Arcview Market Research and BDS Analytics have published the seventh edition of
their "State of Legal Cannabis Markets" report.
In regulated markets, U.S. cannabis sales surged
by 20% in 2018 and are on track to jump by another 36% this year,
the report said.
$40B In Sales By 2024
The growth of the global cannabis market comes on
the back of liberalization in existing markets and new countries
introducing laws legalizing medical use.
BDS Analytics and Arcview said countries like
Luxembourg, Mexico and New Zealand are at the forefront of
legalization, alongside South Korea and Thailand, both of
which recently approved medical cannabis.
African countries like Lesotho, South
Africa and Zimbabwe also have cannabis development
These countries and others will bring spending
outside North America to $5.8 billion by 2024, up from $517 million
last year, BDS and Arcview said.
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Leads The Way
The U.S. remains to be the leader in terms of
cannabis market size.
The U.S. cannabinoid market is expected to soar,
helped by a number of developments, such as the legalization
of hemp via the 2018 Farm Bill.
The "State of Legal Cannabis Markets" report
estimates that the total cannabinoid market in the U.S. â
which includes hemp-derived CBD â will reach $44.8 billion by
The largest share of this market will be
allocated to dispensaries that should be present in all states and
U.S. territories by that time, BDS and Arcview said. It is followed
in size by sales of CBD in both retail brick-and-mortar and online
Pharmaceuticals will get the smallest share, even
though companies are spending heavily on developing new
cannabinoid-based drugs following the approval of CBD-based
Epidiolex from GW Pharmaceuticals plc (NASDAQ:
The growth in the U.S. markets will be boosted by
more states legalizing cannabis, despite the federal illegality of
the plant, the report said.
The Strengthening the Tenth Amendment Through
Entrusting States (STATES) Act would allow companies to operate
more freely in legal states, while the SAFE Banking Act would allow
banks to accept money from state-legal businesses.
More Money, More Volatility
The legalization of cannabis in more U.S. states,
as well as full legalization in Canada last year, paved the way for
more companies to be able to raise more money from investors.
Cannabis companies raised $14 billion last year,
which was more than twice the aggregate amount raised between 2014
and 2017, according to Viridian Capital Advisors.
At the same time, more companies
went public, which attracted more investors, but also
increased the volatility.
A number of Canadian cannabis LPs, such
as Cronos Group Inc (NASDAQ: CRON) and Tilray
Inc (NASDAQ: TLRY), listed their shares
on NASDAQ in 2018.
Companies in the U.S. went north and sought a
listing on Canadian markets, led by Medmen Enterprises
Inc (OTC: MMNFF), which listed its
stock on the Canadian Securities Exchange in May.
Overall, there are around 30 U.S. cannabis
companies traded on Canadian exchanges, accoding to New Cannabis
Cannabis stocks also experienced a lot of
volatility last year. NCV's Global Cannabis Stock Index lost 54.9%
last year, even though it hit a multiyear peak in early 2018
following the legalization of adult-use weed in
Volatility aside, investors should keep in mind
that cannabis companies are no longer penny stocks, but are traded
on major exchanges and are subject to stricter regulations and more
At the same time, these companies are investing
their funds into more assets; expanding their cultivation,
processing, R&D and retail operations; and diversifying
into new segments.
Over the next few years, BDS Analytics and
Arcview suggest there will be an increased pace of innovation in
all segments of the cannabinoid market.
The U.S. and other countries are exploring ways
to facilitate interstate and international commerce and export and
public consumption of cannabis. While CBD is gaining popularity in
the U.S., other countries are keeping an eye on the Food and Drug
Administration and how it plans to regulate CBD products.
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