The Cannabis Industry And Its Journey Towards Becoming One Of The Most Lucrative Sectors

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The global cannabis industry has enjoyed massive growth over the past three or four years, which was mainly driven by the legalization agenda in many regions, especially the major markets such as Canada and the United States.

Growth drivers

Countries like Canada have already legalized cannabis for both medical and recreational use. The same has also happed in a few states in the US, and most of the remaining ones have been pushing towards that direction. Cannabis legalization allows the industry to take advantage of the massive demand for cannabis and hemp products.

Legalization has been the key catalyst behind the impressive growth in the cannabis industry. The industry has come a long way considering that just a few years ago, cannabis was deemed to be illegal and outlawed alongside hard drugs such as cocaine.  Fast forward to the present where there is scientific evidence to support cannabis consumption. Unlawful status of the past paved the way for a huge black market for the cannabis sector. However, the legalization efforts have created a whole new fast-paced industry that makes cannabis widely available.

Although there is a legal market for medicinal cannabis consumption, a large percentage of the consumers are those who use it for recreational purposes. Regardless, it is still believed that cannabis black-market takes the lion’s share of the cannabis industry revenue.

The current state of the cannabis industry

The cannabis industry is currently enjoying strong growth, but it is still in its early stages because key players are even setting up their networks. According to New Frontier data, the global cannabis market is currently worth around$150 billion. The breakdown for the regional markets and their respective share is as follows.

Africa (market worth $37.3 billion), Europe ($68.5 billion), North America ($85.6 billion), and Asia ($132.9 billion). Surprisingly, Asia has the largest market share despite the massive cannabis hype in the west, although Asia is an enormous territory compared to the rest. Overall, the figures indicate that the global cannabis market is huge. So far, many companies operate in the industry trying to meet the massive demand. These companies have been generating wealth while at the same time, creating job opportunities. There is also the revenue benefit for governments in the form of tax.

There is the argument for cannabis legalization based on research, which indicates that there are some medicinal values to be derived from cannabis. To put it to perspective, about 1.2 billion people globally can benefit from the medicinal properties of cannabis. The numbers offer a compelling reason for cannabis legalization since the benefits are immense.  There is also the fact that legalizing cannabis would contribute toward reducing the prison population. A large number of individuals are arrested and imprisoned every year for possessing illegal marijuana. However, legalization would render such arrests unnecessary.

The growth opportunities in the cannabis industry

The Global Cannabis Report: 2019 Industry Outlook estimates that the global cannabis industry will be worth around $272 billion or more before the end of the next ten years. Analysts believe that the market has the potential to reach the projected growth figures if legalization continues.

Canada was the first country to grant full legal status to the cannabis industry. A few other countries such as Mexico and Uruguay are expected to legalize cannabis for recreational use by adults possibly before the end of the year.  Many states in the US have legalized marijuana for recreational use, but it is still considered illegal at the Federal level.

Cannabis legalization in more jurisdictions means the marijuana industry will continue to expand, thus providing more opportunities for companies to generate more revenue. Cannabis demand is currently more than the supply from all the industry players while means that there is a shortage in the market. It explains why numerous companies have been expanding their operations to boost their production.  

Researchers have also been working towards creating more potent cannabis plants that are more resistant to the elements so that they can be grown in more regions. Expansion activities and more productive growth will get the industry closer to achieving a balance between supply and demand.

The potential direction of the cannabis industry in the future and growth projections

The cannabis market has already proved that there is a lot of profit to be made. Companies that have invested in the industry have been reporting impressive growth numbers and including revenue growth. There is still a lot of room to grow since the industry is still in its early stages, and legalization in more countries expected to happen means that the market will only grow larger. The future of the cannabis industry, therefore, looks quite promising.

As far as the numbers are concerned, the UN claims that roughly 3.9% of the global adult population are cannabis users. It means approximately 190 million adults in the world use cannabis. Most of those users are in Europe and the US Those figures are expected to increase if as more countries embrace legal status for cannabis.

The National Survey on Drug Use conducted in 2017 revealed that roughly 26 million individuals above 12-years-old in the US were marijuana users. It is estimated that the US cannabis market would currently be generating annual sales worth around $28 billion before taxes if cannabis had full legal status in the US If that were the case, then the US market would be the leading cannabis market, more significant than the Canadian market and the Mexican market.

The survey also suggests that the US market’s annual cannabis sales would surge to $41 billion in the next ten years. Jefferies estimates that the global cannabis market will generate more than $50 billion in cannabis sales every year by 2029.Christopher Carey, who works for Bank of America, believes that the cannabis industry might soon generate as much as $166 billion annually. So far, the marijuana industry has already rivaling various sectors including the tobacco, alcohol, and health and wellness industries whose total annual sales add up to around $2.6 trillion.

Carey also believes that the US will end up controlling over a third of the entire cannabis market. Meanwhile, Canada’s peak annual cannabis sales figures are expected at around $5 billion, which is about 3% of the whole market.

Countries where the cannabis market is rapidly growing

Canada is among the top countries that have been experiencing a surge in cannabis consumption. This growth started taking place when the country legalized cannabis, allowing it to be consumed by adults for both medical and recreational purposes. The US market has also been gaining traction as far as the cannabis market growth is concerned and also due to the legalization.

There are a total of 50 states in the US, and only 11 states have fully legalized cannabis, allowing its consumption for both recreational and medicinal use. Meanwhile, 22 remaining states have legalized it for medicinal use. Fourteen states only legalized CBD products while the remaining three still maintain illegal status for marijuana. The US cannabis market also expects the Federal Government to change its stance on the market sometime in the future. If that happened, then marijuana would become legal at the Federal level; in other words, it would be permitted throughout the country.

Mexico will soon follow in the footsteps of its neighboring countries once it legalizes cannabis as per the current plans by the government. The country plans to legalize cannabis for recreational use and this coupled by the fact that it is a large market means that Mexico will soon be among the top markets for marijuana. Cannabis is also legally sold in the Netherlands, while Spain allows the private consumption of cannabis. These are just some of the countries where the rising use of cannabis has been driving up the demand.

More countries are jumping on the cannabis bandwagon

The number of countries working towards cannabis legalization has also grown higher lately. There has been increased interest of marijuana legalization by lawmakers from various countries, including Mexico, Portugal, Jamaica, and others. This growing interest in cannabis legalization is mostly fueled by the realization that cannabis offers therapeutic benefits.

Most of this interest focuses on medicinal use with countries such as the UK and South Korea, giving the green light for the regulated medical use of cannabis. Some countries believe that it makes sense to legalize cannabis so that they can gain ground against drug dealers.

Cannabis has, for a long time, been sold illegally in the black market but making it legal would allow the authorities to enable controlled access and controlled consumption. It is on the premise that controlled consumption will help prevent dangers such as addiction or overdoses. Legislators also view legalization as an avenue to exercise control while also benefiting through tax collections from the cannabis industry.

The cannabis industry’s current fast-paced development indicates that there will likely be strong growth in the future and thus a lot of revenue to be made. Industry players, therefore, look forward to a promising future.

Resource Links:

  • https://www.marketwatch.com/press-release/global-cannabis-industry-positioning-to-be-worlds-most-lucrative-sector-2019-05-08
  • https://markettalknews.com/marijuana-market-key-players-2019-2025-cara-therapeutics-cannabis-sativa-cannagrow-holdings-united-cannabis/
  • https://etfdailynews.com/2019/05/03/how-big-can-the-global-cannabis-industry-become/
  • https://www.fool.com/investing/2019/05/04/if-legal-today-heres-how-much-the-us-pot-market-wo.aspx
  • https://www.benzinga.com/markets/cannabis/19/04/13571374/new-report-offers-first-ever-overview-of-global-total-cannabis-market

This article by Money News National is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Money News National has no position in the stocks mentioned. Thank you for reading.

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