North America's legal cannabis market to grow to $37.9 billion by 2024

23 December 2019 4 min. read

The legal cannabis market in North America is projected to grow to $37.9 billion by 2024, according to Prohibition Partners, a cannabis-focused strategy and research consultancy. The firm’s Global Cannabis Report also expects all 50 US states to legalize recreational cannabis by the end of 2024.

Overall, the report predicts a global legal cannabis market worth $103.9 billion in 2024, with $62.6 billion for medical cannabis and $41.3 billion for recreational. Europe is forecast to overtake the North American market in this timeframe, driven by a strong medicinal market to reach $39.1 billion.

Nonetheless, North America, even with its smaller population, will have a $37.9 billion cannabis market by 2024 due to first-mover status and advanced market maturity. Canada is one of very few countries to have legalized recreational cannabis, while a number of US states have legalized recreational cannabis. The EU has yet to fully legalize recreational cannabis in any country.

However, recreational cannabis is gaining traction as global attitudes change. The WHO recently proposed rescheduling cannabis in international law, for example, while Luxembourg is set to legalize cannabis by 2021, New Zealand is holding a referendum on it in 2020, and Australia’s Capital Territory voted to legalize recreational cannabis. The drug is legal for recreational use in 11 states currently (33 states for medical use), and the Prohibition Partners report expects recreational legality in 50 states by 2024.

North America's legal cannabis market to grow to $37.9 billion by 2024

As such, North America is projected to have the largest legal recreational cannabis market in 2024, at $17.7 billion versus Europe’s $16.8 billion. Forty-three percent of European countries are predicted to have legalized recreational cannabis by that time, compared to 100% of North America.

On the medical side, Europe is projected to have a market size of $22.3 billion, with North America close behind at $20.2 billion. Despite the population difference, North America’s medical market will be buoyed by its maturity, with more advanced patient numbers and access to programs at the current date.

Canada and the US dominate the cannabis sector, holding nine of the top ten firms by market capitalization. The largest US companies as of October 2019 were Curaleaf Holdings ($2.7B), Green Thumb Industries ($2.3B), and Innovative Industrial Properties ($815.3M).

While Canadian producers currently dominate manufacturing and production, shifting legislation around the globe will inevitably change the landscape. In the US, the 2018 Farm Bill legalized the cultivation and sale of hemp and hemp-derived CBD, signalling Washington’s growing embrace of the cannabis industry. Meanwhile, the House passed an act granting cannabis companies access to the US banking system, including retail banking and credit card processing.

North America's legal cannabis market to grow to $37.9 billion by 2024

Nonetheless, Bank of New York Mellon Corp., one of the largest custody and clearing banks, said in November that it would stop accepting custody or trading with US cannabis-related businesses. The decision likely stems from the current federal illegality of cannabis, despite a of patchwork of state-level legalizations.

As such, US companies employing Americans and providing legal cannabis to Americans have to publicly list shares on the Canadian Securities Exchange, and US retail investors must do cross-border trades to invest in cannabis stocks. Neither options offer the protection of US exchanges and securities laws.

The hazy legal status, according to the report, means that large consumer goods firms have been slow to enter the cannabis space, instead leaving independent startups to lead the charge on consumer products. “The inconsistent legality of cannabis and hemp-based CBD within food and drinks products means we have seen the mainstream brands err on the side of caution before committing,” the report noted.

Despite the federal illegality of cannabis in the US, the country is still the foremost originator of cannabis clinical trials, with 343 in 2019 (versus 106 in Europe and 49 in Canada). The US is, therefore, a leading developer of cannabis-derived therapeutics and new uses for existing medicines.

The pharmaceutical market accounts for a large part of the cannabis market, and depends on rigorously tested drugs. The UK’s GW Pharmaceuticals was able to become the second largest cannabis firm by market cap because of its Epidiolex medical cannabis product, which doubled in sales in the first half of 2019. According to the report, the drug’s success marks a turning point in pharmaceutical-based cannabis – which US firms will look to capitalize on in the coming years, especially as research expands the list of qualifying conditions for medical cannabis prescriptions.