One of the most exciting trends in the global cannabis industry is related to the US market and how it has been reporting impressive growth on a year-over-year basis.
During the last few years, we noticed a trend where broker-dealers or market research firms that are focused on the cannabis industry have continued to raise estimates on the size of the market. Most recently, P&S Intelligence published a market research report which estimates the North and South American cannabidiol (CBD) and tetrahydrocannabinol (THC) industry to be a $293 billion market by 2025.
Although the estimate from P&S Intelligence is one of the highest we have seen to date, we agree with the market research firm’s reasoning behind the estimate. P&S Intelligence’s report attributes a portion of the expected growth to the legalization of cannabis in certain strategic markets like the United States in Mexico.
As it relates to the cannabis opportunity in North and South America, the US and Mexico are two key growth drivers for the legal global cannabis market. During the last month, legislation that supports the legalization or decriminalization of cannabis has been submitted or discussed in both of these markets. Going forward, we expect the cannabis industry to benefit from the growth tailwinds that are associated with a changing legal landscape (especially in North and South America) and we are favorable on how this trend will impact certain companies.
Last month, we published several articles on the Mexican cannabis market after recreational cannabis legislation that has support from President Andrés Manuel López Obrador was submitted. Earlier this week, a key Senate committee advanced the amended legislation toward a final floor vote. Now, the bill will be sent to the Senate Health and Legislative Studies Committees.
Although we are confident in the prospects for legal recreational cannabis in Mexico, the bill will face pushback from certain members of the Justice Committee who have expressed opposition to parts of the legislation (i.e. a requirement for adults to register with the government to grow plants for personal use).
One of the reasons we are favorable on the Mexican cannabis market is related to the structure of the market. We expect the country to learn from mistakes that were associated with the legalization process in Canada in the U.S. and will monitor how the market evolves from here.
We recently published articles that highlight the companies that have leverage to the Mexican cannabis market. Some of the companies that claim to have leverage to Mexico include large-scale Canadian Licensed Producers (LPs) like Canopy Growth Corporation (WEED.TO) (CGC) and Aurora Cannabis Inc. (ACB.TO) (ACB) as well as other small scale operators like Khiron Life Sciences Corporation (KHRN.V) (KHRNF).
Going forward, we will monitor how companies position themselves to gain a first mover on the Mexican cannabis market, as soon as legislation permits, and believe that our readers need to be aware of this.
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