US cannabis industry could expand to $50bn
Big business still shy to enter fray
The legal cannabis industry in the United States may grow to US$50 billion (N$715 billion) in the next decade, expanding to more than eight times its current size.
Legalising recreational use in California, where the drug is already medically permitted, is on the ballot in November, and approval of that measure alone would triple the size of the nation’s current US$6 billion (N$85.8 billion) legal industry, according to a report from 10 Cowen & Company analysts released on Monday. In all, voters in nine states will vote on weed-related initiatives this November - five to legalise the drug for all adults and four to allow for medical use.
Pot already is legal for recreational use in Alaska, Colorado, Oregon, Washington and the District of Columbia, and is medically permitted in 25 states. Cowen’s forecast assumes federal legalisation of the drug, a measure that has more than 50% popular support.
“Cannabis prohibition has been in place for 80-plus years, but the tides are clearly turning,” the analysts said.
The expanding industry will affect big business even though the current competitive landscape is largely made up of smaller start-ups. Because the plant is still federally illegal, large companies have shied away from getting involved.
Legal weed would be a major opportunity for Big Tobacco, Cowen said. Vapour technology - a popular technique for ingesting both tobacco and cannabis - is an essential part of tobacco’s less combustible-dependent future. Companies like Altria Group and Reynolds American already have expertise in vapour and crop-growing technologies, as well as familiarity in dealing with complex regulatory frameworks.
Tobacco companies may make up about one-fifth of the cannabis industry by 2036, adding more than 20% to their revenue, and nearly doubling tobacco’s underlying growth, the analysts said.
For the makers of alcoholic beverages, legal marijuana is more foe than friend. Alcohol consumption has declined over the past five years, especially with men, while cannabis use has risen. The number of drinkers who also used marijuana increased, and the number of cannabis users who drank decreased, Cowen said.
For both the potential winners and losers, the scale of the changes to come is unusual, the analysts said.
“A 24%, 10-year revenue compound annual growth rate is hard to find in consumer staples, in particular one with a US$50-plus billion end-point,” Cowen said.
BLOOMBERG
Legalising recreational use in California, where the drug is already medically permitted, is on the ballot in November, and approval of that measure alone would triple the size of the nation’s current US$6 billion (N$85.8 billion) legal industry, according to a report from 10 Cowen & Company analysts released on Monday. In all, voters in nine states will vote on weed-related initiatives this November - five to legalise the drug for all adults and four to allow for medical use.
Pot already is legal for recreational use in Alaska, Colorado, Oregon, Washington and the District of Columbia, and is medically permitted in 25 states. Cowen’s forecast assumes federal legalisation of the drug, a measure that has more than 50% popular support.
“Cannabis prohibition has been in place for 80-plus years, but the tides are clearly turning,” the analysts said.
The expanding industry will affect big business even though the current competitive landscape is largely made up of smaller start-ups. Because the plant is still federally illegal, large companies have shied away from getting involved.
Legal weed would be a major opportunity for Big Tobacco, Cowen said. Vapour technology - a popular technique for ingesting both tobacco and cannabis - is an essential part of tobacco’s less combustible-dependent future. Companies like Altria Group and Reynolds American already have expertise in vapour and crop-growing technologies, as well as familiarity in dealing with complex regulatory frameworks.
Tobacco companies may make up about one-fifth of the cannabis industry by 2036, adding more than 20% to their revenue, and nearly doubling tobacco’s underlying growth, the analysts said.
For the makers of alcoholic beverages, legal marijuana is more foe than friend. Alcohol consumption has declined over the past five years, especially with men, while cannabis use has risen. The number of drinkers who also used marijuana increased, and the number of cannabis users who drank decreased, Cowen said.
For both the potential winners and losers, the scale of the changes to come is unusual, the analysts said.
“A 24%, 10-year revenue compound annual growth rate is hard to find in consumer staples, in particular one with a US$50-plus billion end-point,” Cowen said.
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