Cannabis has been heatedly discussed, amongst scientists, investors, and governments, all over the world. The global legal marijuana market has attracted multitudes of investment and has expanded significantly in recent years. In 2020, its size was valued at USD 9.1 billion and with consumers and companies jumping in the bandwagon, it is projected to grow rapidly in the future.
Covid has made 2020 a challenging year for the cannabis market. Lockdowns across most countries, difficulties in exportation, and disruptions in supply chains have led to a 32.1% decline in its revenue growth. However, that didn’t seem to concern investors, as the capital raised to invest in legal Cannabis tripled to $ 6 billion in May 2021.
The Market
To better understand this market, we must look at its various components. Recreational cannabis or adult-use cannabis was the dominating segment in 2020, with a revenue share of 54.6%. Recreational cannabis is often used as an alternative to alcohol in social situations or festivities, and its purpose is usually pure enjoyment. Conversely, medical marijuana is used to address health issues such as to treat chronic illnesses, neurological disorders, and alleviate pain. One of their main differences is that the latter can only be prescribed by doctors, while the former is easier, faster, and relatively cheaper to get. Although both might contain high levels of THC (tetrahydrocannabinol), medical cannabis is typically higher in CBD (cannabidiol), which does not elicit psychoactive effects. Industrial hemp, the last of this market’s segments, does not contain psychotropic substances. It is vastly used to produce sustainable commercial products such as paper, textiles, clothing, biodegradable plastics, and even food.
Today, 35 states in the US and a plethora of countries around the globe have legalised medical marijuana, whilst several having legally recognised its recreational use. North America is leading the market, as it acquired a revenue share of 79.6% in 2020. As more and more people are getting aware of cannabis’ medicinal benefits and governments are eager to legalise it, its availability and consecutively the legal marijuana market will grow exponentially. It is projected to reach $ 97.35 billion by 2026, exhibiting a CAGR of 32.92% during the forecast period.
The Products
What is really driving this massive growth? According to Fortune Business Insights, it is cannabis-based consumables. Modern consumers have moved beyond just smoking cannabis flowers and thus a new market has been born, one that includes edibles, topicals, oils, and concentrates, infused with CBD or/and THC. These are especially promising as they lift the health burdens that smoking could cause. Infused products such as chocolate, candy, cookies, and beverages account for most adult-cannabis use following the traditional flower. Beverages especially are a category believed to sharply rise due to people preferring not to smoke and wanting to feel the effects much quicker than when consuming edibles. Next month, the Cannabis Drinks Expo will provide insights into where the US market stands and its future, featuring up and coming brands such as California Dreamin, Deep Desert, and many more.
People who consume cannabis for its health benefits, generally, have a tendency towards CBD products. CDB oils, gummies, and capsules are widely available and are known to be highly effective against pain, stress, anxiety, and insomnia. In the UK, the demand for CBD products skyrocketed during lockdown and it is estimated to generate £690 million in 2021.
CannaTech
It isn’t just the products that are driving growth to the legal marijuana market. Cannabis tech startups and entrepreneurs are fuelling the industry with innovative solutions and practices, with the help of AI and data science. From Hemp farm management platforms such as Leaflink, and software for retailers (Flowhub), to delivery companies (Eaze) and even marketing agencies (Petalfast) dedicated to showcasing companies and products within the industry; companies are working to provide a safer, more controlled, and more convenient environment for consumers and producers. These are only a few examples of the various businesses that are working to transform the market of legal cannabis, with many more cropping up in the horizon.
A new wave of opportunity is here, the foundations to foster economic growth and massive adaption have been laid. It is now only a matter of sustaining the ethics of market conduct and the continuing collaboration of governments, scientists, and entrepreneurs for this novel initiative to advance, flourish and potentially enhance the lives of more and more people.
By Annita Xenou