Cannabis is probably the most disruptive and dynamic fmcg industry of them all. Regulatory changes have become more frequent across various regions, with most of them leaning towards wider liberation and acceptance. More and more consumers are turning to cannabis for different reasons, and a greater diversity of products has been emerging.
Our latest report, World Market for Cannabis, delves into the most impactful developments the global cannabis industry faced last year, and explores how its future might evolve.
Another year of growth predominantly driven by a single market
2023 was something of a mixed bag for the legal cannabis industry. While 13% year-on-year growth to reach USD47 billion represents a modest recovery from the high single-digit growth experienced in 2022, it remains some way off the 40% and 30% expansion achieved during the pandemic in 2020 and 2021.
Most legal cannabis value sales globally derive from the US, which is the leader across the three cannabis segments that Euromonitor International covers – adult-use, medical and CBD & other non-intoxicating cannabinoids. Around 57% of US sales come solely from the adult-use segment, whilst Canada maintained its position as the second largest adult-use cannabis market worldwide. The UK and Germany remained the second largest markets in the CBD and medical cannabis spaces, respectively.
Despite the evident advancements in the legal market, illicit sales still account for just over 80% of combined legal and illicit value sales of cannabis globally. However, if further legalisation occurs, the proportion of illicit sales could decline to around two thirds by 2028.
The relationship between the illicit and legal markets will be central to the evolution of the global legal industry in the coming years, in terms of regulatory framework, excise levels, product types and cultural influence.
A period with legislative milestones
Regulatory frameworks are the fundamental basis for the current and future development of the cannabis industry, and important legislative milestones have been seen since the start of 2023.
More US states have legalised adult-use cannabis, Germany and South Africa have legalised the possession, cultivation and personal use of cannabis, and the Netherlands has expanded its pilot programme to eight additional cities. Japan has proposed new restrictions on THC limits in CBD products, which could clarify and regularise the position of CBD as well as expand its medical access, whilst Thailand is considering reclassifying cannabis as a narcotic.
In spite of the high volatility cannabis regulations are subject to, access to cannabis and normalisation of consumption have been expanding overall.
Normalisation of cannabis among users continues to expand
According to Euromonitor International’s Voice of the Consumer: Nicotine and Cannabis Survey, fielded January to February 2024, the dominant perception is that cannabis consumption has increased in the last five years in most of the markets captured within the Passport system.
These perceived increases are likely a combination of multiple factors – actual expansion of the cannabis consumer population, increased visibility and publicness of consumption that does exist along with heightened interest and awareness on the part of the general population.
The rise of products with different hemp-derived cannabinoids is not only another indication of the ongoing democratisation of cannabis, but also of format diversification. However, their proliferation also adds another layer of complexity to the industry. An example is the case of D9 beverages in the US, which have been growing, although much of this growth benefits from a lack of regulatory reforms at a federal level. Several US states have already restricted or prohibited sales of hemp-derived cannabinoids, though, indicating that it is unclear how long the category can remain viable in mainstream channels.
An industry of highly complex nature and a multitude of drivers shaping its future
In marked contrast to some other modern industries, cannabis is not emerging from scratch but, instead, is transitioning from a largely illicit activity to a legal space, which makes it an unusually complex industry by its very nature.
The factors driving this transition are manifold. Nevertheless, despite the challenges, the current momentum for the industry is the most positive it has ever been, be it from a legislative, consumer or technological perspective.
Learn more about the latest developments in the global cannabis industry in our report, World Market for Cannabis 2024.