An article I did with the Press Association a few months back, its purview being an introduction to both the non-psychoactive and psychoactive varieties of the cannabis plant and its business potential. With 420’s recent passing – which may I say was unfortunately rather suppressed in London by the rain – and the Daily Mail’s inevitable smearing/belittling of these peaceful activists, this could never be more relevant. The overall relevance of this subject should have also been hinted at, rather forcefully, by my earlier post on cannabis. As an added bonus, a few days ago Uruguay rolled out its legalisation of cannabis and anti-Drug War activists the world over are watching, closely.
The Cannabis Industry
Market Size: Medicinal cannabis alone is worth US$1.5 bn
Sub-markets: Fibre (rope, clothing, insulation, etc.), seeds, construction, fuel, plastic, paper, foodstuff, medicine, scientific research
Other Industries it Affects: Housing, textiles, renewable and non-renewable energy, recreational and medical marijuana
Global Opportunity: Cannabis is known for its versatility and can grow comfortably on every populated continent. Worldwide, cannabis is the base of more than 25,000 individual products
Key Countries (by descending order of annual cannabis production): China, the EU, Canada, Russia, and India
Main Players (multinationals with market cap above $0.5 billion): GW Pharmaceuticals, Canna Vest, Med Box
Recent Growth: In the first weeks of 2014 cannabis stocks increased in value anywhere between 20 to 1700 per cent, depending on the submarket or locality
Forecasts: Estimated total potential value of cannabis industry after blanket legalisation is projected to be up to $50 billion
Risk Level: High
Regulatory Status: Strongly regulated, and under a de facto illegality in many legislatures
Public Perception: Very varied, highly regarded by environmentalists but in other cases is taboo
Entry Level Costs: Low
People to Watch: The non-psychoactive cannabis industry (NPCI) activists and lobbyists such as the Hemp Industries Association, and central political figures like US President Barack Obama or US Attorney General Eric Holder
Marketing Costs: Low
After the fall of the Soviet Union, China took its place as the leader of licit cannabis production. Now, China holds half of the world’s cannabis patents. In 2003-2004 China, with 24,000 tonnes grown annually according to the FOA, created 79 per cent of the world’s hemp (nearly all of the remaining fifth was produced by France and Chile).
In 2012, for the first time in history, polling in both the US and UK showed that a majority of the population wanted a relaxation of cannabis laws. On the back of favourable public sentiment towards marijuana, hemp deregulation has accelerated. Recreational marijuana’s legalisation in Uruguay, and the states of Washington and Colorado, was followed in Feb 2014 by the US president signing the Farm Act 2013 that was passed by congress. With the amended Farm Act’s enactment, hemp farming became legal for the first time in 70 years. The US was the only major economy in which hemp production was totally illicit, and its shift in policy could be the final domino that needed to fall before the NPCI could take off.
Investors in cannabis cultivation (particularly in the US), at this stage, will be riding the tide of history and monumental legislative changes. The world’s largest economy has, until this year, been largely excluded from one of the most lucrative agricultural industries ever. And, in light of American businesses’ vigorous competition with their Chinese counterparts, the US will no doubt seize the opportunity they’d previously missed.
Cannabis Timeline (post-Cold War):
1990s: Hemp regulation begins to relax throughout EU member states, after a European Economic Community (EEC) directive in 1993 makes it possible for a few farms to grow cannabis with a low THC content.
1994: Canada issues its first licenses for hemp research.
1996: Californian voters pass Proposition 215, allowing medical cannabis in spite of federal prohibition.
1998: The US begins to import food-grade hemp seed and Canada allows hemp farming for uses beyond research.
2000: Tony Blair states his agreement with the legalisation of medical cannabis, the first PM to do so since the UK illegalised the drug in 1928.
2003: Canada’s public health service is the first to offer medical cannabis to patients.
2005: GW Pharma’s Sativex, the first cannabis derived medicine, is licensed for use in Canada.
2007: The first American hemp licenses in half a century are granted to North Dakotan farmers.
2011-2012: In 2011 GOP representative Ron Paul introduces the Industrial Hemp Farming Act, and Democratic senator introduces a companion bill the year after.
2012: Recreational cannabis is legalised for the first time by a US state with the referenda in Colorado and Washington.
2013: The Farm Act 2013 is introduced to congress.
2014: The Farm Act 2013 moves through both houses of congress before being signed by the president.
2014: Uruguay rolls out its full legalisation of cannabis.