In short, cannabis refers to a group of harvested and dried plants called sativa, indica, and ruderalis that eventually turn into what’s more commonly referred to as weed. Once highly illegal in the United States and across major industrialized countries, cannabis is now gaining significant traction due to its gradual legalization around the world. According to Fortune Business Insights, the global cannabis industry was valued at $10.6 billion in 2018 and has a CAGR of 32.9% between 2019 through 2026.
Cannabis has been used frequently in the medical industry for quite some time. Due to its therapeutic applications, marijuana has been legalized for medicinal purposes in 33 states in America. The recreational use, however, is legalized in only 11 states.
Federal vs. State
Keep in mind, while weed is legal in some states, it’s still regarded illegal under federal law. People seem to get confused by this concept, so let’s make this clear.
The U.S. legal system has two levels — federal and state. Federal laws apply to the entire nation (50 states) as a whole and state laws apply only to that particular state. If a federal and state law conflict, the federal law will always prevail. Meaning, marijuana is still considered by the government as “dangerous” under the Controlled Substances Act. However, the Obama Administration took a different approach and allowed most states to do as they wished, so long as they meet certain criteria.
- Medical marijuana accounts for the majority of the cannabis market.
- After the legalization of cannabis in Canada, North America has become a dominant player in the industry.
- Among the states that have legalized recreational marijuana, California, Washington, and Colorado place at the top.
- According to the United Nations Office on Drugs and Crime (UNODC), cannabis is considered the most cultivated, trafficked, and consumed drug worldwide.
- Candies, chocolates, and beverages are all popular edible choices in the cannabis market.
- Cannabis is considered less harmful than other substances like tobacco and alcohol.
- New Frontier Data estimated that the marijuana industry will grow at least 330,000 jobs by 2022.
- In 2018, the median salary in the marijuana industry was recorded at $58,000.
- According to Marijuana Business Factbook, legal marijuana sales in 2017 was bigger than the combined sales of organic produce and Oreos.
Top Industries Impacted by Cannabis
Cannabis products are disrupting several traditional industries. At the forefront is healthcare. In 2016, more than 64,000 people in the U.S. died from opioid overdose. However, states with medical marijuana programs have reported a 25% lower death rate as opposed to states without access to cannabis. In other cases, medical marijuana has been known to treat patients with cancer and other chronic conditions with limited access to treatments.
Another industry is wellness & beauty. Cosmetic giant Sephora has recently announced it will add a chunk of CBD products to help customers with sore muscles, joint pain, and skin conditions. CBD, also known as cannabidiol, is oil extracted from the cannabis plant and exhibits benefits such as relieving pain, reducing depression, soothing acne scars, and alleviating cancer-related symptoms.
Since the legalization of cannabis in many states, the packing industry has soared in sales. According to Reports and Data, cannabis packaging market will reach a valuation of $5 billion by 2026. Since cannabis products are highly regulated, packaging firms have found innovative solutions to meet both the consumers’ growing demands and the lawful requirements to market products in public.
Cannabis Investment Update
Given the nature of legal uncertainties in U.S., investing in marijuana stocks can become highly speculative. Due to weak fundamentals, cannabis stocks have plunged this year. For example, Cronos Group and Canopy Growth nearly dropped 60% from their highs this year.
But don’t worry, the future still looks bright for the cannabis industry. According to the Associated Press, investors poured more than $10 billion into the North American marijuana industry in 2018. In March 2019, Altria Group Inc. invested $1.8 billion in Cronos Group Inc. And in January 2019, the Colombian Medical Federation and Aphria entered into a partnership to develop an academic curriculum on the medicinal use of cannabis. Finally, in August 2018, Hexo Corp., a licensed producer of cannabis-based in Canada, entered a joint venture with Molson Coors Canada to produce CBD-infused beverages.
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