Cannabis Industry Growth Throughout the World
The cannabis industry is seeing massive growth around the globe. Throughout 2018, numerous changes took place, bringing legalized marijuana to states and countries around the world for both medicinal and recreational purposes.
Though a global trade has yet to be established for cannabis, many jurisdictions are beginning to put the framework in place for this industry. Cannabis users have more options than ever for legal consumption of marijuana. Though availability and variety are widely different from one location to the next, it's clear that the legalized cannabis industry is taking shape quickly.
Cannabis Industry and the Economy
Cannabis has become an increasingly mainstream substance, with legalization spreading quickly through countries around the world. In 2018, legal marijuana was a $10.4 billion industry in the United States alone.
The North American market is expected to reach a value of $16 billion in 2019. The cannabis industry has significant value globally as well. The worldwide legal marijuana market is expected to be worth US$146.4 billion by 2025.
The legalization of recreational cannabis impacts more than just growers with a direct stake in the industry. It also creates opportunities for greenhouse manufacturers, fertilizer companies, and other suppliers who provide the tools and equipment that are needed to grow cannabis and produce related products.
In Canada, an abandoned Hershey Company factory found new life hosting 47 growing rooms for the marijuana grower Tweed.
The Different States in the U.S.A. and its Cannabis Industry
Legalized marijuana may have even greater value than cannabis does in the black market.
In Canada, existing cannabis users report that they would pay as much as 10 percent more for legal products. Investors are excitedly pouring funds into cannabis-related businesses with a keen eye on the potential value in this industry.
In North America, $10 billion went into cannabis investments during 2018, which is double the value of these investments over the last three years combined. In 2019, the North American market is expected to be worth over $16 billion.
So first off, let's talk about the cannabis industry in America USA in general.
In 2017, the recreational and medical cannabis industry in the United States had revenue of $5.8 billion–$6.6 billion. This puts it on par with Netflix subscriptions and only slightly behind sales for the burger behemoth McDonald's.
More notable, perhaps, is that the country has an estimated total demand of over $50 billion for medical and recreational cannabis, were the product to become legalized throughout the country. Society's view of marijuana has changed for Americans in recent years, with more than half favoring legalization.
Legal sales for cannabis are expected to grow 200 percent between 2017 and 2022.
According to “The State of Legal Marijuana Markets, 6th Edition,” produced by The Arcview Group of California and BDS Analytics of Colorado, the United States' legal marijuana trade accounted for 90 percent of the trade worldwide.
As of 2018, medical marijuana use was legalized in 30 states, and recreational cannabis use was permitted in nine. Following the legalization of marijuana in Canada, Terra Tech CEO Derek Peterson ran an open letter to President Donald Trump in The Wall Street Journal urging him to follow suit for the sake of the economy. Federal criminalization of marijuana prevents American cannabis companies from listing on Wall Street indexes, but Canadian companies are still free to participate on these exchanges.
As Peterson explains, the problem “ is partially growth but partially who ends up owning all the pieces.”
Cannabis Industry in California
In 1996, Proposition 215 legalized medical cannabis use in California. A decade later, in 2016, voters approved cannabis for recreational use. As of January 1, 2018, the state had the largest regulated cannabis market in the world.
Though legalized, the cannabis industry faces major fees and regulations in the state.
Purchasers of marijuana and marijuana products are subject to a 15-percent excise tax.
Cultivators face a tax of $9.25 per dry-weight ounce of cannabis flowers and $2.75 per dry-weight ounce of cannabis leaves. Purchasers feel the impact of these taxes as well.
In San Jose alone, the sales tax on a single gram of cannabis is 38 percent. Despite this expense, cannabis sales are expected to reach $4.8 billion by 2025. Of this, $4 billion will be for adult use, while $0.8 billion will be for medical use. The availability of recreational marijuana is expected to lower medical marijuana sales as users opt to purchase cannabis products for their needs without going through a doctor.
Cannabis Industry in Colorado
In 2000, Colorado voters passed Ballot Amendment 20, allowing medical marijuana use.
In 2012, Amendment 64 passed, legalizing recreational marijuana use and making Colorado among the first states in the country to permit adult-use sales.
Aggregate marijuana sales have increased steadily since, growing from $699 million in 2015 to $1.49 billion in 2017.
Medical marijuana sales decreased from $430 million to $420 million in 2017, heralding a trend that's expected to continue as users no longer have to go through their physicians to gain access to the product.
Elected officials have little incentive to stem this trend, as marijuana sales are taxed at a higher rate in the recreational market.
Cannabis Industry in Oregon
Oregon has legalized both medical and adult-use marijuana. By 2020, the state's cannabis market is expected to rake in about $1.04 billion in total sales. This includes $856 million in projected recreational sales and $187 million in medicinal cannabis sales.
This places Oregon's cannabis market fifth in the country.
Oregon authorizes an unlimited number of licenses for cannabis production. The state designed a system with very low barriers to entry, but this has caused some issues in the market. A surplus of marijuana in the state is driving prices down and pushing black market exports up.
The cost of marijuana has dropped 50 percent, even as the state's tax revenue projections have increased to $20.3 million for the period between 2019 and 2021.
Legalized exports are one proposed solution to the problem, which could bring Oregon's superior product to other nearby states if and when marijuana legalization spreads to these areas.
Cannabis Industry in Florida
Florida legalized medical marijuana in 2014 and approved five licensees the following year.
Currently, 14 companies are registered to operate in this industry. Florida requires medical marijuana companies to be vertically integrated, so all aspects of the business are handled by a single company, from growing to sales.
By 2018, 147,000 people in the state had signed up to use medicinal cannabis.
The "State of Legal Marijuana Markets" report predicts that Florida's medical marijuana market will be worth $1.1 billion in 2020. However, among other industry analysts, Greenview expects the market to be valued at just $936 million by that time, and New Frontier anticipates a market value of $727 million in 2020.
Florida currently permits only cannabis oils and extracts. The state has not yet legalized edibles or marijuana that one can smoke. This is likely hampering growth of the industry.
Cannabis Industry in Massachusetts
In 2012, a ballot measure passed to legalize medical marijuana in Massachusetts. This was followed by recreational legalization in 2016.
The first recreational cannabis sales in the state were made in 2018.
Within just five days of opening, the two recreational marijuana shops in Massachusetts had amassed sales of around $2.2 million for 56,000 products. The second week, these shops took in $2.6 million in sales. By the end of 2018, five cannabis stores had opened in Massachusetts.
Within the next year, the number of recreational marijuana shops in the state is expected to increase to around 45. Massachusetts does not require vertical integration. Instead, it allows wholesale producers to focus on the growth, processing, and packaging of products that are then sold to retail locations.
This is expected to foster a great diversification of products, including several varieties of the herb that can be used in products like the DaVinci MIQRO vaporizer.
Cannabis Industry in Texas
The cannabis industry in Texas is incredibly restrictive.
The state only allows the use of cannabis oil that is no more than 0.5 percent THC and at least 10 percent CBD by weight. This oil is available for medicinal use only for those with intractable epilepsy.
As of January 2019, the state had only three vertically integrated licensed cannabis companies.
In the 2019 legislative session, Texas plans to address possible changes to the legislation, which will cover regulations for hemp and CBD, permissible research into cannabis use, and the process doctors use to prescribe cannabis use to patients.
Public opinion in the state is shifting to provide greater support for the cannabis industry.
In a 2017 poll, 83 percent of Texans indicated that they would support legalization of marijuana for certain uses, while over half supported the possession of marijuana for any use.
Cannabis Industry in Washington
Legal marijuana sales in Washington have enjoyed a steady rise over recent years, from $259 million in the 2015 fiscal year to $786 million in fiscal 2016 and $1.3 billion in fiscal 2017.
Unfortunately, an overabundance of product is causing trouble for producers in the state. While there are nearly 1,400 producers and processors in Washington State, there are fewer than 500 retailers.
This is driving the price of cannabis down.
While the number of plants started in 2017 increased 63 percent over the year before, retail volumes increased less than 20 percent.
Growers are struggling to deal with falling prices for cannabis sold wholesale to retailers and processors. Unlike other states that mandate vertical integration, Washington prohibits it.
Marijuana producers cannot hold a retail license to sell their product. This has created a question of where the bottom of the marijuana market lies.
Cannabis Industry in New Jersey
New Jersey has legalized medicinal use of marijuana for a growing pool of patients.
Through 2018, the number of patients using medicinal cannabis increased from about 20,000 to nearly 40,000. This has created a shortage of marijuana in the state that's expected to continue through the spring of 2019.
The number of dispensaries in the state has doubled to meet the growing demand for cannabis.
A marijuana bill is in the works to legalize recreational marijuana, but the state legislature has yet to reach an agreement on the finer points of the bill, such as how much the state would tax marijuana sales and how social justice issues would be handled.
The bill remains a work in progress but may bring changes to the cannabis industry in New Jersey in 2019.
Whether you're a cannabis user excited to have wider access to legalized high-quality products, or you're interested in the economic benefits that are available in the cannabis industry, there's much to look forward to in the coming months and years.
Both within the United States and across the globe, the cannabis market promises to expand exponentially.
Now, let's talk about the industry of cannabis in different countries.
Cannabis Industry in Canada
In 2018, Canada became the second country in the world to legalize recreational cannabis.
Medical marijuana has been legal in the country since 2001, and 120 businesses already grow medical marijuana throughout Canada. The market for medical marijuana alone is expected to create a demand for 150,000 kg of cannabis flower by 2021.
Through 2019, the cannabis market in Canada is expected to generate as much as $7.17 billion in sales.
Of this, about $4.34 billion will be legal sales. Current industry regulations prevent manufacturers from completely displacing the black market.
The Parliamentary Budget Office reports that it would take 700,000 kg of cannabis to replace the black market entirely, yet the industry is limited to the production of about 300,000 kg at present. Currently, manufacturers are not permitted to make edibles, infused products, or vaporizable products.
The total Canadian economic impact of recreational marijuana is expected to be over $22 billion when including licensing, security, and transportation costs.
By 2020, the industry is expected to achieve a retail value of $6.8 billion.
Cannabis Industry in India
The cannabis industry in India is complex.
Though the government issues licenses for the cultivation of cannabis, the use of it is still illegal. Legalization issues have done little to stem widespread use of marijuana. Rolling papers and pre-rolled cones are readily available in grocery stores, and pot is served up at many parties.
Legalization of medical marijuana may be looming on the horizon in India, however.
The Indian Institute of Integrated Medicine in Jammu is conducting research on the clinical benefits of cannabis. The results of the study may help urge the government forward, placing medical marijuana on a very plausible timeline for the future.
Cannabis Industry in Australia
Australia legalized medical cannabis use in 2016.
It provides licenses for the production and cultivation of cannabis for research and medicinal purposes. As of November 20, 2018, 49 licenses had been issued.
The country has indicated that it plans to legalize medicinal cannabis exports, which would give Australia a stake in a global market estimated at $57 billion.
Australia has strict regulations in place, which previously made it difficult for patients to access medical marijuana.
However, the advent of an online application system has changed the landscape. Approximately seven people are approved for medical marijuana each day. The industry already has a value of $18 million.
Prohibition Partners, a market intelligence firm, indicates that the Australian medical cannabis market may be worth $1.2 billion by 2024, and $3 billion by 2028.
The recreational cannabis market, if legalized, has an estimated worth of $8.8 billion within a decade.
Cannabis Industry in Israel
Medical marijuana is legal in Israel, and approximately 30,000 Israelis currently receive a prescription for cannabis.
Roughly 14 tons of cannabis are currently required to meet this annual demand.
However, this is expected to increase to as many as 170,000 patients and up to 90 tons of cannabis in the future.
In 2017, the Interministerial Committee of the Ministry of Finance and the Ministry of Health recommended legalization of medicinal cannabis exports.
A bill supporting these exports passed the first vote in the country's parliament at the end of 2018.
Full legalization of the cannabis industry could result in tax revenues of up to $675 million a year for the country.
Cannabis Industry in Europe
The cannabis industry is growing quickly in Europe.
Medicinal marijuana use is legal in 22 countries here, and recreational use has been decriminalized in 12.
The cannabis market in Europe saw more growth in the first half of 2018 than it had in the previous five years combined.
Germany is poised to become a leader in the medicinal cannabis market, having created a liberal medical marijuana program in 2017.
The country plans to begin awarding cultivation licenses in 2019, seeking to produce 10,400 kg of cannabis within the country over the next four years.
Italy is a close second, projecting medical cannabis sales in 2027 to reach $1.2 billion.
Cannabis Industry in South Africa
The cannabis industry in South Africa is rapidly reshaping itself.
In 2018, the Constitutional Court approved legalization of private cultivation and adult use of marijuana.
The legal framework is in place for licensing of medicinal marijuana production, but forward movement has been slow.
The 2018 Cannabis Expo was met with great enthusiasm, though cannabis was not permitted on-site.
Full legalization of marijuana in South Africa is highly anticipated in coming years.