In Canada and several US states, legalized cannabis is becoming a very hot commodity. Entrepreneurs are learning quickly that there is a lot of money to be made in the cannabis industry and with legalization just happening now, getting in on the ground floor presents an excellent opportunity. Learn more legalized cannabis from here.
The Legalized Cannabis Opportunity Become?
So, let’s delve into just how much this industry could be worth going forward.
Marijuana has always been big business, even before it was legalized. In 2017, the year before legalization in Canada, five million Canadians spent $1,200 on average in the year on cannabis. That represents roughly $5.7 billion in total revenue. While lower than the $22 billion spent on alcohol and $16 billion on tobacco, that number can be expected to increase now that it is legalized. In addition, Canada produced about $3.4 billion worth in cannabis. Canada also exported $1.2 billion in illegal cannabis.
Unless you were a drug dealer, or you grew the plants illegally, you were not enjoying any segment of that market. In fact, 90 percent of that $5.7 billion was through the black market. Now that marijuana is legal, that is about to change, and many businesses can cash in on this.
In five days, Nova Cannabis in Alberta took in over $1.2 million in sales. While the line-ups out the door are gone, for the most part, business is still brisk as Canadians adjust to the fact that cannabis is now legal. In a survey done by Deloitte, it was discovered that 63 percent of current cannabis users in Canada planned to make their purchase from legal retailers now that cannabis is legal. This is estimated to generate $4.3 billion in sales through 2019 in Canada. The same survey also found that Canadian cannabis users were willing to pay as much as $8.98 per gram for cannabis. Currently, it is priced at about $7.50.
What about the companies in the United States selling cannabis?
How much are they making right now? According to New Cannabis Ventures, which tracks company revenue in the cannabis industry, these are the leaders in sales for the last quarter and the percentage increase year over year.
- Trulove: $23.3 million last quarter, 947 percent increase over the previous year.
- MedMen Enterprises: $20.6 million last quarter, 1,317 percent increase over the previous year.
- Charlotte’s Web Holdings: $17.2 million last quarter, 90 percent increase over the previous year.
- Curaleaf: $14.6 million last quarter, a 234 percent increase over the previous year.
- Green Thumb Industries: $13 million last quarter, 291 percent increase over the previous year.
Made $2.5 million
Nearly every company on the list, made up of companies that made $2.5 million or more last quarter, had a year-over-year growth. The highest being Madmen Enterprises with 1,317 percent and nearly all the companies had over 100 percent growth. Only seven companies had less than 100 percent, ranging from nine percent to 98 percent. Only one company, Terra Tech, had a loss. That company posted a 33 percent loss over the previous year.
Investors are taking notice of the cannabis market as well. LP Cronos Group, a Canadian cannabis company, was the first company in the industry to be listed on NASDAQ. LP Cronos Group then joined up with MedMen to brand various stores and products in Canada ahead of legalization.
In Canada, there are 354 cannabis companies that have a market capitalization of $9 billion in total. Of those companies, 23 are based in the US and account for $2 billion of that total.
Now we get down to the real business of where the cannabis industry is going in the future. If we could sum it up in one word, it would be “up”.
Looking at how legalized cannabis in several states impacted the black market, the first thing that is going to happen is black-market cannabis is going to fall hard. In Washington, the black-market fell 50 percent and 20 percent in sales in Colorado. As the black-market falls and more states legalize cannabis, that will generate a huge amount of tax revenue for various states. It also opens more and more doors to cannabis entrepreneurs.
According to Forbes
According to Forbes, the largest group of cannabis buyers is in North America, and it is expected that cannabis buyers will spend $47.3 billion by 2017, up from about $10 billion the previous year (in legal purchases). In South America, legalized medical cannabis could grow from $125 million in 2018 to $776 million in 2019. In Europe, Germany is going to lead the cannabis market with over $1.5 billion in sales by 2027. Italy will be second with $1.2 billion in sales. Australia will have an even larger increase from $52 million in 2018 to $1.2 billion in 2027.
How much could it all be worth together?
According to Grand View Research, global legal cannabis could be worth $146.4 billion by 2025. The leading markets in the new cannabis world will be Canada, the United States, Germany, and Australia.
As an entrepreneur in North America
You may not be concerned with future European markets, but you should be. The reason for this is that the United States accounts for 90 percent of the cannabis exported to world markets, amounting to $8.5 billion. Canada is no slouch either, accounting for six percent of the cannabis market exported, amounting to $600 million. That is expected to increase now that cannabis is legal in Canada. In fact, Forbes expects that by 2022, the United States will only account for 73 percent of the cannabis market, while Canada will account for 17 percent. This is projected to be worth $3.1 billion in total.
What areas of the cannabis industry can expect to see large growth?
- Cultivation: With cannabis in short supply in the legalized markets, there is going to be a big push for more cannabis being produced.
- Edibles: It is expected that in 2019, edible cannabis products will begin to hit the market in Canada. Looking at how edibles have done in Colorado and some other states where cannabis is legal, edibles will consume a huge part of the cannabis market share. Several soft drink companies have also announced partnering with cannabis producers to create new products.
- Cannabis Products: The companies that provide a wide variety of products, good customer experience and ease of purchase (online or in-store) will see great success moving forward as more provinces begin to allow cannabis shops to open.
The cannabis industry is going to explode. There is no doubt about that. You just need to make sure you are on the ground floor, so you can take in some of that growing cannabis market.