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CHAPTER Ill Cannabis Industry Segmentation
Epidiolex is an oral formulation of cannabis-derived cannabidiol, or CBD, intended to treat severe forms of childhood epilepsy. Epidiolex has not been approved for use in any country, but the drug’s manufacturer, GW Pharmaceuticals, recently submitted a New Drug Application for Epidiolex to the FDA, which is an important step toward FDA approval in the United States. If approved by the FDA, Epidiolex would be the first FDA-approved prescription drug derived from cannabis. The cannabis extract used in Epidiolex is considered to be “marijuana,” a Schedule I controlled substance under the CSA. Therefore, even if Epidiolex were approved by the FDA, Epidiolex would need to be rescheduled and excepted from the “marijuana” definition before it could be lawfully prescribed in the United States.
Consumer Products Opportunities We believe opportunities in this segment include:
Consumer Product Brands Focused on Health and Wellness. We believe there is a substantial oppor- tunity for companies to develop leading brands of cannabis-based health and wellness products. Mar- keting a broad line of such products under a common brand should provide a competitive advantage.
Direct E-Commerce Distribution. The e-commerce market for cannabis products is expected to expand and consumer awareness of product options is expected to increase, enabling more consumer product companies to sell their products directly to consumers through online purchasing platforms rather than selling only through wholesale.
Advanced Vaporizer Functionality. Vaporizer technology has advanced rapidly in recent years, a trend we expect to continue. In the future, vaporizers may be able to identify the composition and potency of the product being consumed, monitor consumption and dosing of the product, or reorder the product at the push of a button.
Specialty Formulations. We believe that scientific knowledge about the relationships between spe- cific cannabinoid formulations and targeted health conditions will continue to improve, and markets will be created for highly specialized products developed to relieve particular symptoms.
FDA Approval and CSA Rescheduling. If Epidiolex is approved by the FDA and rescheduled under the CSA to permit lawful prescriptions to be written within the United States, it would be the first fed- erally legal cannabis-derived drug in the country. Such a precedent could result in a significant increase in the use of cannabis by consumers as medicine, and it could also be followed by similar approvals in the United States for other cannabis-derived drugs.
Consumer Products Challenges Challenges in this segment include:
Marketing and Customer Loyalty. As more products become available to consumers through dis- pensaries and e-commerce solutions, consumer product providers may need large marketing budgets to drive product awareness and customer loyalty.
Wholesale and Retail Distribution. Providers of cannabis products may struggle to develop whole- sale and retail distribution relationships because of the breadth of products being marketed. Providers
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