Market developments

The global legal cannabis market is rapidly developing and increasing in size as a result of the legalization of cannabis. The proliferation in legalization is mainly driven by the increased amount of academic proof that recognizes the usefulness and versatility of the cannabis plant.

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Market growth is driven by the global trend of legalizing (medical) cannabis

As a result of the ever-increasing list of documented benefits of cannabis, global cannabis legalization is gaining momentum. Many countries are in the process of legalizing, or have already legalized, the use of (medical) cannabis.

The challenges faced with emerging markets

On the back of legalization and increased social acceptance, we predict the global legal cannabis market will develop and grow extensively in the coming years. Although market forecasts from research companies differ quite strikingly from each other, enormous market growth is expected until 2024. According to Statista, for example, the CAGR of global legal cannabis spending between 2018 and 2024 is expected to reach 21.4%, resulting in a market size of more than US$60 billion in four years.


However, such a sizeable growth process generally doesn’t come without its difficulties. Most revolutionary pattern when becoming mature and sustainable (or not), as depicted below. With the cannabis market being a disruptive and fast-growing market, it’s very likely that this pattern will apply to the cannabis sector. Another challenge in developing markets is triggered by the lag between the decision to expand production capacity and new production capacity actually creating output. In the cannabis market, this lag can last up to three years. This means that companies active in different parts of the value chain can be in distinct phases of the market development curve. This lag leads to a temporary imbalance between supply and demand, resulting in price fluctuations.

Global legal cannabis spending forecast (in US$bn)

The current global legal cannabis market can be divided into three main segments: medical cannabis, recreational cannabis
and industrial hemp

Medical cannabis (50%)

Medical cannabis refers to cannabis products containing either Tetrahydrocannabinol (THC) or cannabidiol (CBD), which have been prescribed by a medical practitioner

Recreational cannabis (36%)

Recreational cannabis refers to

any THC cannabis used for nonmedical

purposes

Industrial hemp (14%)

Industrial hemp refers to the cannabis that mainly contains

CBD and which is used for

a variety of consumer products.

Market shares

As the medical cannabis and industrial hemp segments are expected to grow significantly more than the recreational segment, the market shares of the three main segments are expected to change noticeably in the coming years.

New markets

Most new target markets are either related to the medical cannabis segment or to the industrial hemp segment. The range and size of new potential cannabis target markets, as shown below, justifies the significant market growth expectations.


Multinationals with cannabis ambitions

The significant market potential of medical cannabis and industrial hemp has not gone unnoticed by many large companies. Numerous multinationals have already launched cannabis-based products or publicly announced that they are aiming to launch products in due time. This may be

beneficial for conquering a strong position in the highly promising cannabis market.

Some companies are doing this in cooperation with leading pure play cannabis players. For example, AB Inbev, the world’s largest brewery, has started a partnership with Tilray, a Canadian cannabis producer, on the development of CBD-infused ‘alcoholic’ drinks.

Players' landscape

Selection of market players in various regions and parts of the value chain

M&A activity and valuations

M&A and valuation highlights

of recent times