Global Cannabis Outlook for 2022
Wow! Global cannabis sales Hit $37.4 Billion In 2021 and is estimated to top $102 billion By 2026. So says, Prohibition Partners in their recently released second edition of the annual Global Cannabis Report. Prohibition Partners is a market intelligence firm providing strategic consultancy services, insights and data on the global cannabis industry.
The report is intended to give an overview of the current state of international cannabis market development and project a potential future state. The report recognizes the global cannabis industry is heading into a progressive period marked by widespread legalization, innovation, and growth.
As of the end of 2021, the adult use markets in the U.S. and Canada continue to be the strongest regions for cannabis sales. However, international markets, including Germany, Israel and Australia are expected to develop and grow over the next five years.
Much of the growth can be attributed to folks stuck at home during Covid lock downs. In fact, those regions where cannabis is legal saw record-breaking sales figures as folks found varied ways to amuse themselves. Growth might have been even higher if Covid hadn’t also interrupted legislative agendas, delaying expansion around the world.
The report evaluates current activity across the globe, and how that activity might fuel expanding markets in the future.
Cannabis is fully legal in Canada, Uruguay, and a handful of states in the U.S. (including California, if a separate nation, would be the 7th largest world economy).
The expectation is large growth internationally. Mexico and Israel are expected to fully legalize cannabis in 2022, while both the Netherlands and Switzerland are starting legal pilot trials.
In Germany, the new coalition government recently announced a deal to legalize cannabis in Europe’s largest economy.
Medical cannabis and CBD are legal, at least in some form, across the European Union (EU) the United Kingdom (UK) and Latin America.
The largest US cannabis operators match Canadian rivals in size, posting higher financial gains. 2021 saw a great deal of market consolidation, with multiple merger and acquisition transactions.
Last year, 2021, was a significant one for cannabis Mergers and Acquisitions (M&A). Many of the M&A deals involved cultivation and retail (or plant-touching) operations, including:
- Tilray’s $2.4 billion purchase of Aphria in April.
- Trulieve’s $2.3 billion acquisition of Harvest Health and Recreation in October.
- AYR Strategies’ $198 million purchase of Garden State Dispensary.
- Cresco Labs’ Cultivate Licensing in September.
Nearly all of the top 10 M&A deals in the cannabis space in 2021 included plant-touching operators. Investors interest in funding cannabis deals cooled down in 2020, leading to depressed stock prices. However, capital investment is rising again.
As the market analysis demonstrates, the largest players in the cannabis space typically work the entire supply chain: cultivating new strains, growing, packaging and operating retail outlets. Production is now across the U.S., Canada and the Netherlands, and growers also taking advantage of warmer climates, cheaper land, and labor, including Latin America, the Mediterranean and Africa.
Germany and Israel, two of the most important import markets, are also experimenting with cultivating cannabis domestically. It is not yet clear the extent to which future demand may be satisfied.
The global vision for cannabis is exciting and the majority of voters internationally wish for cannabis to be legalized. It is not yet known just how in step legislative bodies are with the desires of their constituents.
However, 2022 promises to be an exciting year, legislatively, followed by strong growth in existing and newly opened markets.
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