Worldwide economic Progress of Cannabis

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David Attwood | Prohibition Partners

THE GLOBAL CANNABIS INDUSTRY HAS EXPERIENCED PHENOMENAL GROWTH OVER THE PAST FEW YEARS AS MARKETS HAVE EMERGED IN PREVIOUSLY CONSERVATIVE REGIMES AND ESTABLISHED INDUSTRIES HAVE DEVELOPED, ALLOWING BUSINESSES TO THRIVE AND THOUSANDS OF NEW JOBS TO BE CREATED AT AN EXPONENTIAL RATE.

Over the past two decades, 37 nations have legalised the use of cannabis on a medical basis, with the majority of reform taking place in the last five years. The shift has facilitated a dramatic year on year increase in the consumption and cultivation of legal cannabis globally, helping to establish a prosperous new industry and allowing a record number of patients access medical cannabis products.

While financial markets have predominantly focused on developments in the US and Canada, Europe has the second largest consumption figures globally and the continent is expected to become the dominant force in years to come, overtaking North America in the process. A range of European nations are reforming legislation to allow medical cannabis to be much more widely available and allowing industrial level cultivation to take place in key production hubs such as Portugal, Greece, Germany and Denmark. Latin America, Australia and Africa are eyeing up a slice of the cultivation market, but currently, North America stands head and shoulders above other markets, as the industry in the US and Canada is projected to be worth US$47.3 billion in five years time, according to data analysed for The North American Cannabis Report.

As consultants for the global cannabis industry - assisting cultivators, distributors, brands and investors - we have the luxury of a birds-eye view across multiple sectors, which is beginning to unearth a number of key market trends.

Medical Consumption

With the ability to treat a wide range of conditions, the number of people being prescribed medical cannabis in Canada alone is increasing significantly. According to data from the government over 364,000 Canadian patients have been treated with cannabis in 2019, representing a 86% increase since June 2017.

Across the Atlantic, Europe has seen a wave of legalisation but, for the most part, policies have been inadequate to deal with the emerging demand for medical cannabis products. Access is growing slowly, but steadily, much to the chagrin of patients, advocates and businesses.

Germany has emerged as the market leader in terms of consumption, with an estimated 40,000 patients currently accessing medical cannabis products after it was legalised in March 2017. A liberal regulatory regime, accessible cannabis programme and a willingness to cover cannabis costs under public health insurance schemes (67% of applications were reimbursed in 2018 according to public insurer Techniker Krankenkasse) have contributed to the rise in Germany’s status as the regional leader.

Formerly conservative regulators such as France, the UK and Ireland have begun to open up very limited access, often off the back of public media campaigns. While each state is still determining its own approach to medical cannabis, the shift in public attitudes is beginning to be represented at the political level.

Cannabis cultivation

As international demand for medical cannabis has increased so has an appreciation and expectation for quality, standardised and compliant product. With an open regulatory regime and a pro-business climate for cannabis companies, Canada has emerged as the international leader for supply, leading the way in terms of cannabis exports, companies and domestic sales. However, if the regulatory regime was to change, the US could, in theory, overtake the Canadian market as multi-state operators look to grow outside of their domestic limitations.

Investment in the European infrastructure is expected to dramatically change the cultivation sector in Europe with Denmark and Portugal leading the way with large-scale production facilities expected to come onstream between 2020 and 2021. Greece has seen a large number of permitted projects, with 26 applications being granted for the production of medical cannabis, and Macedonia, despite its relatively strict access programmes, has invested in cultivation facilities. With change abound in Europe, the Netherlands, Italy and Germany are looking to cement their place as regional leaders, opening up their domestic markets and seeking international opportunities for exports.

A number of Asian, Latin American and African countries are in the process of establishing their own cultivation operations as regulations are relaxed, with the latter two tipped as future cultivation hubs in an effort to curb falling demand for cash crops and agricultural incomes.

Research and the next stage of development

Cannabis has been much maligned for the best part of the previous century, meaning that clinical research and longitudinal data on the therapeutic effects of cannabis, has been limited. However, recent research is beginning to shed new light into both the medical and societal benefits of medical cannabis. As we begin to drill down into the scientific properties and chemical composition of medical cannabis and the economic benefits of a legal cannabis market, regulators are unable to turn a blind eye to one of the greatest healthcare developments of the last decade.

As cannabis gains more legitimacy as a serious medical product, the shift in public attitudes will be represented internationally at the political level. Regulators and industry leaders are on a learning curve, in a relatively new industry, but change is abounding. While the growth rate is impressive, as educators and advisors, it’s up to use to ensure we are building a sustainable industry which benefits patients and businesses internationally.