By many estimates, the global cannabis economy is expected to exceed $95B by 2025. Roughly half of that value is attributed to the United States. Keep in mind, that’s in the face of federal illegality. The other half cumulatively represents the remainder of the world marketplace, in nationally-legal jurisdictions. With Germany set to soon legalize and commercialize adult-use cannabis, pundits suggest that Europe is the next frontier for domestic distribution and consumer development.
Fundamentally, the cannabis industry can be broken down into four distinct regulatory pathways and use categories. These four lanes represent the choices that every government around the planet needs to evaluate to decide how they want to enact cannabis reform.
The first is over-the-counter marijuana or recreational marijuana. This is marijuana in its natural state, not to be confused with medical marijuana. If a government chooses this lane, they have a responsibility to ensure safety, quality, and consistency.
The next lane is pharmaceutical. This is the true medical marijuana lane. This lane makes cannabis available to companies to develop pharmaceutical-grade medicines. The framework of this lane differs greatly from marijuana as an over-the-counter product.
The third lane is wellness and food products. This is by and large what we’re seeing with hemp in the United States since the passage of the 2014 and 2018 Farm Bills, mainly through the extraction of non-psychoactive cannabinoids, like cannabidiol (CBD). As such, it is incumbent upon federal regulatory agencies that oversee food and cosmetic consumer products, like the FDA and the USDA, to develop this regulatory framework.
The last lane is the biggest. This is the industrial lane and encompasses all the uses of cannabis as an agricultural commodity. This is what we think of when we say “industrial hemp.” Far reaching, this includes plastics, fuels, textiles, paper, electronics, and at least 25,000 other uses.
These policy and commercial distinctions have taken hold around the globe. I have personally worked with over thirty nations in developing regulatory frameworks accordingly. However, there seems to be an imbalance, as it relates to international policy reform with some countries electing to focus on export programs, while others concentrate on developing a domestic marketplace. To be sure, there must be a balance between the two, or a newly designed regulatory program will result in commercial failure, as we have seen in various regions of the world thus far.
Under any circumstance, the consumer populations in the United States, Europe, and Latin America are too large to ignore. These countries have developed various means of commercial cannabis policy reform. The policy framework is only the starting point. Commercial and marketplace development must occur on a global scale, reflecting the creation of an international cannabis supply chain. Ultimately, unless and until the United States enacts federal cannabis policy reform, the international cannabis community will far surpass U.S-based operators. Despite U.S. operators oftentimes succeeding in spite of themselves when it comes to sophistication, readiness for global economic participation, and mainstream industry infrastructure development. Only time will tell, but the opportunity is real and it is now.
Last Month in the Cannabis Industry Group
The 3 ‘Cs’ of International Cannabis: Context, Chain, and Capital
According to a new report, the global legal cannabis market size is expected to reach $102 billion by 2030. Most industry participants rush in, often times at their peril and detriment. Prior to entering this industry, it is essential to understand the three essential ‘Cs’ of the cannabis industry: Context, (Supply) Chain, and Capital. Knowing the three C’s is key as there continues to be no centralized industry source for information, market analysis, or trade associations to turn to for reliable resources.
Clark Hill Member and Cannabis Co-Chair, Robert Hoban, and Clark Hill Partner, Sam Saarsteiner were joined by CEO of Gateway Proven Strategies, Chris Day to examine the importance of these three essential C’s, and provide insight and direction for navigating this complex and ever-changing environment.
The History of Cannabis Regulation
By: Sam Saarsteiner
Against the backdrop of a thriving and increasingly complex industry in North America and other countries across the Atlantic, we assess the recent, but rapidly expanding regulation of a legal cannabis industry in Europe and how our laws have begun to evolve away from blanket prohibition.
The European Cannabis Market: Opportunity Knocks
By: Sam Saarsteiner
A continuation of our journey reviewing the history of cannabis regulation and proceed to explore the current state of development of the legal cannabis market in Europe, canvassing its decriminalization and regulation as a culmination of a global pattern over the last 20 years.
The European Cannabis Market: What’s Next?
By: Sam Saarsteiner A final review covering where the European cannabis market is headed in terms of regulation, infrastructure, supply chain and opportunity both for indigenous businesses in this space as well as more established businesses in the US and further afield. The gradual erosion of restrictive laws is taking an effect and there is a growing cohort who see the economic opportunities of a new industry developing in Europe.
Upcoming Events
2022 Virtual Cannabis Research Conference
On August 8th-10th, Clark Hill Cannabis Co-Chair, Robert Hoban will be speaking at the 2022 Virtual Cannabis Research Conference hosted by Oregon State University and the Institute of Cannabis Research on opportunities in the the global cannabis economy.
AICPA & CIMA Cannabis Industry Conference
On August 8th-10th, Clark Hill attorney, David Bush will be speaking at the Cannabis Industry Conference hosted by the American Institute of Certified Public Accountants and the Chartered Institute of Management Accountants.
2022 MiCIA Summer Annual Conference and Chronic Cup
On August 10th-12th, Clark Hill Members, Charles E. Murphy and Michael J. Pattwell, will be attending and speaking at the 2022 Michigan Cannabis Industry Association Summer Annual Conference and Chronic Cup.
Southern Hemp Expo On August 18th-20th, Clark Hill Cannabis Co-Chair, Robert Hoban will be speaking at the 4th annual Southern Hemp Expo in Nashville, TN on the global hemp supply chain.
Next Month’s Focus
Post-Merger Integration Challenges in the Cannabis Industry Led by Robert Hoban
The Cutting Edge in Cannabis Law
Canopy Growth Retires C$263 Million of Debt
Retirement of Approximately $263 Million of Debt Strengthens Canopy Growth’s Balance Sheet and Preserves Cash to Support Future Growth.
New York Regulators Approve Regulations Governing Adult-Use Cannabis Sales
Rules formally adopted by the Cannabis Control Board ensure that the first round of dispensary licenses go to applicants with past cannabis-related convictions.
Colorado Governor Issues Executive Order to Protect Employees’ Off-Duty Cannabis Use
State agencies that regulate professional licenses must now protect an individual’s right to use cannabis without workplace sanctions.
Tilray Brands Closes $155 Million Investment in HEXO Corp. Tilray Brands acquired the HEXO Note from HTI, which has a current principal balance of $173.7 million outstanding. The purchase price paid to HTI for the HEXO Note was $155 million, reflecting a 10.8% discount on the outstanding principal balance.
