The Cannabis Industry: Marijuana in the International Spotlight
The cannabis industry has been undergoing some pretty major changes in recent years. Thanks to legalization, innovation and an enduring love of all things marijuana, this industry is set to see its remarkable growth over the last few years continue. So let’s follow the money to see just how and where the cannabis industry is set to meet, and even exceed, our wildest expectations.
Cannabis Industry Size & Growth
The overall outlook for the cannabis industry appears to be quite rosy. According to projections, the legal global industry is expected to reach around $42.7 billion in sales by 2024, and over $90 billion by the year 2027, with a compound annual growth rate of 20%. Much of the growth in recent years has been attributed to the loosening of legal restrictions in many places, as well as the opening up and development of huge markets including California and Canada.
However, these figures pale in comparison to the total global addressable market, which accounts for both legal and non-legal sales. While close to 60 countries have legalized or decriminalized marijuana in some form or another, illicit sales and unregulated markets combined with legal sales account for $344 billion USD. The top five markets are Asia, North America, Europe, Africa and Latin America. One analysis found that, worldwide, there are 263M current marijuana consumers.
Recreational Cannabis Industry
In the United States, sales of recreational marijuana are expected to perform quite well, thanks in part to legalization. In 2018, recreational cannabis sales hovered at around $6 billion; in 2019, this figure was estimated to top $8 billion, and projections range from total sales as being anywhere from $18 to $22 billion by the year 2023.
Medical Cannabis Industry
Medical marijuana markets are expected to grow significantly. One analysis released in July 2020 projected significant gains over the next seven years, amounting to an estimated $82.9 billion in global sales by 2027. Other research points to growing market share due to demand for cancer therapies.The disease is the second leading cause of death worldwide. As awareness and understanding of cannabis’s potential analgesic effects grows, so too does demand for this therapeutic plant.
Some estimates place the CBD oil market at a $25.57 billion dollar valuation by the year 2027. The size of this market has much to do with the fact that CBD products have been widely legalized, whereas THC remains an illegal Schedule 1 drug in the United States. CBD oil is also known for potential medical benefits and can be used in a diverse range of products.
In 2018, the U.S. Farm Bill officially legalized hemp throughout the country. Industrial hemp is a versatile product, which is one of the reasons this industry is seeing significant expansion. Hemp can replace the need to raze forests for paper production. It is also used extensively in clothing manufacturing, furniture, health products and food supplements such as raw hemp hearts. A 2019 survey proclaimed the size of the hemp industry in the United States to be at $4.6 billion, and projected growth to nearly 27 billion by 2025.
Market Value of the Cannabis Industry
Generally, charts for market value of cannabis tend to be up and to the right – although this isn’t always the case. However, demand appears to be consistent in many places in the world, and growing steadily in others. Here are a few markets to consider:
United States’ Cannabis Industry
The cannabis industry was valued at around $10 billion in 2018, and is expected to grow beyond $15 billion by the end of 2020. From 2019 alone, the industry saw 40 percent growth in sales figures, with projections that retail sales will hit $37 billion by 2024. These numbers are set to increase partly thanks to new markets opening up in states where cannabis was previously illegal, such as Michigan and Illinois, with the two states alone expected to account for $2 billion in sales by 2024.
Canada’s Cannabis Industry
Thanks to nation-wide marijuana legalization legislation passed in 2018, Canada has a booming market for both medical and recreational pot. Total sales were pegged at $7.17 billion in 2019, though this figure includes unregulated sales. Legal sales account for under $5 billion. By 2020, the legal market is expected to rise to $6.8 billion. Putting this into perspective, this valuation is larger than the liquor market in the country.
Uruguay’s Cannabis Industry
In 2013, Uruguay earned the proud distinction of being the very first country in the world to entirely legalize cannabis – including recreational. It took three and a half more years of various regulatory hurdles before legal sales could begin, but in 2017, lines were forming for people to get their cannabis. However, supply chain issues are unfortunately hindering the development of the industry in the country – since legal sales began, only 8,800 pounds of recreational cannabis have been sold.
Cannabis Industry Ancillary Products And Services
Ancillary products and services related to the cannabis industry include producers of equipment for cultivating, processing and consuming marijuana; packaging, software, laboratory supplies and more. These industries account for up to four times the value of direct sales of cannabis.
A whole host of new industries are being spawned thanks to cannabis and its impressive array of potential applications. They fall into two categories: those that “touch the plant” and those that do not.
Industries touching the plant include medical and pharmaceutical companies, which are working on developing cannabis products to treat pain, sleep disorders, anxiety and other conditions. The wellness industry has also recently been embracing Mary Jane by incorporating the plant into certain products, for example CBD oil used in mascara, lip balms and bath products. And of course certain food and beverage companies are taking to cannabis in a big way. Products such as chocolate, gummies, juices, and spirits for mixing up creative cocktails are becoming all the rage.
Cannabis-related industries that do not “touch the plant” including financial businesses, such as small banks and even cryptocurrency companies which providing loans to cannabis companies who may be shunned by more traditional banking. Cannabis advertising, including billboards, are a big part of the cannabis industry, as well as companies providing security and information services.
Laws Governing the Cannabis Industry
Cannabis laws vary by state and country. Typically, cannabis is considered either legal, illegal, or decriminalized.
In the United States, states including California, Colorado, Alaska, Vermont and Nevada have completely legalized both medical and recreational cannabis, so dispensaries in these states are free to sell to essentially anyone over the age of 21.
States including New Jersey, New York, Ohio, Pennsylvania, Rhode Island and Delaware have legalized medical marijuana use, however recreational use and possession remains illegal.
Other states, such as Connecticut, Maryland, Minnesota, Nebraska and Mississippi have decriminalized recreational cannabis. Decriminalization means that, while technically still illegal, harsh penalties such as jail time and hefty fines are lifted for cases where people are caught using or possessing small amounts of cannabis.
At a federal level in the United States, marijuana is classified as a Schedule 1 drug, meaning it is highly risky and carries no recognized medical benefits. However, at a state level, the picture is quite different. States have jurisdiction to enact laws as they feel is appropriate. Certain states have taken steps to legalize it, based on the rules of each individual state. In total, 36 states have legalized the use of marijuana for medical purposes. Of these, 11 have legalized weed for recreational purposes, including California, Colorado, and Washington.
The Future Of The Cannabis Industry
When some folks look into their crystal balls, they see huge marijuana monopolies on the horizon, churning out poor-quality, single-note products for the masses. While this may be an inevitable outcome of widespread regulation, some hope that the cannabis industry will turn towards craft weed as it matures. Similar in theory and practise to craft breweries, wineries, and distilleries, a craft weed industry would focus more on quality over quantity. Smaller-scale producers would grow high-quality products that are not only more sustainable, but would help revitalize local communities by providing jobs.
The regulated cannabis industry is still relatively nascent in North American and other parts of the world, yet the demand for weed and weed products is plainly evident. Be it medical or recreational, edible or smokeable, the cannabis industry has something for everyone – so its continued growth will likely be a boon the world over.