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Global cannabis market to hit $32 billion by 2022, new report says

A new report from cannabis industry intelligence firm BDS Analytics says the global market for cannabis products including dried cannabis, edibles and concentrates should balloon to US$32 billion in 2022, as more jurisdictions legalize medical and recreational pot.

The report’s author Tom Adams spoke to BNN Bloomberg recently, saying the switchover from a long-functioning black market to a legalized framework represents an almost unprecedented growth opportunity, one in which Canada’s approach seems to be one worth copying.

“The most startling thing is the demand growth ahead,” says Adams, managing director of industry intelligence at BDS Analytics. “This is an industry that has existed for millennia and actively for sixty to seventy years and that means that it’s a very quick growth scenario …that rarely has been seen in the global economy.”

“Regulators are at wit’s end trying to figure out how to deal with [the black market],” he says. “Canada is at least very clear on their goal of eliminating the illicit market, but a lot of jurisdictions in the US and elsewhere don’t even have that on their radar as a goal. That’s why Canada is such a great example for the world — they’re focused on the real prize, which is getting a product out of the black market that doesn’t deserve to be there.”

“California is the counter case to Canada in that regulators have essentially made it very, very difficult to be in the legal market, with a 77 per cent tax and regulatory cost load on the price of a gram of cannabis versus the illicit industry,” he says. “Seeing that and facing a huge regulatory battle just to get legal, the growers who have been at this for decades, especially in the northern counties are just sitting it out.”

At the same time, Adams warned that Canadian pot companies will have a tough time squeezing profits from their marijuana crops, as the price per gram is likely to keep sliding, making branded and value-added products the more lucrative play. Adams points to Colorado, where the price per gram was US$4.30 in 2014 when the drug was legalized and is now selling for on average less than half that amount.

“It’s to be expected,” says Adams. “The price of a pound of cannabis, say $3,000 seven years ago in the illicit market was largely made up of what we’d call the illegality premium. And that’s going to go away, of course with legalization. There’s really no value being added by the illicit market. So those costs are just crazy when you think of the cost of a pound of lettuce or strawberries, since that’s what this is, an agricultural crop.”

Adams notes that in California’s market, producers have had limited success in building their brands on flower and dried marijuana alone.

“The profit margins in the US industry are really in the branded edibles and concentrates where they’re adding some value to the consumer now that it’s legal and that risk value is gone and you’ve got to offer something else,” he says. “That’s easy to do with edibles and concentrates where it’s clear that you are adding some value, whereas just the raw flower market is just a commodity for the consumer.”

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About The Author /

Jayson is a writer, researcher and educator with a PhD in political philosophy from the University of Ottawa. His interests range from bioethics and innovations in the health sciences to governance, social justice and the history of ideas.
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