What will the cannabis industry look like in the next five years? CannaInsider host Matthew Kind reviews his past predictions and forecasts the five disruptive changes that will take place in the years to come.
Considering how many Matthew got right in 2017, you don’t want to miss this.
- Review of Matt’s previous forecasts from 2017
- Trend 1: AI-assisted product selection to improve significantly
- Trend 2: Fintech meets Cannabis
- Trend 3: Cannabinoid drinks put a double-digit dent in the alcohol market share
- Trend 4: Cost of cannabis flower decreases 50 to 80 percent
- Trend 5: Autonomous car delivery with biometric verification
Matthew: Hi, I'm Matthew Kind. Every Monday, look for a fresh new episode where I'll take you behind the scenes and interview the insiders that are shaping the rapidly-evolving cannabis industry. Learn more at cannainsider.com, that's cannainsider.com. Now, here's your program.
Hi CannaInsiders, this is Matthew Kind. I have a little bit of a different episode for you is here today. So you may remember back in 2017 I did a check in on my five trends that will disrupt the cannabis industry in the next five years. Well, I wanna check in with some new trends and also see how I'm doing on those last trends. So let's jump right into them. So there was five trends for 2017 that I forecasted. We have two more years for them to complete before we can totally judge success or failure. But let's see where we're at.
One, blockchain tech to disrupt seed to sale tracking. So this has not happened yet. There's no clear winner. But I can say there's a number of companies working on this. And I don't wanna name any in particular to call them out because there's not one that's really doing a better job than the other right now. So there's no standouts. But I think this is a big driver because it just removes all the cost structure and complexity from the seed to sale tracking when there's really no legacy architecture. So I think we'll move into that. That's gonna fall into the not yet category, not a fail, but not a direct hit.
So number two is baby boomers embrace cannabis-infused products. So this one's a bullseye. We've got the cannabis-infused products they embrace, the flower power generation loves flower from way back then, so they still consume flower, but now they're consuming a lot of topicals too for arthritis and all their aches and pains as they move into their senior year. So that one's a bullseye.
Number three, dynamic terpene profiling based on individual preferences. So this is a semi hit, meaning it's kind of happened, but not totally how I envisioned it. So we're seeing things like the dosist pen and LucidMood and some drinks out there that have used custom terpene profiles to create more of an emotion or a mood. And they do that successfully. The second part that we're missing that we don't have yet is that it's based on your individual genetic makeup and neurophysiology. So as you've seen the price of like 23andMe and these genetics test just plummet, they're getting cheaper and cheaper and easier and easier to take. And so we'll see these two things come together. So based on our own individual body, we'll be able to get a super custom experience. So look for that by 2022. But we haven't totally got...we're about halfway there right now.
Number four, intravenous cannabis medical applications. This is a fail. This has not happened at all. So I'm gonna call that as straight up fail on that forecast. I envisioned this happening more, but I think people don't want to do anything intravenously unless it's a have to situation, usually involving a hospital. So there's gonna have to be more casual ways to have cannabis medical applications that are easier, that don't involve shooting something up in your arm. Because obviously there's a stigma there, a hassle factor, you know, hygiene factors. So I'm gonna say that one's just wrong.
Number five, autonomous cannabis deliveries. So we haven't seen that yet. I've seen some experiments, but nothing really there. But I'm gonna tell you why I'm still bullish on that one. And that leads us to my 2020 predictions, the five things that will disrupt the cannabis industry in the next five years. So here's my new ones or mostly new I'll say, and let's jump right into them.
Number one, AI assisted product selection becomes a lot better. So I'm gonna include a link in the show notes of Google's AI Assistant, and you can visualize that with machine learning. And basically what can happen there is that dispensaries and the apps that...like Eaze or different companies that provide delivery, they will be able to measure conversions, meaning what people looked for and then what they purchased. And dispensaries can do this too. What did prospects consider and what did they actually purchase when they pulled out their credit card or cash or whatever it may be? So as that data gets fed into machine learning and AI programs, these assistants, whether they be apps or in-store kiosks are gonna become so good at figuring out what you want that it's gonna really boggle the mind. Like, wow, this thing really knew me really well and I ended up really being delighted with what I picked. Now, one of the creepy factors, which I don't mind so much, but some people do, is that as you approach these kiosks or these apps, they start to make assumptions about you based on your age, gender, maybe some data points they have about your background to get some initial preferences. And then they validate those preferences to see like is it off base before extrapolating on those. Bottom line is that they're gonna get you to somewhere where you feel happy with what you purchased and that's coming. So look for a link in the show notes here with the Google AI Assistant to see how conversant and humanlike these artificial intelligence will be just conversationally with you back and forth.
Okay. Number two trend to watch is Fintech meets cannabis. So I don't know if you're familiar with his online brokerage called eToro. It's based in Israel, but has a footprint pretty much all over the world. It's huge. And one of the features they allow you to do is to follow someone else in their ecosystem. So it's more of a social network than a brokerage account, but you can follow people that post their trades on the eToro and you can see how well they've done over any period of time, whether it be a day, 90 days, a year, how much they're up or down. And so you'll be able to go ahead and mirror their trades, either for a fee or for free where you say, I want to mirror Jane Doe's trades or John Doe's trades and you can just link your account to what that person trades. And it mimics those trades. Now, the cannabis industry has not a ton of publicly traded stocks on...especially on the major exchanges. When that starts to change and open up, we'll see more people following some great, great traders in that way. Mostly young people are more comfortable doing things like this 'cause it's kind of a leap to follow someone trading like this. But when you can see the results so transparently measured by this third party, it's not so risky perhaps. Not investment advice, but just my opinion and for entertainment purposes.
Number three, cannabinoid drinks put a double digit dent and alcohol market share. So that means they would take at least 10% from liquor, wine, and beer. And so that is a pretty audacious goal but I think once we start seeing that product market fit and people realize like, "Hey, I don't have to waste my whole weekend or Sunday feeling hung over if I have a botanical." And, you know, we'll see more messaging like, "Hey, alcohol is actually, you know, ethanol and ethanol is essentially poison. Do we really wanna be drinking poison?" And people love their beer, love their wine, etc. But when they can see, they can make a leap over to a beverage that starts giving this predictable response, similar to alcohol, but better in the sense that there's no tradeoffs, I think we'll see more people making that tradeoff, especially since there's no stigma of smoke that people usually identify with not wanting to participate in. So look for that.
Second part of this forecast is I think we'll see a new kind of license that allows liquor stores and other kinds of, you know, fast convenient stores to offer low THC CBD beverages. So nothing high THC but low THC and with CBD in it perhaps too. But for example, when something doesn't pose a huge risk if it got into the wrong hands because there's only 2 milligrams of THC in each can, that might be a new category where a license allowed for a liquor store to sell some THC beverages. So look for that. Especially in certain markets where they realize the licensing has been, you know, just too onerous and too cumbersome and people want more options.
Okay. Number four, the cost of cannabis flour decreases 50% to 80% in North America over the next five years. This is bad for some and great for others. Who's it bad for? Well, it's bad...you'd think all cultivators? No, it's bad for the cultivators that don't have economics of scale on their side and don't have the capital to invest in massive production capabilities, especially some capability that gives them some edge. They have some special sauce. So this is great for consumers because it allows more products to be available to consumers for much cheaper. Right now, there's a huge premium still on cannabis products and that'll come down, come down, come down and we'll be able to have more access to a wider spectrum of products. So this is further gonna consolidate the industry, probably into kind of a Costco, Walmart type sellers that are just huge low budget sellers. Everything's gonna kind of gravitate into them as the industry consolidates. And then you'll have niche, high-end sellers that are luxury or have some spin or unique selling proposition where they attract a following, which leads to number five.
So you might remember in 2017, I talked about autonomous cannabis deliveries and I said they haven't come yet. I still think they're gonna come. And the reason why is that I think it's almost inevitable is for a few reasons. One is when you look at the cost of like an Uber driver, for example, the biggest cost there is the person driving the car. You know, their wages, make it a, you know, add the biggest expense. Number two, gasoline. And number three is maintenance of the vehicle. Because a lot of things can go wrong with all those moving parts. So when you have an autonomous electric vehicle, let's say a Tesla, that's an autonomous delivery vehicle, the number one expense, the person's wages are no longer there. That person could move on to do something they like better or higher skill or retrain or retool. So that cost is gone. Gasoline's eliminated with electricity, with, you know, there's no petrol or diesel to buy. So it's all just electric and the price of electric continues to go down in most markets.
Thirdly, the maintenance, so the maintenance goes down a ton because essentially electronic cars like a Nissan LEAF and a Tesla, although they're high tech and have cards that produce teraflops and all these things, they're almost more akin to a golf cart than a traditional internal combustion engine because an internal combustion engine has so many moving parts and liquids and things that can go wrong. So there's more entropy vectors on a internal combustion engine car versus an electric vehicle car. So this cost is just gonna bring down the cost of electric autonomous vehicles so much.
The final reason is that these cars can be used 24/7 so the more deliveries they can make throughout the day just going nonstop, that reduces the cost for your individual delivery because it takes the cost of the vehicle and divides it by how many deliveries there are, thus reducing the cost of your delivery. Plus, the overlay of intelligent software that makes the most, you know, efficient use of the vehicle's time and making deliveries.
For all those reasons, I think autonomous car deliveries are coming. But here's the final piece is what regulators get out of it. So regulators initially will say, we need some super like super way to make sure this is getting to the right person. So normally when you go to dispensary, you don't wanna have your... give your fingerprint or your iris scan. But for example, we saw this in Illinois, Illinois required a fingerprint to get a medical marijuana card. And for that reason, initially it wasn't widely adopted. Now that they've gone adult use, there's a lot more to...pent up demand that you can see. While the public wouldn't accept a biometric scan at a dispensary, they might be willing to make that tradeoff if they can have on autonomous electric vehicle come to their house. Inside that autonomous electric vehicle is a locker and they can only open that locker if they scan their iris or put their fingerprint down or maybe some speech. I don't think it'll be speech because that can be mimicked too easily. But then the locker would open and they would take out their order. And to the public, I think that will seem like a fair tradeoff. Like, "Hey, there is no person in the car. There's no way I can be verified unless I do this." So where they may have balked at doing this in store to dispensary, they wouldn't do it for a vehicle delivering to them. And this will give regulators the transparency and data and certainty to allow these autonomous car deliveries. And also I think the fact that everybody wants, you know, a lower carbon footprint and with an electric vehicle making deliveries all around a neighborhood, that's much more efficient and a win-win. So those are my forecasts for the next trends that will disrupt the cannabis industry in the next five years. Keep in mind, these are just my opinions.
Man: Yeah. Well, you know, that's just like your opinion, man.
Matthew: None of this is advice or financial advice. And I could be wrong about any of these and if you think I'm way off base or if you agree with me or if think there are some other trends that I missed that are more important, please tweet me your thoughts @cannainsider.
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