The legal cannabis industry is comprised of the production and selling of the cannabis plant and products derived from it. Many companies involved in this sector began in supplying the medical market when that was all that was available but have now expanded to servicing the retail markets that have opened up in Uruguay, Canada, and the United States. Some of the hottest growing product segments currently are vaping products, edible and beverage products, and CBD (a cannabis-derived, non-psychoactive chemical with reputed health and wellness benefits).
During the beginning of the COVID-19 outbreak, sales of cannabis products in the United States saw a large boost as consumers prepared for coming lockdowns. This demand has not been sustained and the industry in both the U.S. and Canada are facing serious headwinds due to oversupply. New markets on the U.S. East Coast promise renewed growth and Germany has elected a new government which favors legalizing recreational sales.
Legal adult-use cannabis sales reached 16.5 billion U.S. dollars in 2021. The market is expected to grow by nearly a third in 2022 as large East Coast markets in the United States like New Jersey and New York are expected to begin retail sales.
The adult-use market is forecast to grow further and reach over 33 billion dollars in value by 2025. Much of this value is to come from the U.S. and Canada but Germany is expected to start legal sales in this time period as well.
Flower, the raw, dried bud of the cannabis plant is what most people think of when they hear of cannabis. As such, this segment of the cannabis market has remained the most dominant. Sales of flower in the United States grew by 27 percent in 2021 and are expected to grow an additional 29 percent in 2022.
Other segments such as vapes and edibles will see similar levels of growth but none are expected to overtake the importance of flower in the near term.
Cannabidiol (CBD) is a chemical derivative of the cannabis plant that does not have the psychoactive effect of producing a high in the user. Nevertheless, it is one of the fastest growing products to come out of the commercialization of cannabis. Sales have exploded since the passing of the Farm Bill in 2018 which legalized the production of hemp.
Worth just 620 million U.S. dollars in 2018, CBD is forecast to reach sales nearing 16 billion dollars by 2026.
Although the legal cannabis market is still in its infancy, there are many large American companies vying for a spot of their own. The largest American company, in terms of revenue, is Curaleaf, which produces cannabis and operates dispensaries across the country.
Before being aquired by Trulieve Cannabis Corp., Harvest Health & Recreation Inc. was the second largest company in the United States. M&A activity is quite common as the fledgling industry moves towards consolidation.
Cannabis is a genus of plants, some of which produce psychoactive effects when ingested and others which do not (hemp). The cannabis industry produces products from both types of plants.
The legal cannabis industry is made up of companies that sell unprocessed cannabis as well as products derived from the plant in countries that have removed legal barriers for sale. Because the first legal market in many countries was medical only, many companies started out focusing on that field and have since branched out to offer products to the recreational market as well.
Legalization of cannabis has given rise to a number of commercial products. There is of course plain dried flower, which is the traditional and still most common way to consume cannabis. Other growing segments are vaping, which involves heating the product to a level below combustion and edibles, which converts the cannabis into a form that can be swallowed by a consumer.
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