Cannabis consumers and businesses have a lot to rejoice this 420 celebratory weekend. Some historic changes are afoot, not just in Washington and around the country, but all across the globe.
Let’s take a look at the state of the cannabis industry in 2018.
[You can download an Infographic Version of this here.]
The State Of the Market
Sales of marijuana in North America are growing faster than experts predicted. A report from Arcview Market Research released at the beginning of December, 2017 claimed that retail cannabis was on track to jump 33% over 2016’s totals to hit $10 billion.
Troy Dayton, CEO of cannabis analytics firm The Arcview Group has said, “Aside from cryptocurrency, there is simply no other industry changing as rapidly or as unevenly as the cannabis sector.”
Arcview says it expects the legal cannabis market to reach sales of $24.5 billion by 2021.
Additionally, a report issued by Cowen and Company claims that U.S. nationwide sales are expected to exceed $75 billion by 2030, “a figure comparable to the sales of soft drinks in 2017.”
Among other findings, the report revealed:
- California’s medical market is already as big as the total markets in Colorado, Washington, and Oregon combined.
- Nevada retailers generated more than $27 million the first month of adult-use sales, according to the Nevada Department of Taxation.
- Investment money continues to pour into the cannabis business.
According to a report from New York-based cannabis financial advisory firm Viridian Capital Advisors, by the end of November 2017, marijuana companies worldwide had raised approximately $2.7 billion in capital in 2017, almost three times the amount raised in the entirety of 2016. The staggering figure is indicative of investor optimism in the industry as more U.S. states adopt legal marijuana.
The Hemp/CBD Market Is Exploding
Currently, hemp production in the U.S. is exploding. Hemp production more than doubled in 2017 and appears to be on course to top $1 billion this year. Furthermore, it’s expected to grow to $1.7 billion by 2020. According to cannabis data and analytics firm New Frontier Data, hemp production totaled 25,541 acres (10,336 hectares) in 2017.
US’ First Exchange-Traded Fund (ETF) Launches
ETFMG, Alternative Agroscience ETF, recently became the first U.S. traded fund dedicated to investing in marijuana cultivators and distributors. The potential for a marijuana ETF is huge. Individual investors have been clamoring for a good way to get in on the exploding cannabis market.
Horizons Marijuana Life Sciences ETF (HMMJ), another ETF which recently launched, trades on the Toronto Stock Exchange. The Horizons ETF has already built up more than $200 million in assets.
Tobacco and Alcohol Want In
Both the tobacco and the alcohol industries—two other highly regulated adult markets—are eyeing their potential entry into the cannabiz, not just for vertical growth, but also to stop losses.
Cigarette smoking has seen a decline in recent years, some portion of which experts attribute to legal cannabis. And alcohol sales are flagging in states with legal cannabis. In fact, in the tourist town of Aspen, Colorado, cannabis sales surpassed alcohol sales—a first in this country (and probably not the last).
Marijuana is sapping tobacco and alcohol sales in two ways. First, they’re taking market share away as cigarette smokers and drinkers choose to forgo those products in favor of cannabis. Second, cannabis has been shown to provide an effective treatment for helping smokers and alcoholics kick the habit.
A 10-year-long joint study undertaken by two US universities and one in Lima, Peru has shown an overall 15 percent reduction in monthly wine sales in US counties where marijuana has been legalized. When the results are broken up by alcohol type, wine showed an average of 16.2 percent decrease in sales, while beer dropped 13.8 percent after marijuana was legalized.
Another study which took place in 2016 showed beer sales falling in states with recreational marijuana programs. This study, performed by the New York-based research firm Cowen & Company, found that sales of larger domestic producers had "collectively underperformed" over the past two years in Colorado, Oregon, and Washington.
Here are some examples of tobacco and alcohol companies moving in on the cannabiz:
- Imperial Brand, formerly Imperial Tobacco, made some changes to their board of directors last year, appointing the chairman of PharmaCielo, a Canadian supplier of cannabis oil extracts.
- Alliance One International Inc. (NYSE:AOI), recently announced the acquisition of a 75 percent equity position in Canadian-licensed producer Island Garden Inc. and an 80 percent stake in another licensed producer, Goldleaf Pharm Inc. The company is also an investor in a North Carolina hemp company.
- Philip Morris International of Switzerland bought a patent on non-GMO strains of cannabis which are endowed with higher levels of terpenes (the sticky oils that give cannabis its distinct flavors and aromas).
- Constellation Brands, the U.S. distributor of Corona beer, announced it was buying a 9.9% stake in Canada’s largest MMJ concern, Canopy Growth, for just under US$200 million.
The State Of the Union
There’s quite a bit of activity going on in cannabis politics at the federal level currently. To say that recent events in Washington DC are historic might be an understatement. Even if some new opportunities for cannabis freedom which have arisen lately don’t pan out, they are a sign of the times—and a good sign for the industry.
Of course, we all know that cannabis is really two distinct industries—hemp and marijuana. And marijuana has two distinct components—medical, and recreational. And the goings on in Washington may affect both industries in extremely positive ways.
Senator Schumer To Introduce Federal Cannabis Decriminalization LegislationOn the eve of 4/20, an annual day of celebration for cannabis lovers, Senate Majority Leader Chuck Schumer showed up to hand the cannabis industry a gift that might keep on giving. In an appearance on VICE News Tonight on HBO, Schumer announced that he would be introducing legislation to decriminalize cannabis at the federal level. His bill, as he explained it, would remove cannabis from the DES’s list of Schedule I substances. Schumer claims that the legislation would allow states to implement and regulate legal cannabis without harassment from federal law enforcement agencies.
More information on this story is bound to be forthcoming.
McConnell's Hemp Bill
US Senator Mitch McConnell recently introduced “The Hemp Farming Act of 2018,” also affectionately known as “The Hemp Bill.” If passed, this legislation would effectively remove hemp—marijuana’s non-intoxicating cousin—from the Schedule I list of the DEA’s controlled substances, forever divorcing hemp from marijuana.
Being listed as a Schedule 1 drug implies that a substance has no medicinal value and a high probability for abuse. And, as we all know, neither of those conditions are true about hemp. Hemp not only has substantial medicinal value, it also has a myriad of industrial and agricultural uses.
A press release from McConnell's office claims the new bill will not only reclassify hemp, it will also “give hemp researchers the chance to apply for competitive federal grants from the U.S. Department of Agriculture – allowing them to continue their impressive work with the support of federal research dollars."
It looks like lawmakers are starting to get the point—that hemp and marijuana are two vastly different plants and also vastly different industries. Whereas marijuana is mainly produced and sold to medical patients and adult recreational users for it’s psychotropic effects, hemp is used worldwide as a highly nutritious food source, and, for it’s super-strong natural fiber, a highly useful material in textiles, construction material, and is used in thousands of products of all kinds. It can even be used to make plastics and biofuel.
Essentially, we in the industry know that hemp should be regulated in a far different manner than marijuana, and it looks like Washington lawmakers are starting to get it too. If this bill doesn’t pass lawmakers have pledged to try again. It’s really only a matter of time before hemp is returned to its rightful place as a US staple crop.
President Trump’s Pledge To Protect MMJ States
The Ides of March of 2018 produced some news out of Washington which was so unexpected that some in the industry called it “headspinning.”
Colorado Senator Cory Gardner announced that President Donald Trump had pledged to sign into law a bill allowing states to determine their own marijuana legislation, free from federal interference.
Gardner said in a statement, “Late Wednesday, I received a commitment from the President that the Department of Justice’s rescission of the Cole memo will not impact Colorado’s legal marijuana industry. Furthermore, President Trump has assured me that he will support a federalism-based legislative solution to fix this states’ rights issue once and for all.”
Gardner added, “Furthermore, President Trump has assured me that he will support a federalism-based legislative solution to fix this states’ rights issue once and for all. Because of these commitments, I have informed the Administration that I will be lifting my remaining holds on Department of Justice nominees.”
This must be a big disappointment to US Attorney General Jeff Sessions, who has been on a reefer madness rampage for the past year. Since shortly after President Trump’s appointment of Jeff Sessions as U.S. Attorney General the administration’s policies have generated much confusion within the industry. To call the Trump administration’s collective policy ambiguous would be an understatement.
While Trump had stated in no uncertain terms from the campaign trail that he was in favor of states’ rights on the matter, Sessions, on the other hand has been working to undermine cannabis freedom.
Among other anti-pot actions, Sessions personally asked Washington lawmakers to abandon the Rohrabacher Blumenauer Amendment and then tore up the Cole Memo—two critical pieces of policy which protect states with legal cannabis industries from federal harassment.
Only days ago, Trump was calling for the death penalty for drug dealers. That development caused many in the industry to think things were about to get real. But, if Trump follows through on his commitment to Gardner, and loosens federal marijuana laws, this will be unlikely.
What could happen is that the Trump administration’s change of heart about cannabis could prompt other Republicans to support the ending of federal prohibition.
Additional Federal Activity
In addition to these developments, there are other pieces of cannabis-related legislation in the works at the federal level.
New Jersey Senator Cory Booker's marijuana bill, the Marijuana Justice Act, seeks to legalize cannabis at the federal level. The bill recently garnered support from U.S. Senator Ron Wyden, a fellow marijuana reformer, and also Bernie Sanders, among others.
Proposed back in August of 2107, the Marijuana Justice Act seeks to remove marijuana as a Schedule I drug under the Controlled Substances Act, but it doesn’t stop there. Booker’s bill is also meant to undo damage done from decades of criminal charges involving marijuana.
One proposed measure in the bill is the automatic dismissal of federal use and possession convictions and charges. The bill also offers states federal incentives to reform their marijuana laws as well as penalties in the form of withheld funds for states which do not reform.
Additionally, Representatives Barbara Lee and Don Young filed a resolution, calling upon the federal government to refrain from taking punitive action against legitimate marijuana businesses operating in states where the use and distribution of marijuana is legal.
Resolution HR 4779, “protects individuals in states that have laws which permit the use of cannabis” for either medical or recreational purposes. Specifically, HR 4779 bars federal funding for any efforts that seek to “detain, prosecute, sentence, or initiate civil proceedings against an individual, business or property that is involved in the cultivation, distribution, possession, dispensation, or the use of cannabis in accordance with the law or regulation of the state or unit of local government in which the individual is located.”
Dubbed “The R.E.F.E.R. Act,” HR 4779 also prohibits the federal government from taking any punitive action against a financial institution involved in state-sanctioned marijuana-related activities.
In other Federal news:
- The U.S. Department of Veterans Affairs implemented a new policy encouraging doctors with to talk more about marijuana with veterans.
- Republican support for cannabis continues to grow and has reached a majority.
- The Koch Brothers publicly reprimanded Jeff Sessions for rescinding the Cole Memo, saying he was stomping on states’ rights.
The State Of the States
The news is just as exciting on the state and local level. Although there are always setbacks, for the most part, there has been massive forward movement on cannabis freedom for both medicinal users and recreational users.
California Kicks Off RMJ
The biggest news this year is coming out of California, which kicked off recreational marijuana sales on January 1st. It’s been a bumpy road for cannabis for many decades, and the start of recreational sales was no exception. The dust still has not settled.
California was the first state to allow legal sales of medical marijuana in 1994, long before anyone dreamed of legalizing recreational cannabis. However, with the passing of Proposition 64 in November of 2016, it’s now all but certain that cannabis will soon be one of the state’s staple crops.
After the first quarter of 2017, California’s sales are on track to break $4 billion for the year. According to a report in The Cannabist, year-over-year, sales increased 31 percent in 2016 and another 15.3 percent in 2017, putting marijuana sales at $1.5 billion for 2017.
California’s medical marijuana market alone was already as big as the total markets in Colorado, Washington, and Oregon combined, according to BDS Analytics’ GreenEdge point-of-sale tracking service.
A bipartisan bill was recently introduced in California to lower cannabis taxes to help California marijuana merchants compete with black market prices. Should it pass, the bill would temporarily reduce taxes on recreational cannabis by about 9 percent.
California is expected to eventually grow into a multi-billion dollar industry and become one of the largest marijuana markets in the world.
Nevada Also Kicks off RMJ
The Silver State began selling recreational cannabis six months before California in the summer of 2017. Initially, the state of Nevada had projected its marijuana industry to hit $50 million in the first year. But, according to this latest report, the state is on track to sell $60 million worth of both MMJ and RMJ.
Currently, Nevada is selling roughly $1 million worth of cannabis per day. Tourism is likely to be playing a prominent role in the success of Nevada’s cannabis market.
Vermont Makes History, Passes Legalization Legislation
In a history move, lawmakers in the state of Vermont become the first US state to legalize marijuana via legislative action—as opposed to a voter initiative. The action came only two weeks after US Attorney General, Jeff Sessions trashed the Cole Memo.
The law has no provisions for building a regulated market. The state will permit the possession of up to one ounce of marijuana and a maximum six plants beginning July 1.
In Other States…
Much is also happening in other states—so much that we can’t possibly cover it in this article. But here are a few bullet points on happenings around the country:
- Colorado sales neared the $1.5 billion mark in 2017.
- “Arizona Medical Marijuana Reform Act” sailed through the Senate.
- The first social use club opened in Colorado.
- A Utah medical cannabis petition surpassed signature requirement.
- At least four states are expected to have marijuana-related measures on ballots this year.
- In the Northeast, New York, New Jersey, and Connecticut are all considering legislation
- New Hampshire decriminalized cannabis, making it the 22nd state to do so.
- Virginia is considering a bill that could legalize CBD for medical use.
- New Jersey Gov. Elect has pledged to legalize cannabis.
- Texas opened its first low-THC dispensaries.
- Pennsylvania launched its medical marijuana program.
Canada Likely To Pass Recreational Cannabis Legislation
The most significant international marijuana reform taking effect this year is happening in Canada. Recreational marijuana is expected to become legal in the summer of 2018.
The Canadian cannabis market is expected to generate several billion dollars a year in sales. Investors feel there’s big money to made, and the Canadian stock index gained 58% in 2017. Analysts say Canadian cannabis stocks to buy in 2018 include high-growth investments such as MedReleaf, Aphria Inc., Canopy Growth Corp., Aurora Cannabis, and Namaste Technologies.
The Canadian Senate approved Bill C-45, by a vote of 44-29 earlier this year. This is just one of numerous steps towards passing of the bill, however. It must now pass the scrutiny of five different Senate committees which which could recommend amendments. The legislation would then move on to the upper house for a final debate and vote by June 7.
Meanwhile, even though there’s no guarantee that the legislation will become law, Canadian cannabis companies and local government seem to be going full speed ahead into production and distribution plans.
In mid February, six Canadian licensed producers (LPs) of marijuana announced the signing of letters of intent with the Canadian province of Quebec to supply cannabis and related products for the province’s recreational marijuana market once it becomes legal.
Uruguay First Country To Sell MMJ In Pharmacies
Although Uruguay had already legalized cultivation, distribution and consumption of marijuana in 2013, the South American country became the first in the world to allow over the counter sales of cannabis in pharmacies. The Uruguayan government is licensing 16 drugstore chains to sell the product.
Republic of Georgia, Decriminalized
In November, the constitutional court of the Republic of Georgia decriminalized cannabis use, ruling that it is unconstitutional to prosecute someone for consumption. Although growing and consumption are now permitted, the sale and purchase of cannabis is still illegal.
Catalonia Makes It Legal
Cannabis was legalized completely for the Spanish region of Catalonia. As of July, cultivation, consumption, and distribution of cannabis is legal for members of designated cannabis clubs which will be regulated by the government.
Mexico Goes Medical
In June, Mexican President Enrique Peña Nieto signed a bill to legalize medical cannabis. The new policy calls for the Ministry of Health to create and implement new regulations to monitor cannabis and all of its derivatives. Peña Nieto had previously taken a very strict stance against cannabis, but changed his mind in recent months. The government is said to be considering full legalization and watching to see what happens in California.
Greece Adopts Medicinal Use
Alexis Tsipras, the Prime Minister of Greece, announced in July that he passed a bill allowing doctors to prescribe cannabis to their patients for a variety of medical conditions. During a press conference, Tsipras stated, “From now on, the country is turning its page, as Greece is now included in countries where the delivery of medical cannabis to patients in need is legal.” Greece is now looking at ways to import cannabis products into the country.
Germany Calls Cannabis Medicine
On January 19th, voters in Germany unanimously approved a new law, aptly named, “Cannabis As Medicine.” People with preapproved, severe illnesses will be able to buy cannabis with a doctor’s prescription. Rather than having a bill of conditions for which marijuana is allowed, doctors will be able to prescribe cannabis at their own discretion, for whatever they believe it can benefit. Other European countries are expected to follow Germany’s lead.
In other international cannabis news:
- Poland legalized cannabis in November.
- France decriminalized possession of small amounts of cannabis.
- The WHO approved of CBD, removing it from the list of performance enhancement drugs for which it tests athletes.
Now more than ever the cannabis industry has reason to be excited about our future. Support for legal marijuana is at an all time high. In fact, the number of Americans favoring legalization has doubled in less than 20 years. A recent Pew Research Center poll found that six in ten Americans now favor legalizing marijuana nationwide.
“About six-in-ten Americans (61%) say the use of marijuana should be legalized, reflecting a steady increase over the past decade,” Pew researchers write in their findings. “The survey, conducted in October , finds that the share of U.S. adults who support marijuana legalization is little changed from about a year ago – when 57% favored it – but it is nearly double what it was in 2000 (31%).”
The report also notes that a slight majority of republicans—51%—now support ending the prohibition of cannabis.
With state programs getting ironed out, and very promising federal activity, it’s all but guaranteed that interest and support for the burgeoning North American cannabis industry will continue on its remarkable growth trajectory.