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HIGHLIGHTS
  1. World legal cannabis market forecast at US$40-billion by 2024
  2. Bulk of global legal pot sales to remain in North America
  3. Medical marijuana sales in Canada forecast to drop

(Eds note: All figures are US$).

The global legal cannabis market will nearly quadruple above $40-billion by 2024, with North America to account for the bulk of sales as medical pot is expected to become legalized in all U.S. states, according to an annual report by Arcview Market Research and BDS Analytics released Thursday.

Source: BDS Analytics

Global pot sales in regulated markets rose by 20 per cent in 2018 and are forecast to jump another 36 per cent this year to $14.9-billion before surging at a 33-per-cent compound annual growth rate by 2024, the seventh annual State of Legal Cannabis Markets report showed.

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Worldwide legal cannabis sales were pegged at $10.9-billion in 2018 versus $9.1-billion in 2017. BDS forecasts it will reach $40.6-billion in 2024, with the bulk of sales by far in North America. Of this, $26.7-billion is forecast as adult-use legal spending and $13.9-billion for medical in 2024, versus $6.8-billion medical and $8.1-billion adult-use in 2019. In 2018, sales in North America made up roughly 95 per cent of the global legal spending on cannabis.

In Canada, where recreational cannabis was legalized in October 2018, adult-use spending is forecast to grow exponentially to $4.8-billion by 2024, from $113-million in the industry’s first 2-1/2 months of sales late last year. This is expected to materialize after five of the country’s biggest licensed producers closed first-quarter 2019 at a combined market capitalization of $48-billion, even after the New Cannabis Ventures Global Cannabis Stock Index dropped 55 per cent in 2018, the report showed.

Source: BDS Analytics

Canada’s medical cannabis sales, however, are projected to drop to around $381-million by 2024 from $457-million in 2018 as the convenience of retail purchases were expected to attract consumers to stores.

“Canada has already built the world’s most valuable cannabis companies, and unlike their U.S. peers, they are free to export cannabis and operate like any other company,” the report stated.

“For them, even $4.5-billion in domestic consumer spending growth during these years could pale in importance against their opportunity to dominate the coming global market.”

Within the country, provinces such as Alberta with “the most liberal approaches” are expected to prosper in the cannabis industry.

“Among other comparatively liberal policies, the province’s decision to allow private retail is expected to make its cannabis market one of the fastest growing in Canada – ranked alongside much larger provinces including British Columbia, Ontario and Quebec,” the report said.

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In 2018, data from Viridian Capital Advisors show investment capital raised by cannabis companies more than quadrupled to $14-billion. Another $3.8-million was raised in the first quarter of 2019. If this level of quarterly investment is maintained throughout 2019, it could outpace last year.

“Many more giants from the agriculture, consumer products and retail sectors will step in to buy cannabis companies, delivering substantial payouts to those daring enough to have started building them during the madhouse last days of federal prohibition,” the report said.

In the United States, the Total Cannabinoid Market (TCM) that includes hemp-derived CBD and the Epidiolex medication in state-regulated dispensaries, pharmacies and retail outlets was forecast to reach $44.8-billion by 2024, with the bulk to be bought in regulated dispensaries that are expected to open in all 50 states by that year with second biggest percentage to be spent on CBD products from online and physical retail stores.

In 2018, the federal U.S. government legalized industrial hemp and the crop’s CBD. BDS Analytics’ GreenEdge retail sales tracking showed sales of products that were low in THC and high in CBD grew to 11.2 per cent of sales in U.S. dispensaries in the first quarter of this year versus 2.5 per cent in 2014.

“These decisions being made at the federal level put pharmacies and general retailers in the business of selling CBD-based products in all 50 states, which substantially boosted the TCM,” said Troy Dayton, chief executive of Arcview Group.

“In the U.S. alone, sales of CBD products in all channels will hit $20-billion by 2024.”

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Legal cannabis spending in the United States rose to $9.8-billion in 2018, up 15 per cent from $8.5-billion in 2017, excluding pharmaceutical and retail CBD sales. This compares with the 35 per cent compound annual growth rate the regulated dispensary market experienced from 2013 to 2017 when adult-use was legalized in Colorado, Washington, Oregon, Alaska and Nevada.

The main reason for the slowdown in growth was the troubled launch of adult-use sales in California last year, when that market shrunk to $2.5-billion in 2018 from $3-billion in 2017, as the state struggled to compete with its well-established 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 Tom Adams, Managing Director and Principal Analyst for BDS Analytics’ Industry Intelligence group and editor-in-chief for Arcview Market Research.

“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.”

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