Global Ganja Report

Oakland-based cannabis industry research firm ArcView Group has released a new study, ambitiously entitled "The Road Map to a $57 Billion Worldwide Market." It provides a sweeping overview of recent progress and future prospects for legal or medical herb across the globe. But it also warns that, due to continued legal restrictions and bureaucratic overstretch, the market is in most areas bottlenecked from achieving its potential.

ArcView has previously provided such analyses and projections for the state of California, but this effort is far more ambitious.

An opening statement is offered by Tom Adams, research director for BDS Analytics, ArcView's partner in production of the report.  He writes: "Adult-use legalization in California and Canada may have gotten all the ink in 2017, but from a worldwide perspective, the legalization of medical use by Germany in April may prove to be the bigger news.... Germany's initiative should inspire the rest of Europe, with its population of over a half billion... The expansion of medical cannabis markets can be expected to lead to broader public acceptance, setting the stage for the eventual move to adult-use legalization.... It's a model that we forecast will drive the world market, excluding the United States and Canada, to grow at 35% annually to $10.5 billion by 2027, as a key part of the $57 billion overall market."

However, the text of the report states: "As substantial as a $57.3 billion legal market in 2027 would be, the reality is that it falls far short of the market's potential size for the same reason our North American spending forecasts are well short of total consumer spending on cannabis: Cautious regulators are likely to restrict access and tax the legal business so heavily that they inadvertently ensure the continued existence of a thriving illicit market."

Germany positioned itself as Europe's market leader at the start of 2017, with the liberalization of its existing medical program. "While sales there are restricted to pharmacies, the country's lawmakers have approved a fairly liberal list of qualifying conditions expected to rapidly swell the ranks of registered patients over the course of 2018 and beyond."

Italy, Belgium, Croatia, Czech Republic, Finland and Poland are also named as launching similar if less ambitious programs. And in July 2017 the Spanish region of Catalonia "moved past tolerance and legalized cannabis, permitting the cultivation, consumption, and distribution for members of designated clubs." 

The report next moves on South America. Last March, Argentina passed legislation legalizing medical use of cannabis oils and other derivatives. But Brazil, with its large population offsetting a fairly restrictive medical regime, is the leader in South American legal cannabis spending. Medical marijuana was more broadly legalized in Chile and Colombia in 2015. Colombia especially has a fast-growing legal cannabis sector. And Peru's legislature approved a medical marijuana measure in 2017.

Uruguay of course rates a special discussion, with its general legalization policy. "Since 2013, the country has been putting the regulations and infrastructure in place to establish a system for state-controlled production and sale of cannabis through pharmacies, which began this past July... Uruguay's process is being observed by leaders of other South American countries who are looking for an alternative to the Washington-led, and largely unsuccessful, 'war on drugs.'"

The report predicts that Uruguay and Canada will be "two closely-watched market models." It enthuses: "Canada's federal-level legalization of cannabis for medical use has led to rapid growth in that market. Federal legalization of adult use, expected in mid-2018, will extend that even further as adult members of the country's population of 36 million gain the right to purchase and consume cannabis legally."

Furthermore, Canada "is one of the few countries where investors have been confident enough in the legality of the industry to pour millions of dollars into public equity investments, The 88 licensed producers (LPs) operating in Canada as of January 2018 have already begun securing deals to supply the developing adult-use market."

Next we turn to Mexico, where things also look encouraging. In June 2017, Mexico legalized the study of "pharmacological derivatives of cannabis" by its Secretariat of Health (mis-identified in the report as "Ministry of Health").

The bill easily passed through both the Senate and lower house of Mexico's Congress, and was signed into law by President Enrique Nieto Peña. "The move is a small step toward true medical legalization since the derivatives are limited to products with 1% or less of THC, essentially making Mexico a CBD-only market." (The report doesn't mention that as this legislation was being crafted, there were also advances in the Mexican courts recognizing a right to medical and even recreational cannabis.) If the Mexican program broadens in the coming years, ArcView predicts a $106 million cannabis market in the country by 2022.

Turning to the United States, the report notes that the federal system, allowing for widely varying state laws, "makes cannabis legalization more complicated than in any other country." Nonetheless, "Adult-use spending in the United States is expected to explode within the forecast period." California's market alone could be four times larger in four years.

Finally, the report notes varying degrees of liberalization in Australia, New Zealand, Israel, India, Jamaica and the US territory of Puerto Rico—which launched its medical program late in 2016 "only to have it devastated, along with the rest of the island, by hurricane Maria in September 2017."

In this section, the report contains one error. It states: "While medical cannabis was officially legalized in the Philippines in 2014 regulations are still being developed and the program is limited." In fact, the Philippines' medical marijuana bill was first introduced in 2014 but is still pending in the country's legislature.

The report also has some gringo-centric misuses of vocabulary. For instance, Uruguay is lauded for having "the first federally legal adult-use market in the world."  Uruguay does not have a federal system but a centralized one, thereby avoiding the policy patchwork dilemma faced by the United States.

The report actually avoids invoking the word "marijuana" at all, presumably in the belief that exclusive use of the scientific term "cannabis" will erode the stigma that still surrounds this burgeoning global commodity.

Cross-post to Freedom Leaf