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The Structure of the Global Cannabis Economy By Robert Hoban

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.

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