NEW YORK, July 18, 2019 /PRNewswire/ – Recently, Illinois became the 11th U.S. state, including the District of Columbia, to legalize cannabis entirely. Illinois' decision came not too long after Michigan approved its own legislation to legalize cannabis back in November 2018, during the U.S. midterm elections. While only a fifth of the U.S. has legalized cannabis, the marketplace accounts for a majority of the global cannabis market share. Primarily, the U.S. is driven by a handful of states including California, Colorado, and Washington. And these three states, in particular, were among the first states to venture into the cannabis industry. Now, these states are responsible for collectively driving in billions of dollars in cannabis sales each year. In recent times, cannabis legalization has been on the agenda of many U.S. politicians whether for medical or recreational use. However, the U.S. Senate still remains uncertain on the matter. Nonetheless, states have been given the jurisdiction to legalize cannabis or decide to keep it regulated. Overall, the market has also been a prevalent force on the global scale, yet, most analysts tend to focus on the U.S. market because of the attractive opportunities the country presents. Barclays analysts have speculated that if the U.S. cannabis market was legalized today, it could be worth roughly USD 28 Billion. Furthermore, Barclays predicts that the market will grow to USD 41 Billion by 2028 on a pre-tax basis. Barclays had compiled data from a 2017 survey that indicated that approximately 26 million Americans above the age of 12 "were users of marijuana," or nearly 10% of the total U.S. population. At USD 41 Billion, the cannabis market "could generate almost USD 28 Billion of tax revenues across all levels of government," said Barclays. The firm examined data from Colorado, Washington and Nevada and highlighted that tax revenues from cannabis have already surpassed alcohol tax revenues, and in the case of Colorado, already exceeded tobacco tax revenues. While the U.S. is a major growth driver for the global industry, it is important to note that more and more countries around the world are also beginning to legalize cannabis, predominantly for medical purposes. Pasha Brands Ltd. (OTC: CRFTF) (CSE: CRFT), Innovative Industrial Properties, Inc. (NYSE: IIPR), Greenlane Holdings, Inc. (NASDAQ: GNLN), Planet 13 Holdings Inc. (OTC: PLNHF) (CSE: PLTH), The Supreme Cannabis Company, Inc. (OTC: SPRWF) (TSX: FIRE)
Notably, Canada became the second country to legalize cannabis back in late 2018 after Canadian Prime Minister Justin Trudeau made it known that cannabis legalization was on his agenda. Ecstatic Canadians seized the opportunity and began to apply for licenses in order to operate a cannabis-related business. Despite having legalized cannabis, Canada still maintains strict regulations in regards to license approvals and operating hours. The legal barriers have caused demand to severely outweigh supply, and as a result, many growers have engaged in large-scale cultivation efforts to meet Canadians' requirements. While large cultivators can produce tons and tons of flower each harvest, the major drawback is that the quality may be lackluster. Producing on a large-scale basis makes it challenging for cultivators to ensure high-quality products because it can be too costly to tend to each and every single plant. On the other hand, smaller cultivators have engaged in cultivating "craft cannabis," which is similar to craft beer or craft coffee. For cannabis, craft cultivators are enthusiastic about producing premium high-quality cannabis that stand out among the competition. In order to ensure top quality products, craft cultivators stray from using artificial products such as pesticides to produce a more natural product. Moreover, cultivators tend to each plant to insure that mold or a bug infestation does not occur. Additionally, craft cultivators also hand-trim their buds as opposed to large-scale cultivators who typically use machinery. Hand-trimming plants can protect more of the bud, thus maintaining the cannabinoid content within each individual bud. As such, the attention and care that is involved within craft cultivation causes prices to generally be higher than the average selling price point. Despite the price, craft cultivators and large-scale producers are able to co-exist within the same marketplace because of consumer demands. Some consumers may prefer a cheaper product that may provide subtle effects, while other consumers are more interested in a premium product that boasts a strong potency. "Corporate and Wall Street interest in weed is only going to increase now that three more states have legalized recreational or medicinal marijuana use – bringing the total to 33 [as of April 20, 2019] – while Canada recently became the second country to allow recreational uses of the drug," said Ryan Stoa, Associate Professor of Law at Concordia University School of Law, according to the Philadelphia Inquirer. "A local, sustainable, and artisanal model of marijuana production can co-exist with Big Marijuana – much as craft beer has thrived in recent years alongside the traditional macro breweries. One reason is that whereas the illicit drug trade forced consumers to buy ambiguously sourced marijuana from street dealers, the legal market allows consumers to buy a wide variety of marijuana products from legitimate retail businesses. And more and more consumers are turning to edibles and extracts produced by highly specialized manufacturers."