Cannabis 2.0: What Cronos Group Has in Store


Oct. 9 2019, Updated 1:20 a.m. ET

Cannabis 2.0 will open up a massive expansion opportunity for cannabis companies. Arcview Market Research and BDS Analytics expect the size of the global legal cannabis market to grow at a CAGR (compound annual growth rate) of 27.5% from $9.5 billion in 2017 to $32 billion in 2022. These research companies also expect the size of the North American cannabis-based edibles market to grow at a CAGR of 33% from $1.0 billion in 2017 to $4.1 billion in 2022.

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Deloitte also expects the worldwide cannabis-based edibles market to be worth 1.6 billion Canadian dollars. The audit company has estimated the global market value of Cannabis 2.0 legalization to be around 2.7 billion Canadian dollars. To learn more about this market opportunity, check out Cannabis 2.0 Legalization: Canada Is Ready.

What Cronos Group is planning for Cannabis 2.0

On its second-quarter earnings call, Cronos Group (CRON) highlighted its asset-light marijuana cultivation strategy. Accordingly, the company has entered into joint ventures with various partners to bolster its manufacturing and supply chain capabilities.

Cronos Group is deploying a similar strategy to cost-effectively target the Cannabis 2.0 opportunity. On May 14, the company entered into a cannabis concentrate supply agreement with MediPharm Labs. Later, on September 19, it entered into a contract manufacturing agreement with MediPharm. The latter will be manufacturing cannabis concentrate–filled vaporizer devices for Cronos Group’s COVE brand. According to its second-quarter earnings call, the company also plans to leverage concentrate supply and co-manufacturing capabilities to launch Cannabis 2.0 products.

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Cronos Group targeting edibles and vaporizer opportunity

On its second-quarter earnings call, Cronos Group highlighted the importance of cannabis-based edibles as an attractive long-term opportunity. The company also highlighted the importance of its chief innovation officer, Dr. Todd Abraham. The company plans to benefit from Abraham’s experience in the consumer space in the cannabis-based edibles market. Cronos Group aims to leverage Dr. Abraham’s experience to develop and launch a broad range of cannabis-based edibles in the coming quarters.

In the second quarter, Cronos Group launched research and development facility Cronos Device Labs. According to its second-quarter earnings call, the company plans to focus on accelerating the development of next-generation vape products. The company aims to enter the vaporizer space in late 2019, post-Cannabis 2.0 legalization.

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Cronos Group’s peers target the Cannabis 2.0 opportunity

The majority of other cannabis companies, including Aurora Cannabis (ACB), Canopy Growth (CGC), and Aphria (APHA), are also gearing up to leverage the Cannabis 2.0 opportunity.

Aurora Cannabis has been ramping up production facilities and entering into lucrative partnerships to establish itself in the cannabis-based edibles space. The company is also working on a national public awareness campaign for these products. To learn more about Aurora Cannabis’s Cannabis 2.0 strategy, read Cannabis 2.0: Aurora Cannabis Gears Up for Edibles Market.

Canopy Growth plans to focus on the recreational vape product market. The company is working on improving the design and functionality of its existing vape products. The company also plans to launch superior-quality beverages in the coming quarters. To learn more about Canopy Growth’s Cannabis 2.0 strategy, read Canopy Growth: Getting Ready for Cannabis 2.0.

Aphria is also focusing on the vapes and concentrates segment as part of its Cannabis 2.0 strategy. To that end, the company has entered into a collaboration with Pax Labs.

For more cannabis-related news and updates, check out 420Investor Daily.


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