Cannabis comes from a group of three plants with psychoactive properties, known as cannabis Indica, cannabis Sativa, and cannabis ruderalis. These plants are also classified as cannabinoid drugs and contain active chemicals such as delta-9 tetrahydrocannabinol) and CBD (Cannabinol). Cannabis is a depressant drug used to slow down CNS activity. Thus, it is used for relaxation, euphoria, and increasing appetite.
Attributing to its psychoactive properties, cannabis has taken root in various sectors, including healthcare, consumer goods, pharmaceutical, textile, and agriculture. However, if taken in large quantities, cannabis can cause hallucinogenic effects. It is often referred to with different names or slangs depending on the region; some of these include grass, pot, joint, stick, buckets, hash, herb, mull, buddha, ganja, skunk, hydro, yarndi, smoke weed, reefer, dope comes, and hooch.
Cannabis is one of the most commonly cultivated, trafficked, and illicit drugs and is primarily used for medicinal and recreational purposes. Some of the prominent pharmaceutical companies and medical drug manufacturers use cannabis to create medicines that are helpful in controlling/reducing severe or long-term pain, nausea, and vomiting due to chemotherapy, Parkinson’s disease, glaucoma, neuropathy, and others. These advantages have led to the legalization of cannabis in many countries, but only as synthetic prescription cannabinoid products. For recreational purposes, cannabis is still considered illegal in many countries. For instance, Montana, North Dakota, Arizona, and Pennsylvania are some of the states where cannabis is used for only medicinal purposes.
The short-term benefits such as joy, relaxation, and an increase in appetite after consuming marijuana drive the growth of marijuana consumption in several countries. Uruguay was the first country to legalize recreational cannabis in 2013, followed by Canada in 2018.
The market for cannabis is still burgeoning and likely to remain in the developmental stage, owing to stringent regulations related to legalization status in different countries, restrictions on cultivation, and the presence of a limited number of players. The growing demand across various end-use industries is also expected to exponentially drive the growth of the legalized cannabis market in the upcoming years.
The cannabis market comprises a large number of psychoactive components, which drives its demand across various end-use industries, such as healthcare, consumer goods, and textile. Some of the key components present in cannabis include CBG(Cannabigerol), THC (9-tetrahydrocannabinol), CBD (Cannabidiolic), and CBC (Cannabichromenenic).
THC is the chief psychoactive component responsible for creating the ‘high’ associated with the recreational use of cannabis. CBD is the second major component. Although both the components are obtained from the same plant, their demand in the market is different due to their varying medical benefits. For instance, CBD doesn’t cause the euphoric effects that occur with THC, which drives the demand for CBD in the medical sector. In June 2018, the Food and Drug Administration (FDA) approved the use of Epidiolex, a purified form of CBD oil for the treatment of epilepsy. Such applications of cannabis in the medical sector are expected to propel the growth of the legalized cannabis market during the forecast period.
Industrial hemp, a plant species cannabis Sativa, finds use in various consumer and industrial applications across the globe, such as human food, pet food, and animal bedding, body oil and lotions, and oil-based products. It is a high fiber and low active THC species of cannabis with THC levels usually less than 0.3%. Growing industrial hemp is easy; it can be grown in a wide range of conditions and has much lower amounts of THC.
The use of industrial hemp in the consumer and industrial sector is expected to bolster the growth of the legalized cannabis market during the assessment period. Furthermore, recent developments in the market, such as the legalization of the production and retail sale in the Americas and consumption of small amounts of cannabis (up to 5 g) for personal use in the Netherlands, are expected to further augment market value.
North America held the largest share of the legalized cannabis market in 2019 and is expected to dominate the market throughout the forecast period. The consumption of cannabis in various states for medicinal and recreational purposes drives the growth of the regional market. Currently, marijuana is legal for medical purposes in 23 states across the U.S., and in 11 states, it can be used for both medicinal as well as recreational purposes.
The legalization of cannabis in different states across the U.S. and different countries across North America is anticipated to create a lucrative growth opportunity for the global cannabis market. The U.S. federal government’s initiatives to legalize the production and cultivation of hemp is another factor expected to augment the growth of the regional legalized cannabis market.
Uruguay, Colombia, and Argentina drive the growth of Latin America’s legalized cannabis market. Uruguay legalized cannabis for both recreational as well as medicinal purposes in 2013, and the country dominates the regional market. In Argentina and Chile, cannabis is legalized only for medicinal applications.
Europe’s cannabis market is driven by medical uses, such as in relieving insomnia, stress, anxiety, and spasticity. Some of the European countries where cannabis is used for medicinal purposes include Croatia, the Netherlands, Germany, Greece, Italy, Peru, Poland, Luxembourg, and Portugal.
In Asia-Pacific, Australia and New Zealand have legalized cannabis for medicinal purposes. These countries plan to fully legalize cannabis to fight the black market. Thailand became the first country in South East Asia to legalized cannabis in 2019. The country removed low-level cannabis and hemp extracts from its list of banned narcotic substances, allowing each household to grow six marijuana plants. Such government initiatives are expected to boost the growth of the legalized cannabis market during the forecast period.
Cannabis is consumed by individuals in three different forms. The first form is buds — dried leaves and flowers of the cannabis plant, which are smoked through a pipe/bong or hand-rolled into a joint or consumed as edibles such as brownies, cookies, and gummies. The other two forms, oils, and tincture, are consumed sublingually.
The bud form, largely referred to as Marijuana, is driving the black market for cannabis around the globe, which is likely to dominate the cannabis market during the assessment period. Stern regulations restricting the use of cannabis for recreational purposes, the high tax rates in various countries, and surging demand among teenagers bolster the growth of the black market. Attributing to these factors, customers find it difficult and expensive to purchase cannabis in the legal market, compelling them to shift them towards the illicit route. The California Cannabis Industry Association’s Communications and Outreach Director, Josh Drayton, estimates that the prices of cannabis will reach USD 50 for an eight-ounce bud from USD 5–10. This change in the taxation rate is further expected to shift consumer preference toward the black market, hampering the growth of the legal cannabis market.