- Investors who do not traditionally invest in the cannabis/CBD market are expected to benefit from attendance
- FDA regulation will drive a degree of consolidation within the cannabis/CBD market, according to ROTH Capital Partners
- ROTH sees the second half of 2020 bringing decreased regulatory pressure in Canada, resulting in widening market opportunities in the region
The 32nd Annual ROTH Conference is scheduled for March 15-17, 2020, at The Ritz Carlton, Laguna Niguel in Orange County, California. Following the success of previous years’ events, the ROTH Conference, with close to 550 participating companies and over 5,100 attendees, will feature presentations from public and private companies in a variety of sectors.
This year’s conference will spotlight cannabis/cannabidiol (CBD) market presenters from several segments within the large global health and wellness sector that trade on various global stock exchanges. The conference is geared even for investors who do not typically invest in cannabis/CBD. Attendees will hear presentations from both public and private companies across a wide range of legal cannabis/CBD investment opportunities and market caps.
The cannabis/CBD track panels will be held on the last day of the event, Tuesday, March 17, and will include the following topics:
- Leading U.S. cannabis MSOs – Cresco Labs, CuraLeaf and Green Thumb;
- Consolidation in the cannabis sector;
- Distributing and marketing CBD/cannabis products;
- Policy and data considerations in cannabis; and
- The role of influencers in product marketing.
ROTH believes that the industry lows are beginning to play out and the next large catalyst for the cannabis/CBD industry will be the upcoming U.S. operators’ Q1 2020 reports, where robust revenue growth and profitability are expected from the top operators. Top U.S. operators will be highlighted in panels and chats during the ROTH Conference.
As 2020 progresses, ROTH predicts that a shake-out will differentiate those who have access to capital from those who are financially undisciplined and struggling to cut costs. Distinct investment opportunities exist in the burgeoning U.S. cannabis/CBD market, where consumer brand and product leaders will begin to resonate with investors at attractive valuations. The $12.2 billion legal market is estimated to reach $30 billion in 2024, according to BDS Analytics.
Currently, U.S.-based CBD operators are constricted to selling only a small percentage of their product portfolios into the FDM channels due to a lack of regulatory clarity from the FDA. Some large retailers are accepting basic form factors such as topicals and creams but waiting until the FDA moves to regulate more ingestible CBD-infused products such as tinctures, edibles, beverages and pills. With FDA regulation, ROTH predicts consolidation in the industry as larger, high-quality reputable brands build infrastructure designed to comply with GMP-compliant manufacturing and meet supply inventory requisites of large retailers.
Near-term overhangs in the cannabis industry in the North, including limited retail and product availability as well as pricing compression, are predicted to dissipate toward the second half of 2020 as the regulatory environment continues to improve in Canada. Ontario, Canada’s largest province, has committed to significantly widening its retail opportunities beginning in April. This could potentially mean significantly more access to retail as new 2.0 products drive the consumer switch from the illicit to the legal market.
The derivative product opportunity in Canada might also drive sales and improve the retail average selling price, which has affected sector companies’ margins. With businesses currently right-sizing operations and shrinking production inventories, the market could be a back-half execution story as more retail comes online. Legal retail sales are currently trending at an annual run-rate of C$1.7 billion, and the longer-term annual market opportunity in Canada could see numbers close to C$10.4 billion, per ROTH Capital Partners forecasts.
For more information, visit the organizer’s website at www.ROTH.com
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