Could cannabis be in Apple’s crosshairs?
A very plausible long shot
A couple of weeks ago, I played Cassandra by warning cannabis firms that Amazon may be coming for their business (Amazon had publicly backed cannabis legalization). Recently, I discovered that Apple become the first Big Tech firm to support cannabis policy reform.
Apple’s new Apps Store Review Guidelines stated that apps handling the sales and delivery of medical & recreational cannabis in legal jurisdictions are now allowed on the App Store.
This is big news. Up until now no Big Tech firm (including Facebook, and Google) has been friendly to the cannabis sector
I began to ponder: could Apple jump into the cannabis industry?
One could make a compelling case. Apple has the need, means and disruptive inclination to enter this space:
The need:
Trillion-dollar market cap firms like Apple (2021 revenues of $366B) need to enter large global markets like cannabis to sustain their growth and share price. In fact, it is often quicker and easier to capture revenue in a new, greenfield market like cannabis than it is to steal it from well-heeled incumbents in traditional and sizeable markets like healthcare, payments or education.
The means:
Apple has a trillion-dollar market cap and $195B of cash in the bank. They could easily buy into any firm or facet of the cannabis industry. Furthermore, Apple is the only company in the world with all the pieces in place (hardware, software, payments, content, search, App Store etc) to bring seamless commerce directly to tens of millions of North American cannabis users. Apple’s integrated, consumer-friendly services can deliver a powerful value proposition to consumers, growers, and brands centered around convenience, access, privacy, targeted advertising and community.
The inclination:
Apple has a history of disrupting industries and entering hitherto virgin markets. Think iTunes, Apple TV, and the iPad. Apple’s unique role as a channel & intermediary means that they don’t need to invest in risky and low return assets like cultivation and retail. They could take small transaction fees right across the value chain. Finally, their platform can be geo-fenced to only legal cannabis jurisdictions ensuring regulatory compliance.
Apple’s entry is a long shot at the moment. How they would compete is anyone’s guess. Like other US-listed firms, Apple will wait for regulatory clarity before making any major moves. Yet, their first step is more evidence that cannabis is going mainstream in the US and that serious corporate heft is lining up behind reform.
#Apple #strategy #payments #M&A