Arcview Market Research and BDS Analytics have released a “2019 Update” to the sixth edition of their report on The State of Legal Marijuana Markets, which was published last June. The update takes stock of events in the second half of 2018 and anticipates that worldwide spending on legal cannabis will grow 39.1% to $17 billion in 2019.
Recreational Surpasses Medical
The report’s chief editor Tom Adams writes in his introduction: “Legal cannabis continued its winning streak at the ballot box in 2018, but the industry is finding such victories can sometimes be hollow or at least an opportunity to learn patience.”
Case in point: California, which kicked off recreational sales on Jan. 1, 2018. “Legal cannabis launches have faced expensive regulatory regimes,” Adams acknowledges, “such as that in California that handicapped the legal business with a 77% price disadvantage against a robust illicit market.”
TOM ADAMS: “The science, product development and consumer marketing of a consumable that humans have enjoyed for at least 8,000 years is just beginning. There’s enormous potential in all of that.”
Of the four states that voted to go legalize in November 2016, “Maine remains medical-only, Massachusetts took until November 2018 to get stores open and California [became] the first state to actually shrink legal spending (from $3 billion to $2.5 billion) in its first year of adult-use legality. Only Nevada put reasonable regulations in place quickly, opened stores apace in July 2017 and is now seeing a shrinking illicit market.”
In November, voters in three states backed major cannabis initiatives: Michigan legalized adult-use, while Missouri and Utah voters passed medical-marijuana initiatives. Additionally, in June, Oklahoma’s legislature approved medical use. Only North Dakota voted no on cannabis in 2018, rejecting an adult-use initiative.
With Canadian legalization, the report notes, “Adult sales surpass[ed] medical for the first time… The doubling of Canada’s market from a medical-only 2017 figure of $569 million to an estimated $1.2 billion in 2018 helped make the adult-use component of worldwide legal cannabis spending larger than the medical market for the first time ($6.5 billion versus $5.7 billion).”
The Global Picture
The two biggest global markets for cannabis are Canada and California, the report says: “Although their combined share of the worldwide market dropped from 49.1% in 2014 to 29.9% in 2018, it is forecast that Canada and California’s combined share will rebound to 36.3% by 2022.”
Besides Canada, the big international cannabis news stories in 2018 were the Mexican Supreme Court’s decision in October mandating legal personal use of cannabis (although the law has not yet been brought into conformity with the ruling) and legalization of medical use by the Home Office in the U.K. in October.
The global section, however, erroneously states that “South Korea became the first Southeast Asian country to legalize cannabis for medical purposes.” This claim—highlighted in bold type as a pull-quote—is inaccurate on two counts: Korea is not in Southeast Asia and the medical-marijuana initiative unveiled by the South Korean government in July only allows for cannabinoid-based pharmaceutical products.
“Thailand followed suit shortly afterward,” the report adds. Thailand did pass a law legalizing medical use in December.
In addition, South African’s High Court decriminalized private use of cannabis in September and Lithuania passed a medical marijuana law in October.
According to the report, the three “most significant events” of 2018 were: legalization taking effect in Canada in October, FDA approval of cannabinoid-based drug Epidiolex in September and the legalization of hemp in the U.S. due to passage of the Farm Bill in December.
The report finds that “Canada did one major thing differently than California that largely explains why its market grew in 2018 while California’s shrank: Provinces, unlike cities and counties in California, were not allowed to ban legal cannabis.” But cumbersome Provincial regs are blamed for bottlenecking growth of the Canadian industry.
The Semantics of Cannabis
In critiquing the Farm Bill, which legalizes hemp and cannabinoids derived from it but not “marijuana” (varieties with a psychoactive effect), the report refreshingly states : “The distinction in the law between ‘cannabis’ and ‘hemp’ is artificial: the hemp now cleared for cultivation in the U.S. is the same cannabis sativa plant that produces what is sold as ‘cannabis,’ some strains of which are more than 25% psychoactive THC. The new Farm Bill simply enshrines in U.S. law that hemp is now defined as having no more than 0.3% THC.”
That 0.3% standard was actually first imposed in the 2014 Farm Bill, which allowed for cultivation of hemp for research, but not commercial purposes. The text of the new Farm Bill actually does make reference to “cannabis.” But the stigma still attached to psychoactivity has created a degree of semantic confusion.
“Cannabis” has, to an extent, become a euphemism for psychoactive cannabis—that is, for “marijuana,” a word now increasingly eschewed by the industry for its supposed negative associations. But clarity is being lost through disuse of the word, as both “hemp” and “marijuana” are cannabis. Some previous ArcView reports have ignored the word “marijuana” altogether. Happily, this one does not.
Despite decrying confused and overly zealous regulation, the report strikes an overall optimistic tone. “There’s every reason to remain bullish about the future of the legal cannabis business,” Adams concludes. “The science, product development and consumer marketing of a consumable that humans have enjoyed for at least 8,000 years is just beginning. There’s enormous potential in all of that.”
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