus to have no impact on their purchase habits, or expect their consumption to increase.

Overall the US and UK are expected to use more, not less, CBD/hemp infused consumer goods in the next three months, perhaps partly to ease the many stressors of the prolonged lockdown.

Prohibition Partners surveyed 3,155 adults aged 16+ who have used cannabis wellbeing products in the last year across Canada, France, Germany, Italy, Japan, Spain, Switzerland, the UK and the US. Almost a third (32 per cent) expected their consumption to increase.

For medical cannabis across the same countries, Prohibition Partners surveyed 1,817 adults aged 16+ who have used medicinal cannabis in the last 12 months.

Nearly half (47 per cent) of those surveyed expecting consumption to remain the same whilst 35 per cent expected to increase their consumption

In terms of medical treatment, since 2018, millions of people in the US have come to view cannabis as a safe and effective treatment. This is now extending to the UK, as reflected by Jonathan Nadler, group managing director of one of the UK’s largest medical cannabis access group, LYPHE GROUP.

He says: “In the last 12 months, UK prescriptions for medical cannabis have seen an 8000% rise, taking us to 16,000 prescriptions per year and growing at an exponential rate. We calculate growth by considering public information on fulfilled prescriptions and estimating the private prescriber and prescription numbers.

Furthermore – there has been a significant step change since the beginning of COVID-19, with a larger volume of patients and a much quicker process to complete the initial consultation with the patient” 

These findings align with previous conclusions across the industry over the past month. According to CNBC, in the US “average store revenue is up 52 per cent to 130 per cent compared with January at more than 1,300 stores using [California based] cannabis e-commerce platform Jane Technologies”.

On home soil, for the legal CBD market, the story is looking similar in the UK, albeit on a smaller scale, with recent research by Prohibition Partners; indicating that some 20 per cent of the UK population aged 16+ have used CBD in the last 12 months.

This equates to over 13 million UK users and gives a projected spend of £527m in 2020.

Furthermore, data indicates an expected growth to value sales of around 20 per cent year-on-year.

This in the main, is driven by the fact that an additional 10% of UK consumers state that they intend to use CBD in the next 12 months – which equates another 6.7 million users in the UK market.

Prohibition Partners MD Stephen Murphy says: “With a recession inevitable, and a global depression a distinct possibility, investors are working hard to find the most recession proof options. Cannabis may well turn out to be one of the best bets out there.

“People want the safest options to help them both medically and mentally – and for many cannabis is clearly the answer. It’s no secret that cannabis stocks were far from immune from the initial coronavirus related stock market plunge, taking a notable dip even as sales spiked.

“This was attributed to analysts and investors being unsure whether the increased sales were sustainable – especially as 2019 had had a bumpy ride regarding stock price.

“However, what we are seeing now is that whilst most sectors are still struggling amid COVID-19, there has been an increased demand for cannabis and we continue to expect new markets to come online. Whilst certain stocks will struggle and all investments carry risk, signs point towards cannabis being likely to be one of the better markets to ride out the recession.”