EY Expert: New Research Needed to Expand Future of Cannabis

A recently released cannabis report indicates that new formulations will be needed to satisfy changing consumer styles and demands.

The report from the EY Cannabis in Canada team outlines the rapidly changing cannabis landscape, and explains that the companies out there today need to stay active to be prepared for what’s ahead.

“There’s so much possibility of how the cannabis plant can be used,” Joel Alden, a partner at EY Canada, told the Investing News Network (INN) in a phone interview.

The report expands on potential cannabis consumption methods beyond the established ones known currently, such as smoking or eating the plant.

“But as the industry matures, first movers are already researching and developing other novel and non-combustible form factors,” the report reads.

The research undertaken by EY indicates that cannabis consumer demographics will continue to evolve, meaning companies will need to “recognize (cannabis) opportunities outside of medicinal and adult-use/recreational markets.” For example, the EY team states that cannabinoids may become an integral part of people’s everyday health regimens.

“The next generation of cannabis-focused products will be substantiated by validated data and integrated into our daily lives and ubiquitously woven into the fabric of society, especially as new form factors, formats and new consumption occasions come to fruition,” the report continues.

Alden said he was drawn to this research because so many unknown factors remain in terms of the cannabis plant and how it can be consumed.

While cannabis is a multibillion-dollar industry at the moment, Alden explained that there needs to be more research on how to tap into the endless possibilities ahead.

“Substantive and validated data for next generation cannabinoid-based products and devices will inform company decisions and act as a source of differentiation as regulations continue to transform,” the report from EY further states.

Investment in cannabis research has undergone ups and downs in the past few years alongside the rest of the industry. But looking forward, the potential attached to policy changes in the US could open the floodgates to all types of new investments.

Alden told INN there’s been a heavy focus on the two most well-known cannabinoids found in the plant itself: THC and CBD. However, he added that there’s untapped potential in the hundreds of other molecules within the cannabis plant.

“My hope is that it inspires others to think that these are areas that are worth research, worth investing into understanding what might be done and what different ailments may be treated through different cannabinoids,” the EY Canada partner said.

In addition to the cannabis team at EY, the report also pulls from expert voices overseeing the industry.

Among those thought leaders is Narbe Alexandrian, CEO of RIV Capital (CSE:RIV,OTC Pink:CNPOF), who said cannabis brands are targeting consumers who may be exploring cannabis for the first time.

“This is the key to crossing the chasm and unlocking mass market appeal for the sector,” he said.

For his part, Todd Harrison, chief investment officer with CB1 Capital, reaffirmed the idea that there are still roadblocks preventing a wider array of senior investors from joining the cannabis space.

However, Harrison explained, these challenges will change in the future.

“As these legal and banking barriers resolve, and the cannabis space opens, institutions will likely chase growth,” the CB1 Capital executive said.

Cannabis industry has gone through a “lifecycle” in a few short years

When asked about the rapidly changing cannabis space and the challenges it poses to new players, Alden said it is a nascent marketplace in which everyone is still learning as they go.

“It’ll be an evolution for some years to come … it does require cautious optimism and thoughtful planning,” Alden said. He pointed to consumer behavior and noted that until recently little was known from the regulated producer perspective.

“I think we’ll get smarter about it, I think consumers will get more educated,” the EY partner told INN.

In the firm’s report, Trina Fraser, a partner at Brazeau Seller Law, cemented this notion with her expert perspective. “In some respects, the cannabis industry has already gone through a lifecycle, and in some respects the industry is incredibly immature or commoditized,” she said.

“You can’t just speak in broad generalizations.”

Don’t forget to follow us @INN_Cannabis for real-time updates!

Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.