The Green Rush: CBD For Pets
The all-star lineup of cannabis leaders at the Cannabis World Congress & Business Exposition shed some light into what we can expect — both in the short and long term — from this nascent but voraciously budding industry.
What triggered this post is something Bruce Linton, CEO of Canopy Growth Corp said at the aforementioned CWCBE Expo, which was essentially:
Veterinary drugs are the next big thing or even in the same ballpark as GMP?
Let us pause and consider that for a moment. Even if I’m misrepresenting how important this opportunity is to him and his company, the fact that the CEO of a $7.5B dollar cannabis company even mentioned animal products/drugs grabbed my attention faster than you can say “Airbud is coming out of retirement”.
For context, the first point regarding GMP certification allows companies to import cannabis into a bunch of European countries, including the highly coveted German medical (and eventually recreational?) market. A lot of these countries are still in the process of figuring out how they’ll approach the regulation of cannabis, but GMP appears to be important to most. Germany is restarting their tendering process after courts ruled that German companies weren’t given enough of a heads up. Canadian companies dominated the rankings for German cultivation licenses which should make us very proud, but let’s get back on track.
CBD FOR PETS
CBD is commonly infused into consumable pet products that you’re already familiar with like dog bones and cat treats. Pretty much whatever pets already eat can be infused with CBD, and if purchased separately as an oil, can be added to their food by the pet owner. This should be avoided unless you know exactly what you’re doing as I’ll touch on in a bit.
I brought up the idea of ‘cannabis and pets’ to a bunch of pet owners and their (expected) reactions were a combination of reluctance and a general lack of knowledge or confusion on what that means. It was quickly followed up by a story of something goofy their cat did after consuming catnip. Anecdotally speaking, this example and many other conversations I’ve had highlight the challenge and opportunity behind demonstrating the applications of cannabis beyond just recreational use.
To very quickly clarify for those unfamiliar, there is substantial peer-reviewed research that suggests cannabidol or CBD (a compound found in cannabis) has wide ranging medicinal properties that can be used to manage pain, anxiety, and lower the occurrence of seizures — among many other benefits. CBD is non-psychoactive in humans or animals and is an approved substance by the World Anti-Doping Agency (WADA).
The International Olympic Committee, Paralympic Committee, and the UFC all follow WADA’s rules, so the next time you watch the Olympics, there’s a very good chance some of the athletes on screen will have been consuming CBD.
When discussing medicinal applications of cannabis, and in this case the potential benefits for pets, the conversation is exclusively about CBD.
ARE THERE ANY LEGITIMATE CONCERNS?
THC or what gives cannabis its psychoactive properties can be especially toxic or even fatal to animals. Consider, for example, how a dog can appear to eat every edible thing in sight but get terribly sick (or worse) from a small piece of chocolate. So even trace amounts of THC contaminated treats could be disastrous, especially for smaller pets. There also needs to be significantly more research done on the effectiveness of CBD variants and ways to optimize how different pets, or even breeds, ultimately consume it.
These concerns are very easily addressable through tight regulations and research, which will predictably ensue as the industry matures and expands.
“People might have a high-stress, high-anxiety dog, then they give them CBD and within seven days they’re walking with them…”
- Brian Tasker, MYM Nutraceuticals
RESEARCH
The UC Davis School of Veterinary Medicine is currently conducting a formal survey to learn more about the effects of CBD on pets. A quick read through PubMed shows that there is a decent amount of medical literature on how CBD appears to help pets improve or manage a handful of ailments. It was even discussed at a Nestlé Purina Animal Nutrition Summit in 2016 by Susan G. Wynn who provided guidance to veterinarians who often feel conflicted between the legality of cannabis and benefits pet owners have seen in managing their pet’s ailment(s).
OPPORTUNITY
So how big is this opportunity that Bruce Linton mentioned as being the “next big thing”? Well, very big. The U.S. pet industry alone is worth a whopping $85 Billion annually. $35 Billion is spent annually on just pet supplements and other types of related treatments and products.
Yes, cannabis is still federally illegal in the U.S., but its legalization at the State Level in places like California, Colorado, and Minnesota along with the efficacy of CBD pet products pet owners have witnessed have already started to shift the landscape:
· Chuck & Don’s is a pet supply chain in Minnesota with 30 retail locations and they legally carry wide range of CBD infused pet products.
· Denver-based Dixie Brands sells ‘Therabis’ pet supplements through their broad network of veterinarians.
· Pet Releaf, who makes CBD infused dog and cat products is now found in more than 2,500 independent retailers around the United States and in several countries overseas. Their goal is to hit 5,000 in the near future too.
If you’re Canopy Growth Corp (or any LP for that matter) and control the entire chain of cultivation, product development, and branding, being in the mix of an industry this massive could heavily pad your bottom line. Being a large scale cannabis cultivator is useless if you can’t turn your “hops into beer and put a slick logo on the bottle”. The opportunity in the U.S. alone is so massive and ripe that waiting for the federal legality of cannabis is probably welcomed patience.
In Canada, the pet market is valued at approximately $1.5B and I couldn’t find anything informative on whether Bill C-45 will eventually sanction CBD for pets. With human edibles, which I presume reads as strange as it types, we’re at least a whole year away. So it’s safe to presume that we won’t see any pet-specific legislation for, at least, the next few years.
It’s really not that hard to see why Bruce Linton sees this as the “next big thing”. As the legal status, stigma, research, and ultimately consumer behaviour shifts advantageously for cannabis, unsuspecting but massive opportunities like this unearth to the mainstream.
FINAL THOUGHT
The versatility of cannabis and the spectrum of opportunity available to companies in this space is so vividly apparent. From the expected disruption to beer and alcohol sales triggering Molson Coors (and a few others) to include the industry in their annual report to simultaneously targeting pet treats as an upcoming opportunity.
When BMO, who recently led and underwrote a $115MM bought deal for Cannabis Wheaton and a $100MM one for Cronos Group. and CIBC, who participated in a $60MM private placement for Canopy Rivers, are so formally in the mix, the reality of what’s happening really begins to click in. Whether it’s a reduction in institutional stigma surrounding this industry, a shift in conservativeness generally expected from Canadian banks, and/or the realization that the opportunity cost of sitting on the sidelines is just too much, the writing’s on the wall for all to read.