GO
Loading...

Cannabis Investment: An Industry Primed for Growth

If you thought cannabis investment was only a teenage pastime, think again. Hemp and medicinal cannabis are both tried and tested money-making industries, and both are moving at a fast pace. For those on the lookout for unusual investment opportunities—particularly in construction and pharmaceuticals—this could be a growing market.

Although industrial hemp contains less than 1 percent of the psychoactive component THC, in the United States the stigma attached to its hallucinogenic elements have hindered its development.

Production there ended in 1957 after prohibitive laws were passed, but while US legislators continue to debate the issue, 30 countries around the globe are cultivating the crop, including China and Australia.

John Hobson, president of the European Industrial Hemp Association, explained the interest: “Ten years ago if you stopped somebody on the street and said, ‘What is hemp?’ they would probably think it was something that you smoked.

“But now with construction and hemp insulation taking off, I think that the general public are becoming much more aware of what hemp is,” he said, adding that hemp has the added bonus of being cost-effective and environmentally friendly.

“Hemp is low on input, particularly chemicals, because it has a zero chemical requirement. It doesn’t suffer from any pests or diseases that would warrant a spray. And its quick growth in covering the ground would blot out any weed competition," he said. “It’s a fantastic crop for cleaning up ground, and profitable for the farmer to grow.”

100% Natural Hemp Draperies by Kevin Russo EcoManor is the first LEED (Leadership in Energy and Environmental Design) certified residence in the Southeast and the first to utilize both solar and geothermal energy to power its daily energy use. (Photo by Rick Diamond/WireImage)
Rick Diamond
100% Natural Hemp Draperies by Kevin Russo EcoManor is the first LEED (Leadership in Energy and Environmental Design) certified residence in the Southeast and the first to utilize both solar and geothermal energy to power its daily energy use. (Photo by Rick Diamond/WireImage)

About 15,000 hectares of hemp are being cultivated in the European Union, providing food, biodiesel and paints, paper and textiles and construction materials.

With a turnover of around $4 million, Britain’s Line Technology is at the forefront of hemp development and demonstrates the versatility of the crop, producing everything from concrete blocks to panels for the BMW five series.

Hobson summarized hemp’s attractive investment possibilities, telling CNBC:

“It is a profitable product for the grower, the processor, the construction companies, and the people who will be living in those structures, because there are huge savings on energy to be had in hemp construction.”

Cannabis is also increasingly popular in the pharmaceuticals industry, where it is used for pain relief for chronic illnesses.

Justin Gover, managing director of GW Pharmaceuticals told CNBC about the medicinal properties of cannabis and the science of ‘cannabinoids’:

“The cannabis plant has an extraordinary range of medicinal properties—it has had over many thousands of years a history of medicinal use.”

Developed over the past 12 years, his company’s drug Sativex is derived from two standardized extracts of specific types of cannabis to help multiple sclerosis sufferers.

Already available on the National Health Service in the UK and approved in four countries this year, Gover said he hoped by the end of next year nearly 20 countries should have approved the product.

Addressing concerns about costs of development in the current climate, Gover said, “The product costs about six pounds a day, which in the context of a lot of new medications coming onto the market is a significant discount. In particular treatments for the disease of MS are significantly more expensive.

“We appreciate that this isn’t as cheap as an old generic medication, but it is treating a patient population for whom those treatments have failed to provide adequate benefit.”

Gover agreed that the US was the place to be for pharmaceuticals, given it represents half of the market share. “It would be a significant inflection point for our company to be approved there,” he said, adding that in two years he hopes GW Pharmaceuticals will be involved in the care of terminal cancer patients.

He told CNBC that cannabis could help in not just pain relief, but the actual treatment of chronic illnesses such as cancer, epilepsy and diabetes.

The success of Sativex shows that cannabis based products do have a place in the global drugs market; commercial rights have been out-licensed to Novartis to sell to Asia, the Middle East and Africa, German based Bayer for the UK and Spain’s largest drugs company Almirall.

So in the construction, textiles, energy and drugs industries, hemp is a truly diverse and versatile crop; an alternative investment that's looking evergreen.

Latest Special Reports

  • Advisors say it's time to get serious about year-end financial plans, like taxes and portfolio re-balancing.

  • With the world becoming more interconnected, it’s getting harder to anticipate and manage global risks. We take a look at some of the biggest risks and ways to mitigate them.

  • From family-run companies to public companies with family ownership, we tackle challenges and rewards facing family businesses.

Alternative Investing 2012