Dr. Mila Kletsky, President, Academic Director, Picking Alpha

Europe. Europe potentially  is set to become  one of the biggest cannabis  markets in the world with its  742,517,277  population  of which at least 12%  are already its’ active users  and this is  apart from medical, edible  and industrial uses of  cannabis.  Legislation in Europe is moving in favor of  legalization  of cannabis marijuana, while  hemp has enjoyed in Europe for a long time the legal cultivation and usage.

Remarkable event took place in February 2018 when Germany legalized medical and industrial use of cannabis   joining two European countries which so far approved   large scale cannabis cultivation – Netherlands (not for the whole country though)  and Czech Republic.   From now on German pharmacies like in some other countries will be granted the permission to “overtake” the street sales of illegal cannabis and turn it into controlled and secure  business. Of course this process will be followed by the growth of R&D in the plant application in medical and other industries, one more niche for   prospective  investments.

In Netherlands, where medical usage of cannabis is permitted (so far only by prescription)  the Parliament this year  has passed the bill allowing  10 provinces to grow cannabis.

Generally European cannabis marijuana   market is expected to grow very fast  to  hit   by 2020  a high mark  of  $52,6 bln.  Cannabis hemp market in Europe has always been legal and even more – it was subsidized by EU as part of the green initiative. European hemp acreage has surged by 450% from 2011 to 2016. And with other European countries launching its production this growth is expected to increase exponentially. Though for now France boasted   50% of the total hemp production in Europe.

In UK the situation is very contradictory. Though cannabis (marijuana) is still illegal, the country became the world leader in its production for medicinal and scientific needs (44,9% of the global total) and export.   Recently UK became a home for the first  investment company in the country dedicated to the investments in cannabis medicinal use – Sativa Investment which raised  1,1 mln pounds in IPO, the fundraising estimates 4 mln pounds.  Also UK is a home for the one of the world largest medical cannabis companies GW Pharma, which listed on NASDAQ USA  with  a market valuation of $3,1 bln.

Italy. The Parliament of the  country few years ago  approved only the medical usage of  cannabis marijuana, by prescription  and in Florence they have one of the  biggest in  Europe  cannabis  marijuana cultivation facilities which are operated under the Military Forces supervision.  Though recreational usage is illegal, still Italy counts the highest number of teenagers smoking “the weed”.  In January 2017  Italian Government passed the Law on regulation of cultivation,  processing  and sales of cannabis and cannabis derived products  with less than 0,2% of THC, the drug component of cannabis marijuana. It opens a road to the fast growth of emerging businesses in Food and Beverages industries along with the essential oils production.

Czech Republic. Medical usage of cannabis marijuana is allowed strictly by prescription  and recently the cultivation of the medical grade cannabis was permitted by the Government. Edible cannabis for candies, beverages and other products also is allowed provided that it will contain no or a very small fraction of THC, which is the “drug” component of cannabis marijuana. Recreational usage is prohibited.  But still the cannabis cultivation is permitted and grows due  to the rising demand for the product and its derivatives.

USA.  On a Federal level cannabis (including medical, industrial edible and recreational) use is prohibited, but let us see what is happening in different states of USA.  In spite of recent threats  from the USA Government on Law  enforcement actions cannabis production and processing is growing.

30 states already have allowed  cannabis medical use. Now 9 states (Alaska, California, Maine, Massachusetts, Oregon, Nevada,  Vermont, Washington, Colorado)  and Washington DC   legalized  the recreational  one.   New generations of marijuana entrepreneurs with various backgrounds like  finance, medical, law, politics emerge in the country.  Recently the former US House Speaker John Boehner and former Governor of Massachusetts  Bill Weld joined the Board of Advisors of one of the biggest USA cultivation, production and dispensing  operations  company  working so far in 11 states of USA.

Other states are lining up to join  the legalization.  Cannabis (marijuana) becomes a really big business in USA.  In 2017 being only in the infancy state cannabis market   legal sales reached $10 bln   but that was before the huge California market  approved the cannabis business  in January 2018.  By 2021 it is  expected to surge at least to $21 bln.  And according to the estimates 12 more states are lining up to legalize cannabis.

Israel. Since 2017 medical marijuana has been acknowledged as a legal farming culture, granting to the growers access to state grants, training and aid.  Accordingly the extensive clinical research of the marijuana has taken place in Israel. In fact this kind of research is a unique in the whole world and it of course contributed in the willingness of international investors to pour more than $100 mln dollars in the Israel’s cannabis industry.

Israel  cannabis companies not only grow cannabis but also produce and export inhalers, skin care and cosmetics products.  According to  some evaluations Israel is the biggest potential exporter of the medical cannabis in the world, but still the question of legal export is not solved on the Governmental level,  due to some disputable issues.   Resulting  overgrowth of cannabis stock assigned for export    involuntarily pushing all this stock for sales in the  black market.

Latin and South America. Medical use of cannabis was legalized in many countries of the continent in 2017, though only for prescription or through subscription in some therapeutic clubs which were permitted to cultivate  medical cannabis (as in Chile).  Generally it is allowed to  cultivate, produce and sell cannabis-based medication in Argentina, Brazil, Peru, Chile, Paraguay, Colombia, Uruguay (recreational use  has also been legalized), Puerto Rico, Mexico. In the latter it is expected legalization of recreational use and cultivation of cannabis to take place this year.

Africa. Lesotho is a leader in cannabis cultivation and export to South Africa and some other African countries. Canadian companies looking for new opportunities for cannabis growing to some extent boosted the process of cannabis legalization  (especially for medical usage) which is expected to happen in many countries this and next year.

Our brief survey of cannabis usage legalization in various jurisdictions suggests that macro conditions for the cannabis Mega trend development in fact have been and continue to expand globally prioritizing different cannabis applications in different countries.  A growing number of the jurisdictions which strictly prohibit any cannabis usage become more and more  tolerant to the idea of reconsideration of their laws and in the first place in medical  and edible applications of cannabis.

Next:  cannabis market overview, trends in various markets, companies, M&A.

Part 1. Please click here.