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Analysts: Global Marijuana Market Generates $9.5 Billion in Spending

The cannabis industry is plowing full steam ahead despite political opposition, reaching nearly $9.5 billion in consumer spending worldwide last year, $8.5 billion of that generated in the US, according to a new report from Arcview Market Research and BDS Analytics.

And, this year for the first time, adult use is expected to outpace medical use.

The report, “The State of Legal Marijuana Markets,” released Tuesday, June 5, 2018, might be viewed as an affirmative referendum on cannabis use.

Politicians who supported adult use cannabis at one time had to worry about losing voters in doing so. No longer.

“I think the votes are in,” said Tom Adams, managing director and principal analyst of BDS Analytics. “Really, the political risk now lies with the prohibitionists’ side, which is at risk of losing votes. That’s a real turning of the tables. That’s why you are seeing this flood of people changing their views.”

Adams, one of the authors of the report, pointed as evidence for his statement to an about-face on cannabis from prominent Republicans over the past year, including former Speaker of the House John Boehner, Utah Sen. Orrin Hatch, Colorado Sen. Cory Gardner and North Carolina Sen. Thom Tillis.

The report chalks up a large share, 31 percent, of US growth to the five states that had adult-use retail stores operating by the end of 2017 —Colorado, Washington, Oregon, Alaska, and Nevada.

The report also offers a bright forward-looking assessment of the cannabis market.

Recreational sales that began in California at the start of 2018 increased the number of adults legally able to purchase adult-use cannabis products globally by nearly threefold from 17 million to 47 million in the legalized states. That headcount will jump to more than 75 million later in 2018 with the anticipated addition of Canada to the ranks of markets where cannabis can be sold to all adults, the report notes.

The report shows that Oregon leads the nation for adults reporting they consumed cannabis over the past six months (35 percent), followed by Washington (31 percent), Colorado (25 percent) and California (23 percent).

The report highlights adult-use as the key driver of consumer spending worldwide by 2022, tripling the figure to $32 billion, while US spending alone is expected to $23.4 billion.

Adult-use appears to be outpacing medical use, a milestone that wasn’t expected to occur for at least another year.

The medical portion of the market is expected to drop to 41 percent in 2018 as the Nevada, California, and Canada recreational markets explode, the report stated.

By 2022, the medical component of worldwide legal sales will shrink to just 35 percent due to continued substantial growth in those three markets, plus the launch of new adult-use markets already approved in Maine and Massachusetts, as well as those expected to launch during the forecast period.

That’s not to say medical sales are faltering, they’re just becoming a smaller percentage of the overall market, Adams said.

The threshold of adult-use surpassing medical marijuana was expected to be reached in 2019, according to the 2017 forecast.

“We’ve moved up by a year which we think adult spending surpasses medical,” he said. “We’ve now got that in the forecast model for 2018.”

The report shows continued growth in the medical cannabis market as numerous states line up to allow medical marijuana. “Overseas will be almost entirely medical for years to come,” Adams added.

Legal cannabis will likely remain predominantly medical-use worldwide until the end of the 2022 forecast period, with medical cannabis patient numbers outside of North America expected to skyrocket from 7 percent in 2017 to 44 percent by 2022.

Germany’s authorizing of medical-use sales in 2017 represents “an enormous step forward for the world­wide legal cannabis market,” the report states. “To date, only a handful of countries have authorized a few thousand patients each to be treated for very narrow lists of conditions with very limited numbers of pharmaceuticals — often synthetics.”

The report notes that, in addition to sales, cannabis investment is on its way up.

The cannabis market saw its first $5 billion company this past year when Canadian licensed producer Canopy Growth reached that capitalization at the end of 2017, in which it also generated $54 million in revenue.

In the US, public equity markets have generally been closed to plant-touching cannabis companies, but that is changing.

“There are now hundreds of private equity funds, family offices, and high-net-worth individuals replacing the friends-and-family investors of just a few years back, and they have made available several billion dollars in seed and expansion funding to both plant-touching and ancillary companies in the hopes of a big payoff when federal prohibition ends,” the report stated.

David Rheins, founder and executive director of the Marijuana Business Association, sees the report as a clear signal that legal cannabis has gone mainstream, and that the path has been cleared for “big marijuana” to take over.

“Mom-and-pop entrepreneurs, motivated by an equal mix of activism and opportunity, are quickly being displaced, or subsumed, by big corporate entities who are finally off the sidelines and making serious investments for the first time,” Rheins said. “Big Marijuana is here to stay.”

Adams said the rapid growth of the cannabis market is because it’s unlike other new product categories, such as the Internet, cable television, or organic foods — all of which had to prove to consumers why the product was useful and what it could do for them.

“Cannabis, on the other hand, has just been quietly an illicit product for 50 years, getting the consumer educated and making the appeal clear,” he said.

Gallup reported last year that a record 64 percent of Americans believe cannabis should be legalized, and for the first time in Gallup’s nearly 50 years of polling, a majority of Republicans agreed.

Such polling, the change in direction from Republicans such as Boehner, Hatch, Gardner, and Tillis, a marketplace that continues to exceed expectations, all points to one inevitability, Adams believes.

The time will soon come for cannabis to taken off the list of Schedule I drugs in the Controlled Substances Act.

“The legalization is coming. That’s the bottom line,” Adams said. “It’s pretty clear that this is the last gasps of the prohibitionists.”

Gallup Poll: Majority of Americans Are High on Marijuana … Being Legal

Americans’ support for marijuana legalization is at a record high.

With cannabis already legal in several US states, a recent Gallup poll found that 64 percent of Americans are saying its use should be made legal. The poll also found, that for the first time, a majority of Republicans also support marijuana legalization – by 51 percent.

Fred Smoller, a political science professor at Chapman University in Orange, California, attributes the numbers to the generation polled.

“Woodstock,” he said. “That generation [baby boomers]… it’s a cohort, they’ve always viewed marijuana differently than the people before them. … They grew up laughing at ‘Reefer Madness.’”

He said while some attitudes might have changed regarding marijuana, the difference lies in the demographic.

According to a Gallup news article, Gallup first asked adults nationally about their views on marijuana in 1969, when only 12 percent were in support of legalization.

In the recent study, results are based on phone interviews conducted Oct. 5, 2017, to Oct. 11, 2017, of a random sample of 1,028 adults 18 and older from all 50 US states and Washington, DC.

Whether this increase in marijuana legalization support will soon lead to federal legalization remains to be seen. Smoller doesn’t think so.

“No,” he said. “The laws will remain on the books but won’t be enforced. This allows electeds to appeal to different groups. It’s kinda like [former President Bill]Clinton saying he smoked pot but didn’t inhale.”

On the political level, there is a steady stream of activity in regard to the topic of marijuana.

Senate Minority Leader Chuck Schumer announced on April 20, 2018, his support for decriminalizing marijuana federally and his plans to introduce new legislation in the Senate, according to a press release on his website.

“The time has come to decriminalize marijuana,” Schumer said in the statement. “My thinking – as well as the general population’s views – on the issue has evolved, and so I believe there’s no better time than the present to get this done. It’s simply the right thing to do. This legislation would let the states be the laboratories that they should be, ensure that woman and minority owned business have a fair shot in the marijuana industry, invests in critical research on THC, and ensures that advertisers can’t target children – it’s a balanced approach.”

In an April 16, 2018, press release on his website, California Republican Rep. Dana Rohrabacher was said to be preparing stand-alone legislation called the Cannabis States’ Rights Act, which would permanently restrain federal enforcement of marijuana laws in states that have legalized it.

“This is a fundamental issue of federalism and freedom, as state after state moves to take marijuana out of the hands of the cartels and place it in a competitive market where consumers can be assured of product safety,” Rohrabacher said in the statement. “It also encourages more exploration of medical uses for cannabis, which has shown unquestionable promise in the treatment of multiple ailments and disorders.”

But the support in the direction of marijuana legalization clearly isn’t unanimous.

The Department of Justice on Jan. 4 issued a memo on federal marijuana enforcement policy, returning to the rule of law that deems it a controlled substance and enforces it as such, according to a press release on the Justice Department website.

“It is the mission of the Department of Justice to enforce the laws of the United States, and the previous issuance of guidance undermines the rule of law and the ability of our local, state, tribal, and federal law enforcement partners to carry out this mission,” US Attorney General Jeff Sessions said in the statement. “Therefore, today’s memo on federal marijuana enforcement simply directs all U.S. Attorneys to use previously established prosecutor principles that provide them all the necessary tools to disrupt criminal organizations, tackle the growing drug crisis, and thwart violent crime across our country.”