The marijuana industry witnessed significant profits in the last few years after the recent trend of legalization supported the industry. In the United States, nine states have legalized the recreational use of marijuana. Moreover, 29 U.S. states have legalized medical marijuana, though at the federal level, marijuana use is still banned.
The country’s northern neighbor, Canada, had legalized medical use of marijuana way back in 2001. Additionally, Canada has now geared up to legalize recreational marijuana this summer, which in turn has brought attention back to the cannabis industry. Moreover, several marijuana giants are now eyeing foreign markets like Africa to improve growth opportunities, which is also good news.
Canada: First G7 Nation to Legalize Marijuana
More than 17 years ago, Canada legalized the use of marijuana for medical purposes. Moreover, the country recently introduced the Cannabis Act and is all set to legalize the recreational use of marijuana by the end of next month. Today, Canadian Prime Minister Justin Trudeau and Senate of Canada will be voting in favor of the C-45 bill that will help in legalizing marijuana use.
According to several projections, the Canadian cannabis industry is expected to produce 800,000 kilograms of marijuana per year after the legalization. Further, Canadians are estimated to incur a total expenditure of $7.17 billion on marijuana products in 2019, with overall consumption increasing by 35%, per a Deloitte report.
In fact, legal recreational marijuana sales are expected to be around $4.34 billion next year. Moreover, illegal sales and purchase of marijuana will be reduced significantly after the availability of legal cannabis. Along with, Canada, another profitable marijuana market is the United States.
Marijuana Sales in U.S. to Jump 28% by 2021
After eight states, California is the latest to legalize the usage of marijuana for recreational purpose. Moreover, Washington D.C. (District of Columbia) has also legalized recreational marijuana usage. However, earlier this year, this optimism hit a roadblock when Attorney General Jeff Sessions said that it is necessary to "return to the rule of law" to repeal the Obama-era marijuana-friendly state laws.
However, all is not as lost as legal marijuana sales in the United States increased significantly in 2017. According to a report by ArcView Market Research and BDS Analytics, sales of legal marijuana in North America increased 33% in 2017. Moreover, in the next four years, i.e. 2018-2021, legal marijuana sales are estimated to surge 28%, touching a new high of $25 billion. If the data came true, it will be significantly higher than 2017’s performance.
Africa Holds Prospects for Marijuana
Canadian marijuana giants are clearly moving beyond their known terrain and now looking for new markets like Africa. One such major medical cannabis seller, Aphria Inc. is looking for more business in Africa. This is mainly because, in the African continent, marijuana of 10,000 tons or higher is being produced each year, per a UN survey. Additionally, African countries like Lesotho and then Zimbabwe have legalized the production of marijuana for medical and scientific purpose.
Given this scenario, companies related to the marijuana industry like Terra Tech Corp. , GrowGeneration Corp. , Innovative Industrial Properties, Inc. (IIPR - Free Report) and GW Pharmaceuticals PLC (GWPH - Free Report) are expected to gain. Both Innovative Industrial Properties and GW Pharmaceuticals have a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
Undoubtedly, the marijuana industry is booming at present, following the legalization of both medical and now recreational cannabis in Canada. Moreover, strong growth prospect in its two major markets, Canada and the United States is also a positive. Also, recent development in the African continent is expected to boost the marijuana industry further.
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