As Canada’s implementation of recreational cannabis laws inches closer, companies are moving swiftly to lock in licensing and regulatory agreements. Implementation in Canada is set for October 17th, which will be a huge milestone for the industry globally. Canada will become only the second country to legalize cannabis nationwide, alongside Uruguay. Despite the two countries legalizing cannabis, the United States still dominates the market, contributing over 90% of the revenue last year. According to Arcview Market Research in partnership with BDS Analytics, the market is projected to continue growing, as it already increased by 31% in 2017. Consumer spending is projected to increase at a CAGR of 22% by 2023. Although, medical cannabis sales still control the market, in U.S. states where it legalized entirely, recreational sales are beginning to overshadow medical sales.
As many countries and states within the U.S. turn to voting for legalization whether for medical or recreational purposes, it signifies a new market emerging. The market is already highly competitive, which has led companies to look into new sub-segments, leading companies to expand while also introducing new players. Global expansion and diversity of company portfolio’s have interested the investing community, showing how quickly the market is growing despite prohibitions. Tilray Inc. (NASDAQ: TLRY) is among one of the top cannabis companies expanding rapidly in both market segments. Recently, Tilray acquired Alef Biotechnology, which establishes its presence in Latin America. Last month, Tilray complete shipments of cannabis, both medical and recreational, to Germany and the United Kingdom.
Global expansion is still predominantly led by medical cannabis growth due to regulatory laws. Recreational-based companies are looking to enter mainly into the U.S. and Canada, while providing supply overseas. For the U.S., companies are beginning to target states that are in the process of voting. Specifically, states such as Michigan, Utah, New Jersey and Massachusetts are set to vote in the upcoming elections. According to Grand View Research, the U.S. legal cannabis market was worth approximately USD 7.06 Billion in 2016 and its projected to grow at a CAGR of 24.9% from 2017 to 2025.
Obtaining licensing permits to run dispensaries and cultivation sites is competitive. In Massachusetts, as of late September, there were 15 businesses with provisional retail licenses, according to the Cannabis Control Commission, increasing the total to 38. Most of the businesses revolve around retail, cultivation and product manufacturing. Meanwhile, Colorado, which was the first state to legalize cannabis, had a total of 364 dispensaries alone operating earlier this year.
The statistics compared to Massachusetts and Colorado show that Massachusetts is still at its infancy stage and that there’s much more room for the state to grow, especially Suffolk County, home to Boston, which has not yet issued a license to any recreational cannabis operators. There are already established businesses in Massachusetts who have received licensing early on such as AmeriCann, Inc. (OTCQB: ACAN), which has secured the purchase of property in Southeastern Massachusetts. The property, which will be known as the Massachusetts Medical Cannabis Center or “MMCC”, will include greenhouse cultivation, processing and infused product facilities. To expand the facility, AmeriCann plans operate a second building to produce branded cannabis beverages, vaporizer products, edible and non-edible products and concentrates. The facility is set to open in early Spring 2019.
States like Massachusetts that are beginning to legalize cannabis highlight the widespread effect cannabis is having. As states and even nations beginning to reduce regulations, new companies still have plenty of opportunities to enter into the industry.