The cannabis market has shown investors its long-term potential in recent years.
Despite legal setbacks on the federal level, the young cannabis industry has made impressive progress in terms of cultivation, distribution, packaging and product innovation. This positive trajectory is expected to continue, especially as legalisation sweeps throughout the US, Europe, and Latin America.
Legalisation helps cannabis industry
Jefferies Group, an investment bank, predicts that these regions will legalise cannabis for both medical and recreational use in the shortcoming years. Additionally, cannabis products can be grouped with many other industries and Jefferies projects that the pharmaceutical, alcohol, health and wellness, and pet supply industries will have a growing portfolio of cannabis products in the near future.
Last year, Canada made headlines after it became the second country ever to legalise cannabis and the first G-7 nation to do so. Additionally, the remaining G-7 nations, with the exception of Japan, have all adopted partial or full medical cannabis programs, while several have decriminalised the recreational use of cannabis.
Meanwhile, the US rakes in billions of dollars in cannabis sales annually, largely thanks to states such as California, Colorado, Nevada, and Washington.
Growth of less regulated markets
Jefferies also estimates that less regulated markets can account for nearly $80bn USD (~€0.91bn) of the total global cannabis market value.
Specifically, Jefferies projects the US cannabis market to reach a value of $21.7bn by 2029, compared to Canada’s estimate of just $5.8bn. This estimated value is also added onto Jefferies’ base valuation for the global cannabis industry of $50bn by 2029, a figure that accounts for all the countries that have already legalised cannabis for either medical or recreational use.
As a result, Jefferies forecasts that the total global legal cannabis industry is positioned to reach $130bn by 2029.
Other growing sectors
The medical cannabis segment holds the majority of the overall cannabis market share because of its widespread availability and accessibility.
However, the recreational sector is growing at a much more rapid rate due to the expanding user base in the North American region. Additionally, due to the legalisation efforts and changing consumer trends, cannabis-based companies have introduced new products that are much more potent, and cleaner.
Cannabis flower is starting to become less popular among avid consumers, however, the cannabinoids found within the flower are still required to create other products such as oils, concentrates, and edibles.
