How Big is the Cannabis Industry?
September 19th, 2017
The advent of legal medical and adult-use cannabis has proven to be big business. According to a report from The Arcview Group, marijuana sales in the United States totaled $6.7 billion in 2016 with that number expected to climb to $50 billion by the year 2026. The extreme growth has led to job creation, increased tax revenue, and most importantly, safe access to cannabis products. The United States is not the only country working to cash in on the so-called “Green Rush.” A few countries have already legalized cannabis for medical and/or recreational use and even more are are considering it. This begs the question: just how big is the global pot industry?
As mentioned earlier, the United States cannabis market is already bringing in billions of dollars but with Canada planning to fully legalize the plant in mid-2018, North America will certainly become the biggest in the world sooner than later. According to Forbes, Canada’s base retail value of recreational cannabis is initially expected to fall somewhere between $4.9 billion-$8.7 billion.
“When you consider ancillaries such as growers, testing labs, security, etc., the economic impact could range from $12.7 to $22.6 billion,” said Vivien Azer of Cowen & Co. “Of note, these numbers do not include the impact of tourism, business taxes, licensing fees and paraphernalia sales, which could drive the economic impact higher.”
Mexico recently legalized medicinal cannabis, with some companies and investors already trying to get in on the ground floor. While it is not yet known just how much Mexico’s cannabis market will be worth, it will certainly make a big impact on the North American market as a whole.
While cannabis is not fully legal anywhere in Europe, Germany recently approved medical. Analysts believe that Germany could easily become one of the world’s largest marijuana markets. The country has a population of over 80 million, and nearly one-quarter of its citizens have consumed cannabis, meaning the market has huge potential for growth. Additionally, cannabis will be covered by health insurance, which could fuel the market as well. A couple of Canadian licensed medical cannabis producers have already taken steps to capitalize on this opportunity. These companies are Canopy Growth and Cronos Corp.
“This is a very substantial market, and it’s probably the best place to enter the European Union from,” Bruce Linton, CEO of Canopy Growth, said in an interview with New Cannabis Ventures.
The plant is also decriminalized in several other counties. Spain, Germany, Portugal and the Netherlands have twisted their laws to tolerate and frame the use and sale of small amounts through special dispensaries, recreational stores (coffee shops) and clubs. Legislators in Italy have been discussing legalizing cannabis, but opposition from the Roman Catholic Church could mean a difficult fight.
Investors from around the world have been keeping a keen eye on Israel, especially after the government passed legislation in February to allow for marijuana’s cultivation, manufacture, and export. Since , the “green rush” has seen about 500 companies apply to exploit cannabis products; the US and others invested almost $100 million in the last year into Israel’s nascent medical marijuana startups. Israeli analysts believe that number will climb to $1 billion within the next few years as the startups win official licences.The country is also arguably the world leader in cannabis research and development with over 100 clinical studies currently in development.
Despite China’s hardline approach to marijuana (possessing 5 kilos could get you the death penalty), the country has quietly become a legal hemp powerhouse. Certain provinces now allow for the cultivation of the plant, which has greatly benefited local farmers who receive nearly $1,500 per hectare of hemp grown. The People’s Liberation Army has been researching the plant’s varying abilities since the 1970s and recently teamed with Beijing-based Hemp Investment Group to create a drug used to treat PTSD. Subsequently, China now holds nearly half of the world’s cannabis patents.
Currently, Uruguay is the only South American country to fully legalize cannabis. Pharmacies across the country are now able to sell marijuana products to citizens over the counter. While no other countries in South America have gone as far as Uruguay, several have relaxed pot laws in recent years. In 2015, both Chile and Colombia legalized medical use of cannabis or cannabis-based medications. Argentina approved medical use of marijuana in March of this year.
The Australian government legalized medical marijuana in 2015 but the implementation has been territory to territory. Currently, cannabis is available in New South Wales and Western Australia with the rest to follow, with the exception of Northern Territory and South Australia. According to UN data, people from Australia and Oceania account for 15 percent of all cannabis users worldwide. New Zealand legalized medical CBD oil earlier this summer; it is not clear if medical cannabis will be fully legalized, but local activists believe the CBD announcement is a step in the right direction.
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