Canada implemented the legalization of cannabis on October 17th, 2018, marking a huge milestone for the cannabis industry. Canada becomes the first and only G-7 country to legalize cannabis, now joining Uruguay. Although cannabis is still prohibited in most countries, regulations regarding cannabis began changing. Many countries are moving to decriminalize or look into medical usage. While the cannabis market is still in its infancy stage, Canada’s legalization opens up opportunities for the market to continue to grow globally.
The legal cannabis market is expected to record strong growth rates. According to Mordor Intelligence, the global market was valued at USD 7.7 Billion in 2016. By 2023, data projects that market value will reach USD 65 Billion, growing at a CAGR of 37% during the forecasted period from 2018 to 2023. Although Canada is a major nation taking a step forward in the industry, the U.S. is still expected to dominate in terms of market share. In 2016, the U.S. alone contributed to 90% of the global market.
Most cannabis-based companies are located in Canada, including major players like Tilray (NASDAQ: TLRY), Canopy Growth Corporation (NYSE: CGC) and Cronos Group (NASDAQ: CRON). Although they are located in Canada, these three have already formed agreements to supply cannabis products globally for both medical and recreational purposes. Tilray has already expanded out within the U.S. and overseas into Europe. Companies are looking to lock in licensing agreements in states that have fully legalized cannabis such as California, Colorado, Washington and Nevada. Other states where cannabis legalization is pending are New Jersey and Massachusetts.
Andrew Glashow, CLS Holdings USA, Inc. (OTCQB: CLSH) Director and Board member, recently had an interview regarding the future of the cannabis market. Glashow said in the interview that the market is beginning to flourish as many companies are going public and raising large amounts of funds. Glashow continued to say that the market is waiting to see how major players in the industry are going to execute their strategies.
“You have one great catalyst, and that is cannabis becoming legal in Canada. I think the next catalyst is potentially Congress in the U.S. being controlled by the Democrats as opposed to the Republicans, and I think you’ll get a real favorable outcome there. At least you’ll get some legislation that will be able to be pushed forward as opposed to today where you’ve got the Republicans who won’t even allow some of these [cannabis reform] measures to be brought to a vote.” said Glashow in the interview.
The industry has grown at a rapid pace that even companies like Constellation Brands (NYSE: STZ) and Molson Coors (NYSE: TAP) have already invested into it. Even companies like Coca-Cola (NYSE: KO) and Walmart (NYSE: WMT) are exploring opportunities within the market. Although, smoking cannabis is a primary driver of the industry, Glashow said that cannabis-infused or CBD-infused products are the fastest growing segment. He sees infused products as a whole other industry, “I think that the non-smoking portion of the cannabis marketplace is going to grow exponentially. And I think that’s why mainstream brands like alcohol, and Coca-Cola, and others are looking at the market because they’re in need of growth as well. The beverage market and the beer market isn’t necessarily growing all that much, but the cannabis market is in the very early stages.”