CBD-Derived Products May Provide Consumers an Alternative to Tobacco
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arlier last year, New York State voted to decriminalize the recreational use of cannabis. Instead of jail time, offenders are now punished with a fine.
And while cannabis is only legal for medicinal purposes in the state of New York, many companies have already established operations in anticipation of recreational legalization. In New York City, there are already over a dozen legal medical dispensaries.
Overall, the legal cannabis market is permeating throughout the U.S. and is creating a multi-billion-dollar industry. Medical cannabis can already be found in many regions around the world such as parts of the U.S., Australia, Canada, France, Germany, Thailand, and South Korea. Predominantly, the overall CBD market is driven by the medical sector.
And, while medical cannabis still dominates that broad cannabis marketplace, increasing awareness and legalization efforts are expected to further propel the industry forward. As a result, the global legal cannabis market is expected to reach USD 146.4 Billion by 2025 while registering a CAGR of 34.6%, according to data compiled by Grand View Research. TAAT Lifestyle & Wellness Ltd. (CSE TAAT), Altria Group, Inc. (NYSE MO), British American Tobacco (NYSE BTI), Philip Morris International Inc. (NYSE PM), Vector Group Ltd. (NYSE VGR)
The use of CBD can and often does converge with other industries. For example, hemp citrates converge with the tobacco industry, which may inadvertently cause positive effects across the board. According to the former FDA Commissioner Scott Gottlieb, M.D., Tobacco use also costs nearly USD 300 Billion a year in direct health care and lost productivity. In fact, cigarettes are the only legal consumer product that, when used as intended, will kill half of all long-term users. Overall, 480,000 Americans die every year from tobacco use, mainly from smoking cigarettes, according to FDA's data from 2018. In the meantime, some data estimates that CBD may potentially reduce cigarette consumption among tobacco smokers. Researchers at University College London, conducted a small study in 2013 of 24 smokers and gave them an inhaler with CBD or placebo for one week. The results of the study showed that, Over the treatment week, placebo treated smokers showed no differences in number of cigarettes smoked. In contrast, those treated with CBD significantly reduced the number of cigarettes smoked by ~40% during treatment.
TAAT Lifestyle & Wellness Ltd. (CSE TAAT) announced earlier last week breaking news that it, has identified a significant opportunity to compete in the menthol cigarettes category of the global tobacco market with its menthol variety of Taat Beyond Tobacco cigarettes. At a global level, the menthol cigarette category was valued by Grand View Research at USD $80 billion in 2018, with a predicted compounded annual growth rate of 3.1% between 2019 and 2025. Despite this projected growth, the Company believes that there is significant unmet demand which can potentially continue to be unmet as several government bodies worldwide have banned or have sought to ban menthol cigarettes, which began with a nationwide ban being passed in Brazil in 2012, with Canada following closely thereafter finalizing a federal ban on menthol cigarettes in October 2017. Characterized by a unique cooling sensation from menthol (a substance derived from plants such as peppermint and spearmint), menthol cigarettes are believed by many smokers to be less harmful than traditional tobacco cigarettes, although according to the U.S. National Cancer Institute there is no evidence to substantiate this notion.
The Company has developed Taat Beyond Tobacco cigarettes as a better-for-you alternative to traditional cigarettes in an Original tobacco flavour, as well as a Menthol version, neither of which contain nicotine or tobacco. The user experience of Taat Beyond Tobacco cigarettes is designed to replicate that of a traditional cigarette between the stick format, cigarette-style packaging, a proprietary flavouring blend, and an enhanced volume of smoke exhaled. Taat Beyond Tobacco cigarettes each contain a minimum of 50mg of cannabidiol (CBD, a non-psychoactive derivative of hemp), which has been shown to mitigate tobacco withdrawals and reduce dependency. Initial retail market testing of Taat Beyond Tobacco cigarettes, as detailed in the Company's June 29, 2020 press release, yielded overwhelmingly positive responses from users, whose anecdotes formed a general consensus that there were no significant experiential differences between Taat Beyond Tobacco cigarettes and legacy tobacco products.
Menthol, which is also commonly used in non-tobacco products such as lozenges, ointments, and candy, was first added to cigarettes in the 1920s. The tobacco industry presented menthol cigarettes as a supposedly healthier alternative to regular cigarettes, which was part of a strategy to target beginner smokers who had health concerns regarding smoking. Kools, the first major brand of menthol cigarettes, was founded in 1933 and gained a 2.2% market share by 1935 with the purported benefit of throat comfort. Beginning in the mid-1950s, tobacco producers also began offering menthol cigarettes under standalone brands, including R.J. Reynolds (Salem), Lorillard (Newport, Spring), and Philip Morris (Alpine).
Following several decades of popularity for menthol cigarettes, in 2012 the World Health Organization published guidelines recommending regulation of ingredients that seek to make tobacco smoking more attractive, to include the use of flavours such as menthol. To date, nationwide bans have been passed in Brazil and Canada, as well as across the European Union. In February 2020, the United States House of Representatives approved a bill on a 213-195 vote which would include banning cigarette flavouring such as menthol.
The Company believes that several current factors create an environment in which the menthol variety of Taat Beyond Tobacco cigarettes can potentially thrive. Foremost, there is a sustained demand for menthol cigarettes in jurisdictions in which they remain legal. As of 2018, menthol cigarettes represented 36% of all cigarettes sold in the United States, the highest ever proportion since reporting of such data by major tobacco companies was required. A 2010 estimate by Philip Morris also showed that menthol cigarettes had a 49.4% market share in the Philippines10. Additionally, as of this writing there are no known competitor products that offer a cigarette-like smoking experience that specifically imitates menthol cigarettes. Between potentially being market-ready in just a matter of months and the combination of demand for and regulatory action against menthol cigarettes, TAAT LTD is confident in the early-stage and long-term prospects for Taat Beyond Tobacco cigarettes.
✔️ CBD-Derived Products May Provide Consumers an Alternative to Tobacco
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