In an opinion piece by financialbuzz.com, the new emerging marketplaces for the cannabis industry are explored.
The cannabis industry has reached some significant milestones in recent years. Perhaps most notably, Canada's legalization of recreational use cannabis was a historic event, marking the country as the first G-7 to legalize cannabis entirely. However, the remaining G-7 nations, excluding Japan, have since adopted a form of cannabis legislation. The G-7, or Group of Seven, is classified as the seven countries with the largest economies in the world as collectively, the seven nations account for 58% of global wealth.
France, Germany, Italy, the U.K., and the majority of the U.S. have all legalized cannabis for medicinal use. Additionally, the U.S. has ten states, and the District of Columbia, that have legalized cannabis for recreational use. On a regional basis, the North American segment is expected to account for the largest share within the cannabis industry. However, other emerging countries such as Australia and Germany are also expected to become multi-billion marketplaces by 2027, according to ArcView Research and BDS Analytics. The South American region is also expected to become a major marketplace because of its fertile land and the lenient stance countries have on cannabis regulations.
Overall, the collective effort from nations around the world is further accelerating the global cannabis industry. According to data compiled by Verified Market Intelligence, the global marijuana market was valued at USD 42.20 Billion in 2017. By 2025, the market is projected to reach USD 466.81 Billion, registering a CAGR of 35.3% from 2018 to 2025.
While the North American region remains a booming marketplace, the Latin American region has also become highly attractive in recent times. Companies have begun to establish operations in countries such as Brazil, Argentina, Uruguay, Peru, Colombia, and Chile. Moreover, most of these countries have all legalized cannabis on a medical level, while others have also decriminalized the plant. While the LATAM region is an untapped market for many large corporations, the fertile land and cost-effective growing processes are also major factors as to why companies have expanded to the south.
According to Craig Dempsey, Chief Executive Officer and Founder of Biz Latin Hub Group, citing a report, the cost of construction and facilities in LATAM can be as much as 80% cheaper than it would be in North America or Europe. Furthermore, companies can cultivate within the LATAM region then export cannabis elsewhere pending on licensing agreements. For instance, The Ministry of Health and Social Protection in Colombia can grant licenses to cannabis-based business. Specifically, the license allows companies to distribute within Colombia, conduct scientific researches, and export products, with the exception of flower.
"In the past couple of years, Latin America has emerged as a key player in the legal cannabis market, at a time when ten major countries have legalized the use of the substance," said Dempsey, "There are further opportunities for businesses looking to establish a presence in Latin America, with Chile and Colombiatopping the bill. If you're looking for investment opportunities Colombia-based, for example, then you'll be able to take advantage of the country's plan to encourage recreational cannabis legislation, which will no doubt include the ability for businesses to grow cannabis on an industrial scale for local and international use."