Based on current sales, as well as reasonable projections regarding new markets, an industry report projects that global cannabis sales could hit about $15 billion this year, with a continued growth rate that might push the market to a whopping $40 billion in just five years. Cautious regulatory approaches in Canada and California provided hurdles for the industry, but both of these major markets are expected to take big leaps the coming years, with the Golden State’s cannabis community continuing to transition to the regulated market and the Great White North starting to sell extracts, concentrates, and cannabis infused-edibles and products this December. Another prospective boom for the overall cannabis industry is the continued growth of the CBD industry and the approval of cannabis-based medicines.
For the first time, the annual “The State of Legal Cannabis Markets” report evaluated the cannabis industry as the “Total Cannabinoid Market,” meaning it encompassed sales of medical and recreational cannabis at dispensaries; hemp-derived products rich in non-psychoactive cannabidiol, or CBD; and US Food & Drug Administration approved CBD-based pharmaceuticals.The surge of CBD products coupled with Canada starting legal recreational cannabis sales in 2018 helped to buoy the industry’s growth, according to the report published by the market research arm of cannabis investment firm Arcview Group and data firm BDS Analytics. This was the first full year to evaluate the effects of three significant developments in the cannabis industry: the FDA approval of CBD-based drug Epidiolex, legal adult use sales starting in Canada, and the 2018 Farm Bill giving hemp products more legal standing.***The seventh edition of the report — like publications Arcview published previously — includes a calculated gaze into the crystal ball, projecting industry sales. Arcview and BDS’ latest expectations are that cannabis sales in dispensaries, retail stores and pharmacies will hit $44.8 billion globally by 2024.
Some key trends analyzed in the State of the Legal Cannabis Markets:
- Total legal cannabis spending in regulated dispensaries in the U.S. topped $9.8 billion in 2018, and is forecast to grow to $30 billion in 2024, a compound annual growth rate (CAGR) of 20 percent.
- Investment capital raised by cannabis companies more than quadrupled to $14 billion in 2018, according to Viridian Capital Advisors.
- Despite a 55 percent decline in 2018 in New Cannabis Ventures’ Global Cannabis Stock Index, the five largest Canadian licensed producers closed out the first quarter of 2019 at a combined market capitalization of $48 billion.
- In Canada, which launched adult-use nationwide October 17, 2018, spending on adult-use cannabis is forecast to grow from $113 million in the partial year of 2018 to almost $4.8 billion by 2024.
- A total of 13 state markets will have passed the $1 billion mark in total annual legal cannabis spending by the end of 2024—by the end of 2018, only three had done so (California, Colorado and Washington).
- Internationally, more consumers are forecast to gain legal access to non-medical cannabis. In addition to Uruguay’s groundbreaking legal adult-use and Switzerland’s market for products with <1% THC, Luxembourg, Mexico and New Zealand have all given indications that adult-use sales could begin within the forecast period. Adult-use spending in international markets is expected to grow at a 33 percent compound annual growth rate from 2018 to 2024.
Only time will tell, but it is certainly possible that Arcview’s report is a little too bullish on 2019, as a 36% growth for the cannabis industry over 2018 would be a dramatic increase, but it certainly isn’t out of the question. The long term market increase is easy to see as the momentum for cannabis legalization, thanks to the hard work of advocates, only increases by the day. With more states and nations ending prohibition, and existing markets like Canada adding more products, sales will certainly increase over the coming years. When it comes to the current state of the cannabis industry, the question isn’t whether it will grow, but how much will it grow.
The International Cannabis Business Conference in Vancouver, Canada, this September 15-16 is the industry event to learn the latest crucial info and to network with top investors and entrepreneurs. Discounted, early bird tickets are available until August 21st.