Despite ominous, if vague, signals of disapproval from the federal government, the legal cannabis industry is widely expected to continue growing at a breakneck pace. Regardless of a scare in January after Jeff Sessions revoked the Cole Memo and its tentative protections for state-legal cannabis operations, all other signs point to a continued rise in the social and political acceptability of cannabis use. In turn, this will keep the space open for the industry’s unprecedented economic boom to continue to progress. It may even simply be a matter of keeping operators and investors from panicking until the wider tidal wave of pro-cannabis sentiment drowns out the voices Sessions and his ilk.

jeff sessions cole memo anti-cannabis Republican

Support for a range of cannabis bills in Congress has picked up vast momentum in recent years. Ultimately, it is up to Congress to lift the federal prohibition that still has a chilling effect on the future growth of the industry. While this support for cannabis may be growing slower than advocates would like, there is little question of which way the winds are blowing. A range of bills have popped up, proposing everything from lifting federal prohibition to protecting state-legal businesses. Much of the support for these bills has come from Republicans, and the Cole Memo decision by Sessions only fueled that support, with bills gaining dozens of new cosponsors. In March, the most powerful Republican in Congress, Majority Leader Mitch McConnell, said he would introduce legislation to allow states to regulate their own hemp industries. Even industrial hemp cultivation was fully illegal until 2014, when new legislation allowed for pilot programs. While hemp cultivation remains otherwise illegal under federal law, with McConnell at the helm, Congress seems likely to put this into the hands of states in the near future.

Although industrial hemp legislation won’t directly affect the legal cannabis industry, such efforts do show the degree to which mainstream, middle-of-the-road, bipartisan America has become far less squeamish about the plant in general. It’s not clear how many years it will be until such attitudes extend to cannabis itself within the legislative branch of the federal government, however, along with the bipartisan support for cannabis legislation and President Trump’s own ambivalent statements on the issue, it suggests that support for a cannabis crackdown would be less than unanimous among Republicans. With support for legalization well above 60 percent and rising, it has become harder and harder to imagine Sessions getting his way on the issue.

With an increasing number of studies suggesting that legal cannabis can help to mitigate the deadly opioid epidemic sweeping the country, there is an additional incentive for non-smoking, mainstream America to live and let live when it comes to cannabis. One new study found that states with legal medical cannabis saw 2.21 million fewer daily doses of opioids prescribed each year. With solid data showing that legal cannabis can save lives, prohibition will surely become a politically tougher sell. In an era with a partisan divide wider than ever before, cannabis seems to be one of the few things that the left, and much of the right, can agree on.

Dan Canon, a progressive civil rights lawyer running for Congress in Indiana, summed it up perfectly when he told Politico Magazine:

“I think anytime you have an issue with such a high degree of bipartisan support in 2018, you have to pay attention to it. And it's appealing because it touches on so many other things: creates a new industry with jobs, good for agriculture, alleviates pressures placed on the criminal justice system, reduces overdose deaths, is a natural pain reliever, can raise massive tax revenue, etc.”

So if we take the leap of faith that the industry might emerge from the Trump era intact, how is the economic outlook for the cannabis industry?

cannabis industry growth

 

Economic Outlook

 

According to a report from Arcview Market Research and BDS Analytics, global spending on legal cannabis is expected to hit $57 billion by 2027, with medical accounting for one third and adult-use recreational accounting for the other two thirds. Most of this spending is projected to occur in North America, where it is anticipated to grow from $9.2 billion last year to $47.3 billion in 2027. The report notes, however, that the world’s legal cannabis industry is still held back by the United Nations 1961 Single Convention on Narcotic Drugs, and warns that this is unlikely to change until federal prohibition finally ends in the US. According to Arcview CEO Troy Dayton, this is likely to occur after the next presidential election in 2020.

Furthermore, the report notes that steps forward by US states and Canada have encouraged a wave of liberalization surrounding medical cannabis and, to a lesser extent, adult-use cannabis policy worldwide, in places such as Brazil and Uruguay.

In California, Arcview projects annual growth of more than 23 percent in the coming years, growing from a $2.81 billion medical market in 2016 to become a $6.5 billion industry by 2020. As the world’s largest regulated cannabis market, California and its progress is likely to reverberate elsewhere. For one thing, a cannabis friendly environment in the world’s 6th largest economy could help to break the cycle in which federal prohibition prevents proper cannabis research, and the lack of research in turn helps to justify keeping prohibition in place. Legal cannabis in such a large economy also provides a model for other states and nations, to see how the system works and how to implement it. If California acts as a microcosm America as a whole, perhaps this model can work in an entire country.  

In Canada, where the Cannabis Act is slowly but surely making its way through the legislative system, industry publication Marijuana Business Daily has projected the market growth from its current $2.3 billion to $4.5 billion by 2021.

Despite the reactionary wave we see from old-school conservatives like Sessions, it’s very clear that cannabis legalization is more than a fluke. Perhaps, when it had only occurred in the relatively small states of Colorado and Washington, it could be written off as a quirky stunt by unconventional western states. However, we’ve long since passed that threshold. Not only have nine US states and Washington DC legalized cannabis, but the idea has been planted on the global stage. Since the US led the charge for international cannabis prohibition to begin with, it’s unsurprising that other countries are beginning to reexamine their own policies. With such massive potential economic rewards for both governments and entrepreneurs, it can’t be long until prohibition becomes the exception rather than the rule.