Cannabidiol – or, as most people know it, CBD – is a naturally-derived compound from the cannabis plant which has garnered much media attention in recent years and is often confused with its infamous family member, THC. Although CBD and THC are similar in that they are both classified as cannabinoids, they are only two of over a hundred distinct compounds sharing that classification, each interacting and impacting the human body in a unique manner.
While the usage of cannabis to treat medical issues dates all the way back to 2800 BC, modern science has only recently begun understanding how different cannabinoids interact with the human body. The 1988 discovery of the first cannabinoid receptor by Allyn Howlett fueled the discovery of the endocannabinoid system in the human body, shining a light on the human body’s intended relationship with cannabinoids.
The result of this ongoing research has pointed to cannabinoids having unique, beneficial impacts on the human body and spurring customer adoption. One example, from January, 2022, came when an Oregon State University study found that two cannabinoids (CBDA and CBGA) demonstrated the ability to prevent the virus that causes COVID-19 from entering human cells. Once the research hit the news, consumer searches for these compounds spiked. Similarly, CBD has continued to gain popularity as research has pointed to numerous health benefits without the psychoactive side effects or drug abuse and dependence risks found in many pharmaceuticals. Due to growing consumer acceptance coupled with advances in scientific research, regulatory restrictions on cannabis have steadily loosened. In 2018, the Farm Bill legalized the production and sale of hemp, spurring a wave of activity in the market. Though the bill did not legalize the production and sale of CBD as a dietary supplement on a federal level, states have actively been working to define their own regulatory guidelines, opening the door for a booming CBD supplement market. The same year the Farm Bill was introduced, CBD was removed from the banned substances list by the World Anti-Doping Agency.
While often CBD is marketed as a lifestyle wellness product, the global policy changes have led to increasing popularity in CBD usage among athletes. Of over 45,000 athletes in a 2020 study, 23% reported cannabis usage within the last year. Although clinical research on CBD and its effects on athletic performance is limited, many professional athletes such as Gabby Douglas, Lolo Jones, Rob Gronkowski, and Mike Tyson, grant a portion of their success to CBD as a key tool in supporting their training, citing benefits such as reduced inflammation, pain relief, quick recovery, improved focus, and better rest. Further studies are needed to fully substantiate these claims, but various pre-clinical studies point to the health benefits of CBD and we expect to see adoption among professional athletes continue to increase as they seek to gain an edge over their competition.
Between the loosening of regulatory restrictions and early research pointing to potential health benefits of CBD, there has been a rapid increase in consumer usage driving demand in the market. But not only is the market rapidly growing, but it is significantly under-researched as well – the perfect timing for new investment opportunities.
Maxim Partners has actively been researching and building its investment portfolio in this sector over the last few years, including early stage cannabis investments and most recently partnering with Nutrasource who holds an institutional cannabis research license, one of the few granted in Canada. Between the loosening of regulatory restrictions, early research pointing to potential health benefits, and rapidly increasing customer adoption, we view this category as a prime focus for the firm.
If you are seeking a partner who brings the capital and expertise to help you achieve your vision or are interested in learning more about Maxim, please reach-out and let’s have a conversation about how we can work together.
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