CBD And Legal Cannabis Market On The Rise

NEW YORK: A recent report by Arcview Market Research indicates that consumer spending on legal cannabis in North America is outpacing previous estimates. The report projects that retail cannabis sales will grow 33% from 2016, to about $10 billion this year. The data published projects that by 2021 the legal cannabis market will reach a value of $24.5 billion and at a 28% compound annual growth rate (CAGR).

A Major segment of the legal cannabis industry is the hemp-derived cannabidiol (CBD) market. According to a report by Forbes, Brightfield Group estimates that CBD sales have already hit $170 million in 2016 and at a 55% compound annual growth rate over the next five years the market will cross the billion-dollar mark.

In a report by Forbes, Director of Research at Brightfield Group, Bethany Gomez, explained, “One of the most surprising things we found during this research was how many companies are currently operating in the space, and how few of them are generating significant revenue. Essentially everyone is trying to do hemp, but only a handful is doing it well. It’s seen as easy because it can be sold online but, with restrictions on traditional marketing, it is very difficult to connect with your core consumer and even communicate why they need your product.”

Cannabis Market Begins to Mature in Legal States

NEW YORK: According to a report by Ameri Research Inc., the global legal cannabis market was valued at $14.3 billion in 2016 and is forecast to grow at a CAGR of 21.1% between 2017 to 2024 and culminating to $63.5 billion by 2024.

The market is going through a period of strong growth thanks to increasing legalization and decriminalization of cannabis products across North America and Europe. The report indicates that legalization wave is moving beyond the U.S. region. In 2017, the Canadian prime minister has introduced a bill to legalize marijuana for recreational purposes. The proposed bill mandates the legal age for consumption of cannabis at 18 years, and provides clarity on the federal and state laws in regulating the cultivation, storage and distribution of cannabis across the country.

Strong sales in the cannabis market resulted in economic growth in states where sales of cannabis products are legal. The Ameri Research Inc. explains that, “Growing user base for recreational marijuana in states such as ColoradoCaliforniaAlaskaMassachusettsWashington DC and other states is a key factor boosting the tax revenues. For instance, in 2016 Colorado reported revenues exceeding 1.1 billion from the sale of marijuana products and the tax collected from the sale of these products is diverted into specific community development projects such as the construction of schools and infrastructure development, which is anticipated to improve the overall economy of the region.”

M&A Activity Heats Up In The Cannabis Industry

NEW YORK: Merger and acquisition (M&A) activity in the cannabis industry is heating up, and market analysts point to several important factors contributing to increased activity.

Profit is always a central issue, and as the founders of companies established years ago seek attractive exit strategies, new players are considering ways to enter the field in a profitable way. The rapid evolution of technology and its increasing application also serve as catalysts for M&A, as larger companies pursue opportunities that are positioned for current or near-term commercial availability. Such expertise and assets developed by smaller brands could potentially turn them into attractive targets for M&A activity.

As Canada prepares to legalize the recreational use of marijuana next summer, the push for M&A becomes even greater. Since the beginning of the fourth quarter of 2016, an average of approximately 3.2 deals have been closing per week well into 2017.  In comparison, the average for the same period one year ago was approximately 1.4 deals. Analysts note an increase in interest from Canadian companies that wish to cross the border to become a part of the U.S. cannabis industry.

Generally, M&A activities focus on companies and facilities that already have well-developed positions in the field. In 2017, one of the oldest marijuana dispensaries in Denver sold to a Colorado enterprise . The fate of the two-best selling marijuana retailers in Washington was similar. The initial price tag set for the two businesses was $50 million. Developments on the Canadian market have also been pretty dynamic in 2017. The trend will potentially be upheld in the year to come and strategic interest will fall on innovators in the field of cannabis extraction and CBD oil delivery.