Cannabis Investors Report: Growth of the Medical Marijuana Industry

Cannabis Investors Report: Growth of the Medical Marijuana Industry

According to the 1961 United Nations Convention on Narcotic Drugs, cannabis is defined as the fruiting or flowering tops of the cannabis plant from which the resin has not been extracted. The term medical marijuana refers to the whole unprocessed marijuana plant or basic extracts, which is used to treat certain diseases and illness. 

At a global level, medical marijuana market size stood at USD 7.2 billion in 2016 and is projected to grow to USD 55.8 billion by 2025. More than 23,000 studies advertise the benefits of medical marijuana for those facing diseases from Alzheimer’s disease to diabetes to chronic pain, and cannabis is becoming conventional. Supported by an enormous body of scientific research, public opinion and progressive cannabis laws, cannabis is getting the status it deserves as a ground-breaking medical solution for various health problems.

Medical Marijuana Markets

Key players functional in the global medical marijuana industry are Teva Pharmaceuticals USA, Inc., Pfizer, Inc., CannaGrow Holdings, Inc., Novartis International AG, Canopy Growth Corporation, Inc., AbbVie, Inc, Insys Therapeutics, Inc. and GW Pharmaceuticals, plc, among others.

The medical marijuana market is undergoing growth due to increasing awareness regarding different medical applications such as pain appetite enhancement, management and reducing eye pressure.

Medical marijuana is broadly classified into two types, namely Cannabis indica and Cannabis Sativa which originate from the countries of the south Asian region, western hemisphere and central region. The number of countries which are authorizing the use of medical marijuana in several parts of this world is growing and is a key factor driving the use of cannabis in therapeutic applications.

More than 1.2 million people use medical marijuana for a variety of medical problems, from depression to cancer to epilepsy.  Retail sales for legal marijuana are growing so fast that the industry has to increase their operations. Producing and growing marijuana products are now happening on an industrial scale.

Reasons for Growth of the Medical Marijuana Industry

Investment deals are increasing in scope, size and frequency.  Investors who are unfamiliar with the cannabis market have traditionally been cautious to invest in an industry which is viewed as illegal by the federal government. While this is true for major institutional investors, groups of wealthy individuals and smaller firms are becoming increasingly interested in the cannabis industry.

For instance, in 2016, Tuatara Capital, the private equity firm raised a record amount for the marijuana industry – $93 million in investments for cannabis businesses. Investors who have already invested money into the cannabis industry are planning on investing capital into many marijuana businesses in 2017 compared to 2016 which shows the optimism of the investors regarding the marijuana industry.

Rising Marijuana sales in the US territory

US hold roughly 49% of the cannabis market share in the world. In 2017, it is expected that the overall marijuana sales in the United States at the retail level will grow roughly 30%, hitting USD 5.1 bn-USD 6.1 bn riding on the continued growth in existing (recreational) cannabis markets.

Recreational sales are expected to exceed medical in 2017. Sales in the Medical marijuana industry also are expected to sustain the industry, powered in part by the anticipated launch of MMJ markets in Hawaii and Maryland. Simultaneously, small medical marijuana initiatives in states such as Nevada, Illinois, and New York could post remarkable growth this year.

Mergers and Acquisitions in the Marijuana Industry

The increase in the number of mergers and acquisitions in the medical marijuana industry is one of the crucial attributes that is estimated to boost the industry over the coming years. Some of the current M&A activities in 2016 are as:

  • Gibraltar Industries acquired Nexus Corporation 
  • BioTrackTHC signed a partnership with Cannabase

Legalization of Cannabis

The increasing number of states authorizing medical marijuana and increasing demand for cannabis in recreational and medical applications is some of the essential factors that are likely to boost demand for medical marijuana over the impending years. The mounting research and development activities are also projected to drive the demand for medical cannabis.

Use of Cannabis for treating Chronic diseases

In 2016, chronic pain was the largest medical application segment due to the existence of a mammoth patient base. The increasing occurrence of chronic pain raises the demand for the drug, thus projected to increase the use of medical marijuana for chronic pain management.

Profitability

Despite the massive challenges and obstacles cannabis companies face, the underlying financials of most companies currently generating revenue are strong. About 75% of cannabis companies in all major sectors are at least breaking even, and an impressive 20% of businesses are earning massive profits.

Some additional reasons of note related to the growth of marijuana industry are:

  • Medical marijuana growers continue to benefit from the progressively aging population
  • A growth in per capita disposable income is anticipated to drive demand for cannabis industry products
  • The demand for cannabis in Asia Pacific market is expected to grow due to increased investment in demand and R&D for cannabis in chemotherapy
  • Due to greater consumer acceptance and demand, more companies have entered the cannabis industry

The increasing interest amongst the healthcare providers and academic researchers regarding the therapeutic uses of marijuana and the increasing social acceptance is among the significant factors, which is driving the marijuana market over the coming years.

 

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