The cannabis market may be bigger than first thought.

According to analysts at Cowen, U.S. cannabis sales alone could reach $80 billion by 2030 – an increase of $5 billion from earlier estimates, and a 4% compound annual growth rate.

“We expect continued growth in newly established U.S. states, and more robust growth in Canada as more supply comes online and new form factors hit the market,” analysts at Cowen noted. Among the likely beneficiaries, will be Tilray Inc. and Canopy Growth, which it believes will “finally start to see the true benefits of adult use sales and the lapping of upfront investments made in calendar 2018 to scale up ahead of adult use.”

Better yet, the firm believes both stocks could see triple-digit revenue growth in 2019, as additional capacity begins to come online.  Both will also benefit from robust demand, as well.  Analysts at Cowen expect to adult-use market to generate retail sales of $2.3 billion in 2019.

But it’s not just TLRY and CGC we believe will benefit.

Aurora Cannabis is seeing sizable growth, too. 

In fact, the company now anticipates revenue for the quarter ended in December 2018 of between $50 million and $55 million, compared to $11.7 million year over year.

That implies growth of nearly 330% in a single year.

“Revenue growth for the quarter was driven by the Company’s strong position in the adult consumer use market in Canada, continued shipments of medical cannabis to Aurora’s expanding base of approximately 71,000 patients in Canada, and relatively stable, supply restricted shipments, to its growing international markets,” according to the company.

Such growth could give way to further M&A activity.

Cowen analysts also argue that increased cannabis use could threaten to cannibalize consumption of other products, such alcoholic beverages.

It’s why alcohol companies like Constellation Brands invested $4 billion in Canopy Growth. Molson Coors even listed legal cannabis among the biggest possible risks to its business in its annual shareholder report.

Anheuser-Busch InBev (BUD) looks to be jumping on the bandwagon, too.

In fact, it just partnered with cannabis company, Tilray Inc. in a $100 million deal to research cannabis-infused drinks for the Canadian market. Tilray Inc. also just announced a global partnership with Sandoz AG, a division of Novartis to develop and distribute medical marijuana around the globe.

With sizable cannabis growth in store, and a higher likelihood of falling alcohol sales, we’re likely to see further investments from major companies.

“Hypothetically you take a consumer that on a beer occasion would have three or four beers and then add cannabis to the mix, well now that’s one or two beers plus cannabis,” Cowen analysts noted. “As we think ahead to 2019, we are increasingly cautious again on beer. I would expect all of the large global alcohol players are paying attention to this.”

In short, cannabis stocks could be one of the smartest trades you make all year.

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