The movement for cannabis legalization began back in the 1990s when California became the first U.S. state to legalize medical cannabis. Subsequently, several other states began to legalize cannabis for medicinal purposes throughout the decade. And while the 1990s did pave the way for the birth of the legal cannabis industry, recent years have seen the market begin its growth in earnest.
First, in December of 2013, former Uruguay President Jose Mujica legalized recreational cannabis. Shortly after, U.S. states Colorado and Washingtonlegalized adult-use cannabis in 2014, becoming the first two states to allow legal adult-use. Throughout the next several years, more countries continued to adopt medicinal cannabis legislation. Meanwhile, the U.S. was seeing more states adopt recreational cannabis before, in 2018, Canada became the second nation to fully legalize cannabis. Moreover, Canada is the only G-7 nation to completely legalize cannabis, even though the remaining G-7 powers have adopted a full or partial medical cannabis legislation, save for Japan.
Predominantly, the therapeutic aspects of the cannabis plant are why many nations have decided to legalize its medical use. On the other hand, some countries have moved to legalize cannabis as an economic growth driver or to suppress the damage caused by the war on drugs. For instance, Germany recently approved legislation for medical cannabis in 2017 for seriously ill patients as the German government is trying to reduce the number of patients dependent on narcotics.
Meanwhile, Uruguay moved to legalize cannabis to reduce the war on drug crimes. Similarly, Mexico’s President-elect party wants to legalize cannabis as well and Senator Olga Sánchez Cordero, interior Secretary selected by President Andrés Manuel López Obrador, said that illegal cannabis is causing violent drug wars and poverty. While each nation has their own individual reasons to adopt cannabis, they are all collectively working together towards eliminating the stereotype revolving around the plant.
According to data compiled by ArcView Market Research and BDS Analytics, worldwide consumer spending on legal cannabis was estimated to be approximately USD 12.2 Billion in 2018. By 2022, consumer spending is expected to reach USD 31.3 Billion while exhibiting a CAGR of 26.7% during the forecast period from 2017 to 2022. Pasha Brands Ltd. (OTC: CRFTF) (CSE: CRFT), Aurora Cannabis Inc. (NYSE: ACB) (TSX: ACB), CannTrust Holdings Inc. (NYSE: CTST) (NYSE: TRST), The Supreme Cannabis Company, Inc. (OTC: SPRWF) (TSX: FIRE), Cresco Labs Inc. (OTC: CRLBF) (CSE: CL)
Currently, the medical cannabis sector accounts for the majority of the global market share. Medical cannabis is much more readily available and accessible around different regions across the world because a handful of countries are looking to use cannabis as an alternative to traditionally prescribed drugs like opioids. However, the recreational cannabis market is thriving within the North American region, and despite not having federally legalized any form of cannabis, the U.S. is still the primary growth driver for the industry. Generally, the U.S. is seen as the largest market primarily because of its early adoption. Throughout the past two decades, the U.S. has also attracted new consumers, leading to a massive user base.
Similarly, Canada is expected to witness similar consumer growth, especially after fully legalizing cannabis use. However, as the market continues to grow, consistent users will develop a tolerance while first-time users will have little-to-no tolerance. Primarily, the cognitive function is linked to the showing the highest level of tolerance. Typically, frequent users tend to go on “t-breaks” in order to lower their tolerance. T-breaks are short breaks which mainly recreational users take when they develop a high tolerance, but for medical patients suffering from chronic pain or other symptoms, t-breaks are not an option.
Henceforth, cultivators have set out to develop high-quality premium cannabis to appease both spectrums of the user market. Specifically, “craft” cultivators are developing high-end and expensive strains within the marketplace. Craft cultivators are similar to craft breweries, both want to achieve the top quality product for their consumers and craft cultivators pride themselves on their strenuous and meticulous process of closely monitoring each individual plant and providing optimal nutrients in order to grow the perfect plant.
“There is a coolness factor to artisan and craft style products and this trend is also picking up amongst cannabis consumers. For some, the uniqueness and exclusivity of craft cannabis are attractive. For others, the ethics and identity of a craft grower are compatible with their own and they want to be a part of that story. Yet, for others, simply supporting a local business, in the same way, they support their local farmer, is important,” said Lieze Boshoff, Founder of LBC3 Marketing. “But, in the end, we like to have choices. We like variety. We like to feel connected to whatever product it is that we consume. And this, in the end, is why craft growers will continue to thrive alongside their bigger brothers.”