Cannabis has emerged as one of the fastest-growing industries globally. With the legalisation of cannabis spreading across countries, the industry is expected to experience exponential growth over the next few years.
The global cannabis market is projected to be worth USD100 billion by 2027
Source: Euromonitor International
In our Emerging Cannabis Markets: A Taxonomy report, we build a classification for all emerging cannabis markets/countries that allows us to understand better the market context, capabilities, and opportunities on both the domestic and global stage.
Defining Cannabis Emerging Markets
Classifying and understanding markets is crucial to identifying opportunities and making informed decisions. In the case of emerging cannabis markets, it becomes even more critical. When talking about emerging markets we are broadly referring to countries outside of North America and looking at opportunities and characteristics based on the current market context but also future potential developments in the market.
Our framework aims to understand the market potential beyond just the raw size of the user population for cannabis. While the size of the population is a critical factor, we analyse the advantages (and disadvantages) of being in each of the different buckets and opportunities for companies when looking at those countries and markets. Small countries that are evolving rapidly in legislative terms can offer better opportunities than countries with significant populations that are slow-moving.
Looking into the Future of Cannabis
Much of the global cannabis market is in the very early stages of development, but the potential upside for early adopters is significant. However, caution is still necessary as many markets, while liberalising, could put in place high entry barriers for what is perceived by some regulators as an "undesirable" market. We'll explore some best-in-class opportunities and potential pitfalls in developing markets.
Defining Four Core Types of Markets Around the World
Production Hubs
These markets are focused on increasing their production and export capabilities to supply the global cannabis markets. They can target both adult use and medical cannabis consumption. Industrial hemp is also a significant opportunity for these countries. Countries in this bucket usually have other significant agricultural capabilities.
Regulatory Trailblazers
Trailblazer markets are on the forefront of pushing new cannabis regulations and experimenting with new regulatory models which could change the perception of cannabis. These markets usually have new ideas or plans to regulate cannabis in innovative ways. These markets also create exciting spaces for cannabis markets to develop, either intentionally or not.
Consumer Markets
Consumer countries are set to become big consumption markets for any of the cannabis subcategories, including adult-use, CBD, and medical cannabis. Usually, these markets have high acceptance of cannabis and/or a high prevalence of cannabis use, but they can also be markets where cannabis has the potential to grow into mainstream consumption.
Innovation Markets
These countries are at the forefront of cannabis innovation. From academic research to new technologies to more innovative products and services, innovation markets are set to disrupt the industry for internal consumption and the global cannabis business. In certain cases, these markets might not even be conventional cannabis markets but have the potential to impact the global cannabinoid ecosystem.
Key Findings
Production is Outpacing Demand Growth
Currently, the most promising opportunities for countries that produce cannabis are in the hemp-derived and medical-use cannabis markets. These countries can focus on exporting medical or CBD-based products to other markets. In the future, with a more standardized regulation of adult-use cannabis and international trade for it, these countries could also transition into becoming producers and exporters for this segment. But countries also need to be careful of planning demand for Cannabis to avoid oversupply in the market.
Access is Key to Creating a Consumer Market
The demand for cannabis products will continue to increase. However, establishing a cannabis industry will largely depend on how legal access frameworks to cannabis get built and how it will affect the availability of products for consumers. Moving forward, companies need to consider the potential for growth of the cannabis industry in each country, paying particular attention to the realities (rather than the fantasy) of the regulatory landscape.
Legal Uncertainty Continues to be a Barrier
The cannabis industry faces much uncertainty due to the constantly changing legal landscape. To survive in the industry, companies must have a long-term plan and be able to adapt to legislative changes, whether they are intentional or not. As more countries legalise cannabis, the barrier for others following suit will decrease.
Innovation is Key to Adapt to an Always Changing Landscape
Innovation in the cannabis market can enable companies to try out new opportunities. Companies and countries that are quick to adopt these innovations will benefit from early insight into what works and what doesn't for the different cannabis consumers worldwide. Moreover, the nascent cannabis industry offers many opportunities for outsiders to disrupt in non-traditional ways.
Learn more about opportunities in emerging cannabis markets in our report, Emerging Cannabis Markets: A Taxonomy.