interesting read
Jul 26, 2019 (PR Newswire Europe via COMTEX News Network) -- FinancialBuzz.com News Commentary NEW YORK, July 26, 2019 /PRNewswire/ -- Earlier this week, a top Congressional Chairman and Presidential candidate filed legislation to federally legalize marijuana. Representative Jerrold Nadler (D-NY) and 2020 Democratic contender Senator Kamala Harris (D-CA) signaled that a floor vote to end federal cannabis prohibition could come before the end of the year. If the legislation passes, the Marijuana Opportunity Reinvestment and Expungement Act would remove marijuana and its psychoactive compound, THC, from the Controlled Substance Act. Additionally, federal legalization will also expunge previous criminal records and prevent agencies from using cannabis as a reason to reject benefits or employees. Furthermore, the legislation also proposes a 5% federal tax rate on all marijuana-based product sales. A portion of the taxes would be used for a new Opportunity Trust Fund to help people troubled during the prohibition era. Many other representatives and senators such as Cory Booker, Elizabeth Warren, Jeff Merkley and Ron Wyden have all co-sponsored the bill. Now, if the U.S. moves to federally legalize cannabis, it would be the third nation to end prohibition. Notably, Canada was the second nation to legalize cannabis entirely back in late 2018, following Uruguay's decision in 2013. While Uruguay was the first country, investors and entrepreneurs are more attracted to the U.S. and Canadian markets as the two have a large recreational user base, making them the primary growth drivers for the global industry. Should the U.S. federally legalize cannabis, it would establish the cannabis industry as a prominent global marketplace. Overall, according to data compiled by GlobalInfoResearch, global legal marijuana market was valued at USD 7.97 Billion in 2019. And by 2024, it is expected to reach USD 35 Billion while registering a CAGR of 28% over the next five years. Despite having federally legalized cannabis, Canada is still overshadowed by the U.S., which maintains its dominance in the cannabis industry because of its early adoption. California was the first state to legalize medical cannabis back in the 1990s. Moreover, Colorado and Washington became the first two states to legalize recreational use several years ago. On the other hand, Canada recently legalized recreational cannabis, meaning that the market needs time to mature. While many Canadians are still skeptical to try cannabis because it was previously prohibited, the market continues to progress and it is expected that more first-time users will enter into the industry in the shortcoming future. Overall, during the first quarter of legalization, Statistics Canada reported that 646,000 users reported trying cannabis for the very first time. The number nearly doubled from 327,000 from a year ago when only medical cannabis was legal. Now, while there is a multitude of new consumers entering the market, a large pre-existing user base is still heavily prevalent. Specifically, medical cannabis patients have been around for a while and in some instances, medical users are among the most frequent smokers depending on the severity of their conditions. The combination of the developing cannabis industry and already established, frequent medical consumers has caused the "craft cannabis" marketplace to rapidly emerge. Craft cannabis is known as the product of an artisanal profession of cultivating premium, high-quality cannabis that is both organic and natural. The meticulous process cultivators undergo creates top-shelf quality that both recreational and medical users can enjoy. And as the industry continues to grow, craft cultivators can stand out among competition against large-scale licensed producers. "Legalization always creates consumers who are new to cannabis, and their profiles and habits stand apart," cannabis research firm BDS Analytics said. "Brands must remain highly attuned to their customers and offer a wide range of products to achieve and maintain marketplace triumph. Depending on one winning product is not enough to carry a brand."