Prohibition Partners estimates that, in 2022, the global sales of CBD, medical and adult-use cannabis amounted to US$45 billion and could be worth more than US$101 billion by 2026.
The recently released Global Cannabis Report: 3rd Edition explores the multi billion dollar industry. The report breaks down the acceleration of cannabis liberalisation, the tough financial climate for cannabis operators and the ongoing impacts from the COVID pandemic and Russia-Ukraine war, plus much more.
Legalisation
Legalisation of adult-use cannabis is accelerating across the world. Only Canada and Uruguay allow for fully legal sales but they will soon be joined by others.
Several countries are in the process of implementing legalisation including Mexico, the Netherlands and Switzerland, with governments in several other countries stating a clear intention to legalise and who have just begun their preparations including Germany, the Czech Republic, Costa Rica and Colombia.
Costa Rica and Panama introduced their medical cannabis regulations during the year. In Europe, Spain legalised the use of magistral cannabis while the Ukrainian government stated their intention to legalise. The Malaysian government has similarly stated their intention to legalise in the same vein as occurred in Thailand.
Supply Chain
The supply chain continues to diversify away from the strongholds of Canada and the Netherlands. The main importing markets in the world are currently Israel, Germany and Australia, despite increasing domestic cultivation in each.
Wholesale prices for cannabis products continue to be highly volatile, and regionally dependent. Prices of exports from Canada to Europe fell 20% from $2,827 to $2,355 presumably due to an increase in global supply from 2019 to 2022.
Retail prices in the US are also declining drastically due to increasing supply. In Michigan for example, retail prices have declined to a fifth of their 2020 levels as of Q3 2022.
Social Issues
Programs for restorative justice are progressing in most regions where cannabis is being liberalised. Expungement programmes for crimes of possession of cannabis are being implemented at the Federal level in the US but also globally, in Thailand and Germany, for example.
The issue of protectionism vs free global trade of cannabis is becoming more important, as governments balance control of supply, capitalising on the fiscal opportunity in their own country while respecting International sentiment in favour of free trade.
Cannabis continues to take a heavy toll on the environment, requiring large quantities of energy and water. Many industry groups are now developing programmes to guide the industry towards a more sustainable future.
Finance
Overall 2022 wasn’t a great year for cannabis finance, with over a 50% reduction in the Alternative Harvest cannabis ETF.
Up to October 2022, capital raises are down over 65% from 2021 levels and M&A volumes are down 80%.
Some of these declines have to do with right-sizing and a financial environment squeezed both by the COVID pandemic and Russia-Ukraine war. Still, many cannabis companies continue to be severely undervalued in Prohibition Partners’ opinion.
The Global Cannabis Report: 3rd Edition provides an overview of the development of cannabis markets at the international level, and considers how they might develop in the near future.. In addition, Prohibition Partners have additional market sizing, real-world data and an exclusive, free-to-download, 20-page report on the African cannabis market.
