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Legal cannabis market is already at least a $10 billion market now but legalization takes hold worldwide experts see a potential $80 billion global market.
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Brought to you by Marijuana Business Daily
Hours after Constellation Brands announced its marijuana-industry-record investment of 5 billion Canadian dollars ($3.8 billion) in Canada’s Canopy Growth, experts told cannabis entrepreneurs and investors at MJBizConINT’L in Toronto on Wednesday that global cannabis business opportunities will rapidly accelerate.
The move by Constellation -- which owns, distributes and markets 100 beer, wine and spirits brands, including Corona and Robert Mondavi -- is likely to drive significant interest in the industry, Chris Walsh, vice president of Marijuana Business Daily, said during his opening remarks at MJBizDaily‘s first international conference.
That prediction was echoed by the conference’s keynote speaker.
“I’ve never seen the industry move at the velocity it’s moving today,” said keynote speaker Brendan Kennedy, CEO of Canadian medical cannabis producer Tilray and co-founder and CEO of Seattle’s Privateer Holdings, a private equity firm.
Related: One of the World's Biggest Wine-and-Beer Makers Has Made a Huge Move Into Cannabis
Rapid growth and disruption
Conservative estimates peg retail sales in the legal cannabis market at $10 billion-$12 billion this year -- but there’s no end in sight to international legalization, and the market could grow up to $80 billion depending on a number of factors, Walsh said.
Constellation’s CA$5 billion investment in Canopy means more outside companies with large cash reserves might look to the cannabis industry as a conduit for future growth, he added.
Pharmaceutical, alcohol, tobacco and food and beverage companies are already partnering with or making significant investments in MJ businesses, Kennedy noted, in part to stave off the threat posed by cannabis legalization.
“We’re in the midst of a global paradigm shift,” Kennedy said. “Trusted brands with a multinational supply chain and strategic partnerships will be the ones that win.”
Pharmaceutical giant Novartis, alcohol firm Molson Coors Brewing Co. and two tobacco companies, Alliance One International and Imperial Brands, have announced deals with cannabis businesses this year. There’s no indication such moves will slow.
Related: Unwelcome by Wall Street, Another U.S. Cannabis Company Goes North
A look at international markets
In an overview of international cannabis markets, Walsh said:
- The United States is expected to outpace international markets with a projected $8 billion-$10 billion in retail sales this year. Still, Canada -- with recreational retail sales in 2021 projected to be $2.3 billion-$4.5 billion -- is poised to be a global trendsetter in the cannabis industry in other ways. That’s because Canadian marijuana businesses are pioneering international investment, partnership and export opportunities.
- There’s an optimistic outlook for Colombia’s market, where investment opportunities exist for people outside the country. By contrast, in Uruguay, which was the first country to legalize recreational marijuana, the market is small, and access and supply issues persist.
- The United Kingdom’s sudden move to legalize medical marijuana underscores how quickly legalization is spreading. There’s business potential in Germany, where medical marijuana is covered by government health insurance. There are holdouts in Western Europe, but legalization is spreading.
- Legalization in Africa is slower than in other regions, but there’s promise in Zimbabwe and Lesotho. The latter is taking steps to create a regulatory infrastructure for medical marijuana.
- Legalization in Australia is underway but moving slowly, and recreational marijuana may be in the cards in New Zealand.
- Israel has long been a leader in medical marijuana research. Now, there’s a strong push to allow international exports. According to MJBizDaily‘s first international report -- “Industry Insight: Countries to Watch,” released Wednesday – Israel’s export potential could be close to $300 million.
In all, 35 countries have made progress toward legalizing medical marijuana – but no industry model has emerged. And that’s a problem for international operators, Kennedy said.
The greatest risk to international business opportunities is fragmented regulations, he added.
Strategies for international expansion
“You can’t outsource due diligence or do it from your desk” if you’re entering a foreign market, Kennedy advised.
Companies need to get boots on the ground and explore:
- Worthwhile opportunities that will help them rapidly scale their distribution of products; enhance their brands’ innovation pipelines; boost the credibility of their brands and the industry; and enhance their portfolios of differentiated brands and products.
- Markets that complement their brands and products.
- Established partners outside the cannabis industry that have the scale and resources to help them succeed in a new international market.
Related: Some Tips for East Coast Cannabis Entrepreneurs From Colorado's Industry Leaders
In targeting new international markets, Kennedy said Tilray has avoided:
- Joint ventures that don’t have a strategic benefit or put too much control in others’ hands.
- Overpriced mergers and acquisitions.
- Deals related to active pharmaceutical ingredients.
- Partners that are not experts in their industries or are new to the cannabis industry.
- Markets with prohibitive labor costs and regulations.
This article originally was posted in Marijuana Business Daily. The writer, Joey Peña, can be reached at joeyp@mjbizdaily.com
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