How Cannabis is a Multi-Industry Disruptive Technology

Legal cannabis has the ability to disrupt a handful of industries simultaneously, and many people are becoming aware of this fact. But where will the industry go?

As cannabis continues to be legalized on both a recreational and medicinal level throughout the world, the global cannabis industry is beginning to take shape and new utilizations for the plant are being discovered constantly. Whether it be new ways to consume cannabis, new cannabinoids that are isolated, new conditions that cannabis can treat or new products that hemp can create, the potentials surrounding cannabis continue to grow. Because of this, the cannabis plant is unlike virtually every other product on the planet due to the diversity of its uses.

Globally, the total legal marijuana market size is expected to be worth USD 73.6 billion by 2027, according to a report by Grand View Research, Inc. While this number pales in comparison with Cannabis's more established peers like the Alcohol industry and the Pharmaceutical industry, cannabis is both a newer player to the game, and has a unique aspect to it – cannabis can weave itself into most industries.

Recreational cannabis is a disruptive force to the alcohol and tobacco industries. Medicinal cannabis products are disruptive to the pharmaceutical industry. Hemp products are disruptive in paper production and textiles, hemp-derived CBD products are disruptive in the wellness and nutraceutical spaces and cannabis cultivation is disruptive to big agriculture.

Hemp plastics and hemp biocomposites are disruptive to other materials used in manufacturing (i.e. automotive) allowing companies and countries to fulfill obligations and meet carbon targets and have more environmentally-friendly, lightweight, and strong products.

In this article, we're going to explore precisely what it means to be a disruptive force, and how cannabis can be disruptive on a multi-industry level.

What Does it Mean to be Disruptive?

Netflix, Uber, and Airbnb are some of the most popular brands in today's society. Someone might get an Uber after work, get home, and put on Netflix while they prepare for a weekend away at an Airbnb.

These brands are also examples of disruptive technologies, in that they entered existing markets, like video streaming, ridesharing, and the hotel industry, and changed the paradigm in such a way that they were able to create a new niche for themselves. In the case of Netflix, Uber, and Airbnb, they were so effective at disrupting the respective industries that their business model eventually began to dominate the space they disrupted.

The term "Disruptive Innovation" was coined by Clayton M. Christensen in a Harvard essay in 1995. Christensen's theory argued that many disruptive innovations aren't actually "advanced technologies", but instead, they are often old technologies utilized in innovative ways. This certainly applies to cases like Netflix and Airbnb, which took a novel approach to an existing business model, but does it apply with cannabis?

Well, yes and no. Cannabis is neither a new technology nor has there been an existing business model surrounding it. Cannabis has existed in various forms throughout history, however recent prohibitions caused by the War on Drugs meant that the plant has been left in the shadows for nearly a century.

Though as we mentioned earlier, cannabis is somewhat amorphous, in that it can fit within a handful of other industries, and potentially change the way the game is played. Let's take a look at the individual industries that cannabis is moving into, and how cannabis can potentially disrupt them.

Paper & Textiles

The global paper and pulp market is estimated by Statista to have been worth $63.3 billion U.S. dollars as of 2019. While most people don't think of 'Big Paper' as one of the dominant industries, it was actually both the paper and textiles markets which sought to prevent hemp from being used as a substitute to wood pulp for paper and nylon products. The War on Drugs began to take its earliest form in the 1930s, led by Harry Anslinger, the Commissioner of the Federal Bureau of Narcotics. Anslinger was helped predominantly by William Randolph Hearst, and the DuPont family, who leveraged their own resources to help propel Anslinger's message about the dangers of cannabis.

William Randolph Hearst was a newspaperman who was heavily invested in the timber industry to support his newspapers, and the DuPont family had just invented nylon and were rumored to fear competition from hemp fiber.

And, in many ways, Hearst and the DuPont family were right to be fearful of hemp, as it has many benefits to its use over wood for paper. For example, hemp stalks grow in 4 months, whereas trees take 20-80 years. Additionally, hemp has a higher concentration of cellulose than wood which is the principal ingredient in paper. While trees only have 30% cellulose, hemp can have up to 85% cellulose content.

It was precisely cannabis's potential to be used as a disruptive technology within these industries that led to the initial prohibition of the drug that still lingers in many parts of the world today.

Big Pharma

It will likely come as no surprise that cannabis poses a threat to Big Pharma in many ways. While federal illegality has made it difficult to research cannabis, there remains new evidence emerging surrounding the medicinal benefits of cannabis for a growing range of conditions. Epilepsy, chronic pain, insomnia and a host of other medical conditions can be greatly aided through the use of cannabinoid medicines, oftentimes without the negative side effects that come with existing medications. This is why cannabis poses a great threat to the pharmaceutical industry.

As such, big Pharma has pushed back against legalization efforts, with examples such as in August 2016, the pharmaceutical company Insys Therapeutics made a $500,000 contribution to Arizona's anti-legalization drive. The contribution made Insys the largest donor to the campaign, raising questions as to why they were so invested in preventing legalization. Insys also happens to be the producer of Subsys, a prescription painkiller that treats chronic pain – a condition for which cannabis is becoming increasingly known for treating.

Many other similar cases of Big Pharma lobbying against marijuana have occurred, suggesting that the industry is well aware of the potential losses it may face if cannabis-derived medicines continue to grow in popularity. In fact, New Frontier Data predicts that the pharmaceutical industry could eventually lose up to $4bn per year to the medical cannabis industry, based on the current gains already seen by the medicinal cannabis industry.

This is because where cannabis is made legal, opioid prescription rates go down, sometimes by over 30% in cases such as Colorado. Moreover, cannabis has a much lower potential for overdose or fatality than many of its opioid counterparts designed to treat symptoms such as PTSD, chronic pain, and anxiety, making it a preferable medicine in many instances. And in a true disruptive fashion, anyone can grow cannabis at home, making it highly accessible for the everyday person.

This is why, in some cases, Big Pharma has realized that if you can't beat 'em, join 'em. Companies like Insys, who were well-known anti-cannabis advocates, are now investing in the development of synthetic cannabis products.

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Big Agriculture

For a cannabis industry to exist, cannabis must first be grown, placing the cultivation of the plant neatly within the agricultural industry. However, there have been many vocal concerns raised about cannabis potentially becoming a part of 'Big Agriculture' instead of being a truly disruptive force for the industry.

Big Agriculture, or Big Ag as it is also known, refers to the consolidation of a few large corporations within the Agricultural sector that are able to squeeze out smaller players, using methods such as seed patents, while lobbying to ensure legislative change favours their companies interests. Many allege that these big companies underpay their workers and use their influence in ways that harm the environment all while ensuring they are portrayed positively by the media. As such, several vocal proponents have expressed their fears about cannabis joining this process.

In fact, we're already seeing some big companies within Big Ag put hemp in their crosshairs, like Syngenta AG, who announced recently in its Q4 2019 lobbying report that it is engaged in a "general discussion of legislative and administrative actions on industrial hemp."

Given cannabis's history of being prohibited – which was in part due to lobbying efforts made by moneyed interests – many are reluctant to see cannabis become absorbed by these very same corporations. Instead, many wish to see cannabis operate in a truly disruptive fashion and allow smaller players, in this case, farmers, to enter the space using cannabis.

Where is Cannabis Headed?

One way to think about cannabis's potential to be disruptive is through the lens of displacement. Displacement is the process of putting an object in a full cup of fluid, and figuring out how large the object is by seeing how much fluid spills out due to the object displacing it.

In the same sense, you can work out how disruptive cannabis is, by how impactful its legalization might be to certain industries. While Big Pharma, Big Ag, and the paper & textile industries are some of the areas that cannabis could disrupt, there are plenty more.

Whether it be the prison industrial complex in the U.S., which has become dependent on funding provided by a continuation of the War on Drugs, or the police, who have similar dependencies due to arrest quotas. Then there's Big Alcohol & Tobacco, who may lose some of their loyal customers when cannabis becomes readily available, as evidence suggests cannabis products can reduce the use of other recreational drugs.

Precisely what shape the cannabis industry takes remains to be seen. Cannabis is, in many ways, still shrouded in many of the anti-establishment sentiments that initially led to its legalization, and many would like to see cannabis carve a niche for itself across all industries, instead of simply becoming a part of them.

Though as we're already seeing with Insys, Syngenta AG and Big Alcohol companies like Constellation Brands buying a huge chunk of cannabis companies like Canopy Growth, many bigger players are beginning to realize precisely how disruptive cannabis can be, and as such, they're positioning themselves to be disruptors themselves rather than the disrupted. Whether this is a trend that will continue, remains to be seen. Moreover, as we're amid the COVID-19 pandemic and the resultant lockdowns, the economy could certainly use a boost – and cannabis is precisely one way to do so.

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Louis O'Neill
Louis O'Neill

Louis is a writer based in Sydney with a focus on social and political issues. Having interviewed local politicians and entrepreneurs, Louis now focuses on cannabis culture, legislation & reform.

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