Global Cannabis Report Offers Key Market Trends, Analysis Across 7 Regions

By J.J. McCoy, Senior Managing Editor, New Frontier Data

“It is a capital mistake to theorize before one has data.” – Arthur Conan Doyle (“A Scandal in Bohemia”, 1891)

While Sherlock Holmes figured that out more than a century before California opened its legalized statewide cannabis market, it seems perhaps that someone missed it.

State budget documents released this month by Governor Gavin Newsom cut policymakers’ cannabis tax predictions by $223 million through 2020. Industry analysts said that tax revenue from California’s inchoate cannabis program is lower than expected because of limited access to legal supply in some parts of the state, while the tax impact on price-sensitive consumers and the state’s entrenched black market are more onerous than first expected. Law enforcement officials say that the Golden State’s unlicensed, illegal market is still thriving – and in some jurisdictions even expanding.

California’s growing pains underscore how as government, business, health, and legal experts collectively lay the foundations for newly legal cannabis markets worldwide, it is imperative to understand the size of respective market opportunities and the influences for their growth.

Enter New Frontier Data’s Global Cannabis Report: 2019 Industry Outlook: Using data from more than 200 countries, the report includes modeled consumption rates, market prices, and population trends to estimate the current global demand for cannabis. Based on the latest analysis, consumers globally spend an estimated $344 billion on cannabis each year. As much of the world has not yet legalized any form, much of the demand remains in illicit or unregulated markets. By way of comparison, the U.S., which is the world’s largest legal cannabis market, is forecast to generate $13 billion in legal retail sales in 2019.

“More than 50 countries around the world have legalized some form of cannabis, while six countries have legalized cannabis for adult use (some may refer to it as recreational use),” explains New Frontier Data’s founder and CEO, Giadha Aguirre de Carcer. “The legal cannabis industry has truly gone global; even in the face of extensive prohibition, cannabis consumption grows, and attitudes and challenging perceptions about the typical cannabis user continue to shift. This social and cultural evolution has created a global market with massive potential for stakeholders across dozens of sectors beyond traditional plant-touching verticals.”

All cannabis legalization is not created equal, however, and the different approaches to establishing programs have created widely variable markets across the world, among regions, and even inconsistencies within individual countries. Ultimately, social, cultural, and political differences worldwide have caused cannabis policies and cannabis usage rates to vary widely.

In the United States, though cannabis remains illegal at the federal level, individual states have chosen to legalize medical and recreational cannabis, adopting regulatory structures with varying degrees of strictness that have resulted in drastically different market outcomes. Colorado has medical and recreational storefronts dispensing cannabis every few blocks, while other states have approved low-THC/high-CBD medical products only – granting access to just a relative handful of patients with serious medical conditions.

California will eventually find its way – as John Kagia, New Frontier Data’s chief knowledge officer, noted, “Americans have a prodigious appetite for cannabis, and this is definitely not an issue of constrained demand or demand falling short. It may be a slow, painful, teeth-pulling process to get there, but California will ultimately get there.”

Meantime, as relatively rapid acceptance of medical cannabis has been energized by feedback from patients, clinical research about medical efficacy has been validated by leading health organizations (e.g., World Health Organization, National Academies of Science) which are stimulating further interest in and adoption of medical cannabis and eroding support for legacies of blanket prohibition.

Analyses of legal cannabis markets globally have revealed that even slight cultural, social, and regulatory variations can drastically impact the size of a country’s cannabis consumer market. Influential factors in determining the total addressable market include the prevalence of cannabis use, average prices paid, and population size and growth.

Asia (with 39% of global sales) is the world’s largest market, followed by North America (25%) and Europe (20%). Despite relatively low rates of cannabis use, Asia’s dominance is due to both the geographical size of the region – Asia is home to nearly 60% the world’s population – and the higher average prices paid in the region relative to other markets.

The report provides a foundation of the size and potential opportunity worldwide that legal cannabis could present, based on analysis of demand across 217 countries and 7 distinct geographical regions. Additionally, it explores some of the key global cannabis trends, such as:

  • Durability of legalization support as a long-term cultural trend;
  • Effectiveness of medical cannabis driving acceptance and adoption;
  • Investment capital’s role in accelerating industry growth and scale;
  • Potential for technology and innovation in increasing cannabis business operational efficiency, and transforming the consumer experience;
  • Digital media’s capacity for shaping cannabis awareness and building connectivity between consumers;
  • Future cannibalization of alcohol demand by cannabis; and
  • Hemp’s potential to foment economic growth and sustainable development in developing markets.