The Global Cannabis Market May Grow by 36% in 2019, Experts Say
One of the perennial indexes for the state of the legal cannabis market’s financial future just dropped and Cannabis Now has a full rundown of some of the biggest takeaways.
In 2018, the amount of cannabis sold in legal markets jumped a whopping 20% — and it is on track to jump another 36% this year, according to a new report released today.
The “State of Legal Cannabis Markets” report, from Arcview Market Research and BDS Analytics, comes out every year, making its release a notable event for investors the world over attempting to claw their way into one of the fastest growing industries.
This year, analysts said that they continue to see big growth across the cannabis industry, but there is still unrealized potential in the market. Given the report found a 20% jump in sales in total across legal cannabis markets in 2018, the analysts predicted that 2019 would a massive 36% jump in sales. If the prediction comes true, that would put the global market at a valuation of $14.9 billion in 2019, and on track to hit a valuation of $20 billion by 2024, the report says.
As the marketplace has developed, so have the insights provided by the report’s authors. This year, the report was expanded to cover the total sales of both medical and recreational markets as the “Total Cannabinoid Market.” They also included FDA-approved cannabinoid medicines and hemp-derived CBD in the overall number.
“In 2018, the FDA approved GW Pharmaceutical’s Epidiolex and passed the 2018 Farm Bill legalizing hemp in the United States,” said Troy Dayton, CEO of the Arcview Group, in a statement. “The decisions being made at the federal level put pharmacies and general retailers in the business of selling CBD-based products in all 50 states… In the U.S. alone, sales of CBD products in all channels will hit $20 billion by 2024.”
Cannabis Market Growth Is Actually Slowing, Report Shows
The craziest part about the current numbers? It’s actually a slowdown in growth percentages compared to years past. The authors note what would likely be records in other industries was the slowest year for cannabis growth since Colorado started legal sales in January of 2014.
In another lowlight, California earned the distinction of becoming the first state to see a sales drop. Over the course of regulating the market in 2018, sales dropped by $500 million down from $3 billion to $2.5 billion, according to the report.
“California’s rocky start on full legalization was unprecedented,” said Tom Adams, managing director and principal analyst for BDS Analytics’ Industry Intelligence group, in a statement. “Analyzing the regulatory and tax reasons behind the decline allowed us to compare it to hugely successful roll-outs like Colorado’s in 2014 and develop a proprietary ‘Growth Indicator Matrix’. Scoring existing markets by that matrix led to what we think is a new level of accuracy in forecasting the future of new fully legal markets such as Massachusetts, Michigan and Illinois.”
Adams went on to note overbearing regulators and high taxes were a major factors as the legal cannabis industry attempts to convert consumers over from the illicit market.
“A key takeaway from the report is that highly restrictive regulations and high tax rates are hurting the legal market’s ability to compete with the illicit market,” said Adams. “But legalization advocates endorsed our view that all fifty U.S. states can be expected to be medically legal by 2024, and that twenty will have adult-use sales.”
Investment in Cannabis Continues to Grow
But those challenges didn’t stop investors, the report showed. The total investment capital raised by cannabis companies hit $18 billion in 2018, which was four times higher than in 2017.
Also, the report showed positive growth in Canada, which has drawn major international investment. The market only took in $113 million in sales for the shortened 2018 (as their legal adult-use cannabis market opened in October 2018), but analysts have it hitting $4.8 billion by 2024. But the U.S. market will likely be crushing pretty hard by then too, with 13 states expected to have passed the $1 billion marker for annual sales by 2024.
The report is 349 pages long and stuffed to the brim with great details, so we’ll likely cite it again in the not too distant future in reporting on various markets.
TELL US, how big do you think the cannabis industry will get in the next five years?