The North American cannabis industry continues to show resilience in the first half of 2024, with recent data from market watchers pointing to a promising outlook for the coming years.
According to a report by Research and Markets, the North American market is expected to experience significant growth, expanding from a size of USD 35.6 billion in 2023 to USD 298.5 billion by 2032. This represents an effective compound annual growth rate of 26.65%, indicating remarkable growth. Increase in market value during the forecast period.
While the U.S. and Canada continue to face challenges, more than 48% of profitable cannabis businesses expect the industry to perform “somewhat better” or “much better” in the next 12 months, according to the MJBiz Factbook. He expects it to get better.
Read what drove the US and Canadian cannabis sectors in the first half of 2024.
Cannabis producers show signs of strength in first half
There were encouraging signs in the second quarter of this year that the cannabis industry could recover after a period of challenges and hardship. Many of the largest cannabis companies have reported strong revenue growth, suggesting demand for cannabis products remains strong.
In its second and third fiscal quarters, Tilray (NASDAQ:TLRY, TSX:TLRY) achieved significant net revenue growth of approximately 30% year over year. In contrast, SNDL (NASDAQ:SNDL)'s Q1 2024 financial results reported a modest annual net revenue increase of just 4%.
Canopy Growth (NASDAQ:CGC, TSX:WEED) saw modest growth in net revenue during its fourth fiscal quarter, up 7% year-over-year. Cronos Group (NASDAQ:CRON, TSX:CRON)'s Q1 2024 net revenue showed impressive year-over-year growth of 30%.
Green Thumb Industries (OTCQX:GTBIF, CSE:GTII) reported an 11% year-over-year net revenue increase in the first quarter. Curaleaf's (OTCQX:CURLF, TSX:CURA) net revenue in the first quarter showed 2% annual growth, while Verano's (OTCQX:VRNOF) annual revenue declined 3% in the same period.
Trulieve (OTCQX: TCNNF, CSE: TRUL), which announced plans to open 25 new stores in 2024, announced its first quarter financial results on May 9th. It was revealed that the net loss decreased by 64% compared to the same period last year. The company's sales came in at C$297.6 million, beating analysts' expectations of $285.9 million.
Canada's federal budget disappoints cannabis companies
Canada's 2024 federal budget does not include any measures to support the cannabis industry, disappointing cannabis businesses across the country who had high expectations.
Of particular importance is Canada's high excise tax, which is levied at a rate of $1 Canadian per gram of cannabis or 10 per cent of the producer's sales price, whichever is higher.
Excise taxes are a huge burden on the industry, impacting the profitability of legal cannabis businesses and forcing operators to raise prices. This difficult financial environment has made it difficult for Canadian carriers to expand, suffocating a market with only a few major competitors.
A government-appointed panel of experts recommended the country reconsider how it applies excise tax rates, but the 430-page budget document barely mentions the cannabis industry. Tax Policy Canada also warned Finance Minister Chrystia Freeland that the excise tax is hurting Canadian businesses.
The federal government also increased eight cannabis regulatory fees on April 1st.
US cannabis prices exceed expectations
Data shared from LeafLink and Cannabis Benchmarks shows wholesale cannabis prices in the U.S. are higher than expected in 2024, as the industry matures, even as some markets continue to be under competitive pressure. It shows that you are doing it.
Ben Burstein, LeafLink's senior corporate development officer, told MJBizDaily that he expects emerging markets will likely contribute more than 60% of retail sales in 2024 and 2025.
Roy Bingham, co-founder and CEO of cannabis data company BDSA, told Cannabis Business Times that new markets on the East Coast and Midwest will contribute the most to growth in the U.S. market. Cannabis sales (accounting for about 56% of the global market) will grow within the next few years.
Maryland is a new entrant to the market with the launch of recreational sales in July 2023, with recreational sales exceeding US$700 million in the first year and total state-licensed recreational and medical sales exceeding US$1 billion. Exceeded.
Similarly, Illinois sales exceeded $1 billion for the second year in a row, and market capitalization grew faster than in 2023.
Meanwhile, New York state's marijuana legalization process has moved slower than most expected, with delays in issuing licenses and developing a regulatory framework. The state has issued only a limited number of permits, and regulators are prioritizing those most affected by the drug war.
This approach led to legal challenges from applicants who felt unfairly excluded.
Cannabis booms in Kentucky, Minnesota, and Ohio
In January, Kentucky Governor Andy Bechar called for adding qualifying medical conditions to the state's medical marijuana program, scheduled to take effect in 2025.
In March, Kentucky Sen. Stephen West introduced Senate Bill 377, which would include all terminal illnesses, HIV/AIDS, and glaucoma on the list of conditions for which marijuana can be used medically.
The application process for medical marijuana business licenses will begin on July 1, and the state plans to implement a lottery system to award the first permits in October.
In Minnesota, regulators asked lawmakers to help expand adult-use cannabis sales. Several proposals were considered, including prior approval of cultivators and expediting the permitting process.
Sales for adults are expected to begin in Minnesota in 2025.
Finally, Ohio's recreational marijuana market is undergoing cautious and steady development. On May 13, after months of bureaucracy, the Joint Committee on Rules and Regulations of the Agencies did not object to a proposed regulation that would allow medical marijuana dispensaries to apply for recreational licenses. The regulator issued the first 10 dual licenses on July 24.
US moves to reschedule cannabis
As the U.S. cannabis market continues to evolve, legislative influence is shaping its trajectory. Most notable is the U.S. Drug Enforcement Administration's (DEA) official request to reschedule cannabis in May.
The Associated Press reported that after a long lobbying effort, the DEA plans to change marijuana to a Schedule III substance under the Controlled Substances Act on April 30th.
On May 16, the U.S. Department of Justice (DOJ) announced that it would publish a notice of Attorney General Merrick Garland's proposed rulemaking in the Federal Register and begin a 60-day public comment period starting July 23.
A total of 43,000 comments were received during the comment period, with overwhelming support for measures to expand access to cannabis. Additionally, an analysis conducted by the Drug Policy Alliance found that 69 percent of commenters supported complete deferral of cannabis, reflecting the evolving public perception of cannabis. It turns out that means it will either be removed or legalized at the federal level.
If no objections arise, the DEA and DOJ will consider public comments and make a final decision to issue the rule. Opponents have 30 days to file a lawsuit, and a hearing will be held by an administrative law judge chosen by DEA Administrator Milgram, who has not yet signed the May 16 notice.
Farm Bill amendments could redefine hemp
Another legal development impacting the U.S. cannabis industry is the amendment to the 2024 Farm Bill proposed by Representative Mary Miller (R-Ill.) on May 22nd. This aims to redefine hemp to exclude certain hemp-derived cannabinoids.
The hemp-derived cannabinoid market has exploded by 1,283 percent in three years, according to data collected by Brightfield Group for Cannabis Business Times, but public health experts believe some of these compounds , specifically warns that delta-8 THC can be harmful. To minor users.
If passed into law, Miller's amendment would effectively criminalize many hemp-derived products by excluding from the legal definition of hemp cannabis seeds and derivatives with total THC concentrations greater than 0.3 percent. It turns out.
It would also restrict the sale of seeds and flowers with high THC concentrations, as well as the sale of synthetic or manufactured cannabinoids. These developments have far-reaching implications for the hemp industry and could have a significant impact on cannabis product research and development.
On May 23, the House Agriculture Committee voted to include Miller's amendments in a new draft of the 2024 Farm Bill. Voting is expected to take place by September 30th.
Most recently, on July 9, the House Appropriations Committee passed a bill that would prohibit the Department of Justice from using its funds to reschedule marijuana. The bill targets commercial, judicial, scientific and related agencies, and there are concerns that the bill could further delay or postpone cannabis reopening.
Looking to the future
As the legal landscape surrounding cannabis continues to evolve, more states are moving forward with the creation of medical and recreational cannabis markets. Nebraska, North Carolina, and Wisconsin are also pushing for cannabis reform, showing that legalization momentum is growing across the country.
Meanwhile, the SAFER Banking Act, aimed at addressing financial challenges facing cannabis business owners, remains stalled in the House. Despite this setback, key lawmakers like Chuck Schumer remain committed to passing the bill and stressing its importance ahead of the upcoming election.
Vice President Kamala Harris has a history of supporting marijuana legalization, but President Trump's position on the marijuana issue in particular remains ambiguous. But his tough stance on illegal drugs is consistent with traditional Republican opposition to drug reform. In the upcoming election, market participants will need to pay close attention to candidates' stances on cannabis policy.
Don't forget to follow us @INN_Cannabis We bring you real-time news updates!
Securities Disclosure: I, Megen Seeter, have no direct investment interest in any companies mentioned in this article.
From an article on your site
Related articles on the web
