The global medical marijuana market was valued at $8.9 bn in 2016 and is forecast to grow at a CAGR of 18.2% between 2017 and 2024, culminating in 2024 global sales of $32.78bn.
The medical marijuana market is witnessing robust growth owing to the increasing legalization and decriminalization of marijuana across North America and Europe. The rising demand of marijuana for recreational use and medical use is a key factor driving the growth. Due to the complex regulatory structure at state level and federal level, the full potential of the market is not yet realized.
In the U.S., 44 states have different cannabis laws however, cannabis is illegal as per federal law. The U.S. federal law regulates cannabis as per the Controlled Substances Act (CSA), and this act does not differentiate between recreational and medical cannabis. The CSA classifies marijuana as a Schedule I drug which under federal views is highly addictive with no medical value.
However, as per the 2016 funding bill for Commerce-Justice-Science (CJS) budgets, the U.S. federal government is prohibited to use the justice department funds in preventing the states implementing their medical marijuana laws. Moreover, as per the Rohrabacher-Farr or CJS amendment which was previously signed into law on December 16th,2014, and re-signed on December 18th, 2015, prohibits the federal agencies from raiding, arresting, prosecutions for cannabis use. In different states.
“Optimal Price Point (OPP) for Medical Marijuana Products”
Estimated Average marijuana cost per gram – $ xx globally. However, with improving access and availability of options, OPP and range of acceptable Prices (RAP) are going to change. We at Ameri Research continuously track these prices with our proprietary pricing model.
Due to the presence of a very large black market economy, the prices vary across different regions. Prices across the different states of the U.S. also vary due to the difference in the quality of the product, state taxes, and other regulatory restrictions hampering the supply chain.
The medical marijuana market by product is categorized as powder, pills, oils, tinctures, and others. Majority of the cannabis users prefer smoking of the herb in powder form or use vapor form as these forms show the fastest onset of action. However, for sustained release and longer duration of action, pills and other forms are preferred.
The key factors boosting the medical marijuana market include the growing tax revenues due to product sales and tourism activities, decrease in crime rate, and several medical applications. Although there are over 20 conditions for which medical marijuana is used, some of the key applications include pain management, arthritis, cancer, multiple sclerosis and Alzheimer’s, and others. In 2016, chronic pain was identified as the largest segment due to wide usage in pain management.
As per the U.S., National Institute of Health (NIH), nearly 40 million adults experienced severe levels of pain and over 25.3 million adults experienced chronic pain. Due to unhealthy life style factors, medical conditions, the number of people requiring pain management is growing rapidly and therefore, this segment is expected to continue its dominance over the forecast period. However, cancer is expected to emerge as the fastest growing application area over the next few years. Rapid increase in the number of cancer patients undergoing chemotherapy is a key reason boosting the consumption of medical marijuana across different regions.
North America accounts for over 49% of the market, with the U.S. being the single largest market. In the U.S., 28 states allow the sale of medical marijuana and out of these 7 states allow the sale of marijuana for both recreational and medical use. In the U.S., the tax revenues of legal marijuana are now comparable with other commodities such as draft beer and e-cigarettes. The actual demand for recreational marijuana is more than USD 40 billion, however as most of the economy involves illegal trade, it is difficult to gauge the accurate demand.
In Europe, more than 10 countries allow the sale of medical marijuana. However, there are several restrictions on sale, import and export of cannabis products for recreational use. Even in countries, where it is deemed illegal, the usage rate of cannabis is very high.
Merger and Acquisition Insight
The high market growth is encouraging is driving investor interest in merger and acquisition activities. At present, there are only a few companies capable of end to end processing of medical cannabis and these companies are looking for potential biotech and pharma companies with niche portfolio. Furthermore, large scale producers with technical know-how are also potential targets for companies looking to integrate their operations and leverage on the significant cost savings.
Top Players & Company Share
As of 2016, key market players include United Cannabis Corporation, Corbus Pharmaceuticals, GreenGro Technologies, Inc., Arena Pharmaceuticals, Cannabis Sativa, Inc., Cara Therapeutics Inc, Lexaria Corp, International Consolidated Companies, Inc., GW Pharmaceuticals, Canopy Growth, Insys Therapeutics, Aurora Cannabis, Axim Biotechnologies, and others. Due to the high entry barriers, the market is dominated by the public companies with huge financial resources. The smaller companies with high valuation find it difficult to sustain the long-term competition, and therefore creating opportunities for mergers and acquisitions in the market.
Medical Marijuana Market by Product (Revenue, USD Million, 2014- 2024)
Medical Marijuana Market by Application (Revenue, Million, 2014 – 2024)
- Pain Management
- Multiple Sclerosis
Medical Marijuana Market Regional Outlook (Revenue, USD Million, 2014- 2024)
- North America
- Czech Republic