According to Euromonitor International, an independent market research company, the legal cannabis market is forecast to grow in the next five years.
On November 20, in one of the latest webinars hosted by this consultancy company and entitled 'The Evolving State of Global Cannabis: Market, Consumers and the Future', a study estimated that the total global legal cannabis market reaches over $30 billion today, just over a sixth of the $170,000 billion total turnover that cannabis sales represent, both legal and illegal. During the webinar, researchers from this company predicted that the proportion of the market for legal cannabis market will multiply the figure by three in the next years, exceeding $90 billion annually.
“As regulation progresses, the legal cannabis market is expected to account for 40% of global sales in 2025; companies will be able to tap into a large existing user base as well as nurture the curiosity of new adult consumers”, explains Shane MacGuill, senior director of research on nicotine and cannabis for Euromonitor International.
The main cause for this growth will be the sale of recreational cannabis. Euromonitor estimates that from the total $95 billion that this industry will generate by 2025, legal recreational cannabis will capture 67% of sales. This optimistic forecast is surely based on the upcoming changes to cannabis legislation announced in the United States, after Democrat Joe Biden’s victory. Actually, during the presidential election six states held a referendum to legalize the use of recreational cannabis. Moreover, Switzerland decided last year to start a pilot program for the distribution of recreational cannabis and the Israeli government also announced they were considering to implement the Canadian model, where recreational cannabis has been legal since 2018, favoring large corporations in contrast to Uruguay’s, which in 2013 regulated access to cannabis favoring homegrown production and cannabis clubs.
New regulations in this field would make new adult consumers to reduce the use of alcohol and tobacco and increase that of recreational cannabis, thanks to the new formats, according to the Euromonitor market study. Although flowers would remain the dominant legal cannabis format and bestseller, the sales of this product category will decline from 35% to 27%, giving way to other cannabis-derived products such as topicals, tinctures and edibles. These fast-growing formats will represent the highest sales growth in the next five years.
And what about medical cannabis? The Euromonitor report predicts a slight increase in medical cannabis turnover compared to recreational cannabis.
For Euromonitor, the most promising markets for the cannabis industry in the coming years will be Germany, Canada, the United Kingdom, the United States and Australia. In the case of Canada, this claim is not surprising since the North American country has been one of the main markets for this plant for years. Neither for the United States, considering the favorable results of last November referendums. In Germany, three main companies started a program for the cultivation of medicinal cannabis but it has been postponed until 2021 due to the COVID-19 epidemic. The study also forecasts an increase in the cannabis market turnover that will reach 5,8 billion euros by 2025. Also, it highlights the fact that recreational use of cannabis is expected to be legalized in Germany that same year, a legislative reform that will greatly depend on the results of next parliamentary elections this year.
Euromonitor also foresees that recreational cannabis will be legalized in the United Kingdom and that the use of medicinal cannabis will overall increase, although the CBD market is still very limited despite its legalization back in 2018. While in Australia, government is considering to authorize the over-the-counter sale of CBD products, a market that Euromonitor expects to experience a dramatic growth from AUD 55 million in 2020 to over AUD 2.3 billion by 2025.