A new report from Standard & Poor’s predicted that more companies would be implementing plans to enter the global cannabis market which is estimated to be valued at $150 billion and develop and offer products ranging from cannabis infused as beer and dog treats. The report also predicts that the market would expand further in  the near future because of legalizaiotn and greater acceptability of cannabis.

The changing regulatory framework however can make the growth of the market volatile, noted the report from the ratings agency. However, sectors such as healthcare, alcoholic beverages, soft drinks, tobacco, beauty and healthcare are the areas which are to be looked at for growth.

In recent times, this industry has seen tow of the largest investments being made by traditional companies including one from Altria, owner of Philip Morris cigarettes and another one from the owner of Corona beer – Constellation Brands. Each of the investments by the two companies amounted to over $1billion in cannabis infused products.

Compounds that which includes tetrahydrocannabinol (THC) which impacts the mind and mood of humans is present in cannabis which is essentially a family of plants. It also contains cannabidiol (CBD) which is being used as a source of medical treatment.

Most of the companies that are making investments in this sector are also facing pressure in their existing businesses.

For example, in the alcohol business, less drinks is being consumed by younger drinkers and they are instead choosing to step into “coffee shops and recreational cannabis for an experience”, the report noted.

“The makers of alcoholic and non-alcoholic beverages, health and beauty care products and cigarettes are among companies considering selling cannabis products,” the report says.

But a total market of $150bn – some 90% of which is illicit, was shown according to data from to Euromonitor which was quoted in the report. Euromonitor expects the legal cannabis market to grow to about $166bn by 2025.

“Large consumer product companies will attempt to capitalise on this growth, either through their own branded products or joint ventures with smaller partners that have the deep expertise with cannabis that they lack,” the report says.

The report also says that the growth outlook is based on the assumption that there would be more legislation in favor of cannabis usage in new markets, especially in the US, where the market value of illegal cannabis dealing is estimated to be about $50 billion every year.

The report expects that Canada, the US, western Europe and parts of South America would account for the most growth in this sector.

“Although the push for legalisation so far is less pronounced in western Europe and South America – where only Uruguay has legalised it – Canada legalised cannabis in certain forms in October 2018 and will also legalise edible cannabis,” the report said.

It added that all except three of the states in the US have “okayed some form of medical cannabis use”.

But consumers would need to keep away from illegal cannabis products so that the legal cannabis market and products are able to achieve the full growth potential.

(Adapted from BBC.com)

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