This opens the door to what is projected to become a CAD$7.0 billion market by 2020 (USD$5.45B), according to New Frontier Data, a business analytics company that researches the cannabis industry. The company’s Canada Cannabis Report: Industry Outlook 2018 says Canada is the first G20 nation to establish a dual adult use and medical cannabis system (to date, only Uruguay has adopted a national policy permitting widespread cannabis use), and the first nation to establish a worldwide export market.
“Canada has the first-mover advantage, with international expansion a key part of the strategy,” says John Kagia, New Frontier’s chief knowledge officer.
As a result, the money is flowing as the business is growing. Investors are starting to focus on cultivation and retail.
This is true, too, in the U.S., despite the fact that only a handful of states passed medical and recreational legislation and cannabis remains illegal under federal law. Nevertheless, “in the U.S., there is an extraordinary acceleration of the amount of capital invested in this space,” Kagia says. “By way of context, in the first nine months of [2018], it had already more than doubled the amount of investments in the cannabis industry in 2017.”
While there are still hushed conversations and a stigma attached to the marijuana market, the people processing, packaging, and selling products—ranging from buds to edibles to oils and vape—take business very seriously. And so do the consumers. New Frontier notes that in 2017 the U.S. legal cannabis industry generated an estimated $8.3 billion in consumer sales, and annual sales are projected to grow at a compound annual growth rate (CAGR) of 13.7% over the next several years, to reach more than $23 billion by 2025.
“One of the core aspects of the evolution of legal cannabis that is important to understand is that people are not just waking up and thinking they’ll try cannabis for the first time because it is now legal in their state. Rather, this is taking the already well-established consumer base of existing American cannabis users and migrating them out of an illicit market and into a legal market,” Kagia says.
Now, it’s time to deliver product to these consumers. And to do that, the cannabis cultivators are looking for more efficient ways to process and package their products. And the manufacturers and distributors are turning to OEMs to help them scale operations in order to meet new demand.
