Cannabis Cultivation Market

Market Overview

The global cannabis cultivation market size was valued at USD 184.04 billion in 2022. It is estimated to reach USD 603.23 billion by 2031, growing at a CAGR of 14.1% during the forecast period (2023–2031). The proliferation of technical innovations in the cultivation practices of cannabis suggests a promising outlook for the global cannabis cultivation market.

Cannabis is a blooming, dioecious, annual herb. Cannabis cultivation is the process of cultivating cannabis either in an industrial setting or in a home garden. The cannabis plant, indigenous to South Asia, is used for medical and recreational uses. The preparation, production, and harvesting of the cannabis needed for various uses are all included in the process of cannabis cultivation.

Various cannabis plant components, including roots, flowers, stems, sugar leaves, and seeds, have drawn much interest from the medical and recreational sectors. The cannabis plant's parts above contain proteins, vital fatty acids, long and short cellulose fibers, herbal qualities, and more. Cultivators are focusing on distillation and processing to boost output. Cannabis can be cultivated indoors using hydroponic (soilless) farming and can also be grown outdoors.

Market Dynamics

Global Cannabis Cultivation Market Drivers

Increasing Demand for Cannabis, Driving Cannabis Cultivation Across the Globe

The use of cannabis for medical purposes is increasing worldwide owing to recent legalizations in various countries. Medical cannabis is used to treat patients suffering from chronic conditions such as Alzheimer's disease, Parkinson's disease, arthritis, cancer, and neurological conditions such as epilepsy, depression, and anxiety. Therefore, wide applications of medical cannabis have increased its adoption for treating various chronic conditions.

In addition, as recreational cannabis is easily available in the market at an economical price, the demand for the same has increased exponentially. For instance, as per a Yahoo News and Marist College survey, in 2017, over 55 million adults in the U.S. were utilizing marijuana in any given month. Many of these consumers used marijuana for recreational use, and there were around 2 million medical marijuana users in the country. This signifies the growing preference and demand for recreational cannabis in the country, which is expected to propel cannabis cultivation to meet the growing demand.

Utilization of Genetic Engineering in Cannabis Cultivation

The technological advancements in cannabis cultivation techniques indicate a prosperous future for the global market. Through the application of genetic engineering techniques, it becomes feasible to alter many traits or qualities. Cannabis cultivators have begun using genetic engineering to increase yields; genetic engineering in cannabis cultivation permits the crossing of cannabis strains to accomplish a desired trait.

In a matter of weeks, cultivators can now produce the desired product due to technological advances. Cultivators can withstand the effects of climate change on cannabis crops, and genetic engineering is predicted to guarantee an increase in cannabis production, thereby driving cannabis cultivation market growth.

Global Cannabis Cultivation Market Restraints

Shortage of Supply of Medical Cannabis in Various Countries

The global demand for medical cannabis has witnessed a surge following its legalization in several nations. With this increase in demand, the supply of medical cannabis is expected to increase in the market, boosting its cultivation. However, the high demand for medical cannabis has caused a supply chain bottleneck in several countries. This is primarily because of a significant increase in cannabis demand and cultivation ban in the countries. For instance, there was a shortage across Pennsylvania 2 weeks into the sale of medical cannabis.

Moreover, lucrative markets such as Germany face a shortage of medical cannabis, which compels patients to pay higher prices. For instance, in 2019, according to the Bank of Montreal, patients in Germany were paying higher average prices than Canadian patients. This higher price may be due to the shortage in supply. Therefore, the supply of medical cannabis is inadequate concerning its high demand, which is expected to hinder market growth.

Global Cannabis Cultivation Market Opportunities

Growing Legalization of Cannabis in Various Countries

With medical marijuana being legalized in 30 U.S. states and ongoing political movements supporting the legalization of medical marijuana across several other states in the U.S., many other states are expected to legalize it. Other countries that have legalized medical marijuana are Israel, Canada, and some countries in Europe and South America. The legalization of medical marijuana by these countries, owing to its multiple therapeutic applications, is predicted to promote revenue growth.

Moreover, the demand for hemp is increasing rapidly, as many developed nations have legalized the cultivation and processing of hemp after detecting the levels of CBD present in it, increasing the demand for hemp extracts for various applications in various industries. Countries such as China, Canada, France, South Korea, Ecuador, Croatia, Chile, the Czech Republic, Romania, Mongolia, and Russia are some of the major producers of hemp across the world. Thus, the growing legalization of marijuana and hemp in various countries is creating opportunities for the cannabis cultivation market growth.

Regional Analysis

Based on region, the global cannabis cultivation market is bifurcated into North America, Europe, Asia-Pacific, Latin America, and the Middle East and Africa.

Asia-Pacific Dominates the Global Market

Asia-Pacific is the most significant global cannabis cultivation market shareholder and is predicted to exhibit a CAGR of 15.01% during the forecast period. Cannabis regulations in the Asia-Pacific vary significantly between countries. Cannabis plays a major role in Afghanistan's predominant culture. Despite using cannabis as hashish, its cultivation and use as cannabis or derivatives, such as CBD, is strictly prohibited. In many other countries of the region, cannabis and CBD remain illegal, primarily because the countries do not differentiate between hemp and marijuana. Moreover, the countries in this region are considered emerging markets for cannabis and derivatives. The region also has potential for growth due to favorable climatic conditions and increasing awareness about cannabis and its medical benefits. This is one of the major reasons for companies trying to enter the Asia-Pacific cannabis market.

Additionally, strategic initiatives companies undertake to prove that many are interested in entering the Asia-Pacific market to cater to its large population. Therefore, possible legalization of the production and cultivation of cannabis, increasing awareness about cannabis, and growing the patient pool eligible for medical marijuana treatments are expected to propel the market in the Asia-Pacific.

North America is estimated to exhibit a CAGR of 11.01% over the forecast period. North America has the highest number of cannabis companies globally, most concentrated in the U.S. and Canada. The growing number of hemp and cannabis firms can be ascribed to the ease with which product creation and wholesale hemp/cannabis sourcing can be accomplished. Favorable cultivation norms in the region help cater to the biomass demand in the region. Further, the market has expanded due to the legalization of cannabis and hemp products in the region. In 2015, a company based in the United States, Elixinol, had a revenue of USD 2 million, which increased to nearly USD 4 million in 2016. This indicates that the market is profitable. Moreover, many businesses' supply chain management is simplified due to partnerships with local farmers. They are responsible for providing cannabis of the highest quality following federal and state laws. As a result of the reduced demand-supply imbalance and the increasing number of cannabis cultivators and product development firms due to legalization, the market is anticipated to experience lucrative expansion over the forecast period.

The European cannabis cultivation market is exhibiting lucrative growth owing to increasing demand and availability of more cannabis products. Many companies seek to enter the growing cannabis market in the European region. For instance, in 2019, Canopy Growth, a Canada-based cannabis company, acquired Cafina, a producer, distributor, and exporter of cannabis in Spain. It is one of the three companies authorized for cannabis operations in Spain. This acquisition would help Canopy Growth create a strong foothold in Spain's cannabis market. An increase in such strategic mergers and acquisitions by leading European companies is expected to drive the market's growth significantly in the coming years. Therefore, due to an increase in consumption, rising awareness and positive attitude toward cannabis and its products, and strategic investments by major companies in Europe, the market is expected to grow at a substantial rate during the forecast period.

Latin America has imposed stringent regulations on cannabis and its derivatives, primarily due to the drug trafficking history in the region. However, various initiatives are being undertaken by many countries for the legalization of cannabis and its derivatives. Some countries in the region provide access to the cultivation of cannabis at home and for personal consumption, with certain restrictions. Uruguay, Mexico, Brazil, Colombia, and Chile have allowed home growing within certain limits for medical or recreational purposes. Similarly, due to legalization in some countries, many companies are keen on entering the Latin American cannabis market. For instance, Khiron Life Sciences, headquartered in Canada, is one of the early entrants in the Latin American cannabis market. Therefore, as many players are expanding the cultivation and production of cannabis into the region, the market will likely propel significantly in the coming years.

Segmental Analysis

The global cannabis cultivation market is segmented by biomass and application.

Based on biomass, the global market is bifurcated into hemp and marijuana. 

The hemp segment dominates the global market and is projected to exhibit a CAGR of 14.51% over the forecast period. Hemp, also known as industrial hemp, is a strain of Cannabis sativa, a member of the cannabis genus, with as little as 0.3% THC content. Hemp-derived CBD finds application in several sectors, including pharmaceuticals, cosmetics, nutraceuticals, and food and beverage. Hemp contains low THC and high CBD. It is predominantly used by individuals who wish to gain the medicinal advantages of cannabis without becoming intoxicated. Due to the low THC in the oil, governments in many countries have legalized its sales. Hence, the consumption of hemp is higher as compared to marijuana. For example, Japan has not legalized marijuana products, but CBD oil derived from cannabis has been legalized due to its low THC content.

Moreover, South Korea uses CBD oil in cosmetics due to its non-psychoactive properties. Marijuana is considered to be a narcotic drug, whereas hemp is nonnarcotic. Hence, governments in many countries support its usage. Owing to this property, people have started producing CBD nutraceuticals for human and animal consumption.

Marijuana, technically known as Cannabis sativa, is an herb that produces intoxicating effects when consumed. The compound Tetrahydrocannabinol (THC) present in the plant is responsible for its psychoactive effect. The plant also contains more than 500 chemicals. The flower produced from the plant is mainly used for medical or recreational (smoking) purposes. However, the flower is often processed to produce oils and tinctures. Due to its effect, many countries have banned its usage. However, due to the increasing patient population and its rich medical properties, governments of many countries decriminalize or approve its usage.

Marijuana is available in the form of flowers and oil. Dried cannabis flowers have been traditionally used for smoking and obtaining the medical benefits of cannabis. Traditionally, it has been used to alleviate chronic pain, limit the growth of cancer as well as stop the progression of Alzheimer's disease. Marijuana oil is used to treat cancer and nausea and can also improve the sleep cycle and alleviate stress, pain, and anxiety. It is mostly used by people who refrain from smoking buds due to their ill effects.

Based on application, the global market is segmented into adult consumption, medical consumption, and industrial consumption. 

The industrial consumption segment owns the highest cannabis cultivation market share and is estimated to exhibit a CAGR of 14.7% during the forecast period. The industrial consumption application mainly comprises consumption by companies that are using cannabis or have obtained CBD and other cannabinoids to manufacture their products. This includes pharmaceutical and wellness organizations as well as food and beverage companies. Pharmaceutical companies use CBD oil and tinctures from the cannabis plant to produce medicines. For instance, in 2018, GW Pharmaceuticals introduced EPIDIOLEX—a CBD-based oral solution for treating seizures. The company is using plant-derived CBD to produce its prescription pharmaceutical formulations. In addition, wellness companies use derived CBD to create their range of nutraceuticals, cosmetics, food and beverages, and other preparations. This increasing use of cannabis and its derivatives as raw materials by companies to manufacture their goods is anticipated to propel the market over the forecast period.

Medical consumption of marijuana refers to the use of marijuana for medical purposes. Currently, marijuana is used on a large scale for treating chronic pain and mental disorders, such as anxiety and sleep disorders. The application of cannabis for medical use is increasing as the demand for cannabis and products based on it increases, and the legalization of medical cannabis is also growing in various countries. However, medical cannabis distribution is strictly regulated in certain countries by government programs, and therefore, suppliers must maintain the required quantity of the product. In addition, the medical application of cannabis has experienced tremendous development over the years as the number of scientific studies demonstrating its efficacy in treating various diseases increases.

In countries where marijuana is restricted, people have turned toward hemp-derived products to meet their medical needs. Moreover, in recent years, several countries have legalized medical marijuana, but its prescription depends on the physician's choice and the patient's demand. As the number of nations legalizing medical marijuana surges, the market is expected to witness lucrative growth over the forecast period.

Recent Developments

• July 2023- Fawn River Cultivation Company and BioLumic announced an agreement today to redefine cannabis cultivation in Michigan using BioLumic's patented UV light technology, allowing new varieties to reach the consumer market by the end of 2023.
• November 2022- Akanda Corp., a medical cannabis cultivation company, announced that they are affirming a transition in strategy to become a significant participant as a premium EU GMP cultivator in Europe, aiming for a 10% market share in the German medical cannabis flower market soon. Cookies® and Akanda have a cultivation and dispensary licensing agreement in Portugal. These measures position Akanda to serve the prospective regulated adult-use markets in Europe once established.