Marijuana Market Overview
Spending on legal cannabis worldwide is expected to hit $57 billion by 2027. The recreational market will cover 67% of the spending; medical marijuana will take up the remaining 33%.
Tom Adams, editor-in-chief of Arcview Market Research and managing director for BDS Analytics, writes in the introduction: “… the expansion of medical cannabis markets can be expected to lead to broader public acceptance, “setting the stage for the eventual move to adult-use legalization” and that this model “will drive the world market, excluding the United States and Canada, to grow at 35% annually to $10.5 billion by 2027, as a key part of the $57 billion overall market.”
The largest group of cannabis buyers will be in North America, going from $9.2 billion in 2017 to $47.3 billion a decade later. The largest growth spread, however, is predicted within the rest-of-world markets, from $52 million spent in 2017 to a projected $2.5 billion in 2027.
According to the report: “The Road Map to a $57 Billion Worldwide Market”:
- The initial decision by many U.S. states and Canada to create medical-only cannabis regulations prompted many other countries to act similarly while California’s and Canada’s willingness to legalize adult recreational use triggered a second wave of laws internationally to increase access to medical cannabis.
- South America has some of the most liberal medical cannabis programs. Led by Brazil, Argentina, Peru and Uruguay, the South American medical cannabis market may grow from $125 million in 2018 to $776 million in 2027.
- Germany is poised to be the leader of the European cannabis market, and Italy is expected to be second with $1.2 billion in sales by 2027. Overall, however, the European cannabis market is not expected to grow as stridently as its potential suggests.
- Australia’s legal cannabis market is forecast to grow from $52 million in 2018 to $1.2 billion in 2027, the 5th largest in the world.
- Israel has a small population and a long history of legal medical marijuana use. It continues as a leader with years in the development of cannabis pharmaceuticals.
Although the federal government still considers the use of cannabis a criminal offence, more than half the states of America have legalized it in some form. Most states sell it only for medical purposes, often broadly defined. But eight states – Alaska, California, Colorado, Maine, Nevada, Massachusetts, Oregon and Washington – have gone further, legalizing the recreational use. Legal weed is more high-priced than the black-market variety, but it is better value: three times more potent and only about 50% more expensive.
Legal cannabis sales reached $9.2 billion in North America in 2017, according to a new report from cannabis industry analysts Arcview Market Research, in partnership with BDS Analytics. That represents an unprecedented 33% increase over 2016.
The report further predicts the entire legal cannabis market to reach $24.5 billion in sales – a 28% annual growth rate by 2021 – as more states legalize cannabis for recreational use and existing markets mature.
The U.S. Cannabis Market
60% of the U.S. population now lives in states that have legalized some form of cannabis use and sales, illustrating the rising acceptance of cannabis nationwide and highlighting the industry’s immense potential for future growth.
As at June 2018, there are 30 States that now allow cannabis for medical use, 16 States allow Cannabidiol (CBD), 9 States and the District of Columbia now allow for recreational cannabis use.
There are 9,397 active licenses for cannabis businesses in the U.S., according to Ed Keating, chief data officer for Cannabiz Media, which tracks cannabis licenses. This includes cultivators, manufacturers, retailers, distributors, deliverers and test labs.
The industry employed 121,000 people in 2017. If cannabis continues its growth trajectory, the number of workers in that field could reach 292,000 by 2021, according to BDS Analytics.
According to research firm Cowen & Co the U.S. legal cannabis industry is expected to reach $75 billion in sales by 2030.
Analysis of monthly nationwide wholesale rates for cannabis flower in state-legal markets in 2017 shows remarkable steadiness.
While the average wholesale price has been highest in April in 2017, the highest monthly rate observed in 2016 was $2,059, in May, with the weekly peak price for 2016 occurring late that month as well. So far, this year, the highest weekly U.S. Spot price was observed in the week ending March 31st, at $1,682 per pound, roughly two months ahead of when 2016’s peak rate was documented.
2017 closed with a more modest rise in the U.S. Spot than has been observed in prior years. Furthermore, anticipated disruption due to the imposition of regulation on the major markets of California and Michigan has not resulted in dramatic price fluctuations in those states to this point. Increasingly, it appears market participants believe that the transition to licensed, regulated systems in those states will be a gradual process, at least through the first half of 2018.
The U.S. Cannabis Spot Index averaged $1,562 per pound in 2017, a decline of 13% from the average of $1,789 per pound in 2016
- 2016 U.S. Spot Index average = $1,789
- 2017 U.S. Spot Index average = $1,562
The seasonal impact of the fall harvest remains undeniable, driving prices to their annual low in November the last two years
- 2016 low was $1,386 on November 11th
- 2017 low was $1,368 on November 17th
The volume of wholesale flower sold in the U.S. cannabis market grew 22% in 2017
- Estimated 3.0 million pounds in 2016
- Estimated 3.7 million pounds in 2017
The U.S. wholesale market for cannabis flower was $5.7 billion in 2017
77% the size of the U.S. wholesale wheat market of $7.4 billion