National Post Global cannabis sales expected to double to US$51B by 2025
“Canna-curious” consumers who have not yet tried weed are expected to play a substantial role in marketplace growth.
Increasing social acceptance and expanding legal access is expected to drive a doubling of worldwide cannabis sales by 2025, forecasts a new report from Washington, D.C.-based New Frontier Data.
The data, analytics and technology company teamed with TSRGrow, FTI Consulting and SoRSE to release The Global Cannabis Report: Growth & Trends Through 2025, which covers 23 regulated medical cannabis markets and six adult-use markets in 24 countries. It also includes an analysis of annual global cannabis demand based on usage rate, pricing and consumer spending data sourced from legal and illicit markets across all 217 countries.
Looking specifically at high-THC cannabis, a New Frontier Data statement notes that sales to patients and adults through legal regulated sources totalled US$23.7 billion ($29.9 billion) in 2020, with the U.S. accounting for the lion’s share at US$20.3 billion ($25.6 billion). But sales in currently legal markets are forecast to exceed US$50 billion ($63 billion) by 2025.
The push to that new level is expected as a result of strong growth in the largest and most dominant markets, namely the U.S. and Canada, the report suggests.
Spain, which is not included in the report data, could potentially move into third place for sales “should it become fully legalized and regulated,” the report suggests. “Sales through clubs in Spain totalled an estimated US$431 million ($543 million) in 2019,” it notes, adding that was before COVID-19 took hold.
Of the countries analyzed, a chart in the report notes that after the U.S. and Canada, the next five largest legal cannabis markets in 2020 were Germany at US$206.3 million ($260 million), Israel at US$158.9 million ($200 million), Puerto Rico at US$145.5 million ($183 million), the Netherlands at US$108.4 million ($137 million) and Australia at US$89.6 million ($113 million).
When it comes to global consumer spending on legal and illicit high-THC cannabis, the report states that expanding legal country markets and increasing social acceptance of the plant’s therapeutic value will drive the global from US$415 billion ($523 billion) in 2020 to US$496 billion ($625 billion) in 2025. There is also the influence of the “industry’s potential as a catalyst for economic growth.”
In 2020, legal domestic sales of adult-use weed were about US$11.2 billion ($14.1 billion) in the U.S., approximately US$2.1 billion ($2.6 billion) in Canada, US$103.5 million ($130.4 million) in the Netherlands and US$3.5 million ($4.4 million) in Uruguay.
With respect to recreational cannabis use among adults last year, Canada was in the top five — 15.7 per cent — of the countries analyzed in the report.
The report suggests that “canna-curious” consumers who have not yet tried weed will play a substantial role in marketplace growth as social acceptance widens.
Citing the potential for canna-tourism, which the report regards as a growing sub-vertical, the statement points out that “29 per cent of leisure travellers express interest in consuming cannabis while on vacation.”
“With consumers’ tastes and preferences evolving alongside product innovation, the pace to reach a mature product landscape in newly legalized markets will accelerate,” New Frontier Data suggests.
“While Canada beat the U.S. in establishing a fully legal national market, the 38 U.S. states having legalized either medical or adult-use are home to a population six times the size of Canada’s,” notes the reports. Authors point out that over the next few years, “the legal market opportunity in the U.S. alone will account for the lion’s share of legal global demand.”
As always, pricing may come into play. In North America, for example, “the difference between the average high price and average low price for a gram of cannabis flower is about US$3,” states the report.
At an average price of US$10 ($12.60) per gram of high-THC flower, North America sits in about the middle of pricing compared to other regions of the world. Oceana, Asia and Europe are all higher, while the Caribbean, Latin America and Africa are lower.
Although an evolution of legal markets worldwide is underway, “we have found that regulatory structures and societal norms vary greatly, and each country, region and market require a nuanced approach to quantifying, qualifying and understanding them,” Giadha DeCarcer, New Frontier Data’s founder and executive chair, writes in the report.
That being the case, it is important to continue to bear in mind that “illegal sales still represent the majority of consumer demand, and that failure to incorporate the impact of the illicit market on any global study is a shortcut likely to result in rudimentary and inaccurate projections,” DeCarcer notes.
Though cannabis remains illegal in most parts of the world, self-reported usage rates are rising, the report states, adding that these were higher in almost every country with updated consumption data than was as reported in the company’s 2019 report.
“The trend toward increased use is expected to continue as science affirms that cannabis is comparatively safer than alcohol, and as young adults come of age in societies where cannabis is increasingly viewed as an analog or substitute to alcohol, rather than as a dangerous narcotic,” report authors write.
For Canada, the second country out of the gate to federally legalize recreational cannabis, the country is home to some very large companies with deep financial pockets. “Canadian LPs (licensed producers) have agreements for exporting to over 20 different countries, giving the country a significant head start in the emerging global cannabis market, though companies in the Netherlands and Latin America are also seeking entry to establish themselves for global cannabis exports,” the report notes.
“While Canada will trail the U.S. in terms of its total domestic retail sales of cannabis, Canada will remain the world’s leading cannabis exporter through 2025, with its LPs holding in place among over 20 countries worldwide,” authors add.
As a whole, “North America North will be the engine both for the industrialization and commercialization of cannabis, and in shaping the emerging consumer culture,” New Frontier Data concludes.