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Cannabis Remains World’s Highest Value Agricultural Commodity: Growth Outlook Bullish

Cannabis is by far the highest value agricultural commodity, according to New Frontier Data that published a comparison with other high value products on 29 June 2021.  See table below for a comparison of wholesale prices:

 

Commodity Price US$/kg
High Quality Cannabis 1 362,00
Medium Quality Cannabis 681,00
Italian White Truffle 717,77
Summer Black Truffle 163,89
Ginseng (Dry) 249,70
Saffron 679,18
Tobacco 0,93
Coffee 0,81

 

According to Businesswire, a Berkshire Hathaway company, there may be a drop in cannabis prices in time “as products get commoditized”, but the outlook for the global cannabis market is bullish. 

 

This report from Businesswire, published earlier this year.

 

The global cannabis market is estimated to be valued at USD 20.5 billion in 2020 and is projected to reach USD 90.4 billion by 2026, recording a CAGR of 28%, in terms of value.

The market is primarily driven by factors such as growing medical applications of cannabis and increasing legalization of cannabis and rise in social acceptance of marijuana. North America accounted for the largest market share in the cannabis market owing to the increasing legalization of cannabis for both medical and recreational purposes across the region. However, one of the restraining factors in the growth of cannabis market is complex regulatory structure to produce and use cannabis.

 

By application, the recreational segment is projected to grow at the highest CAGR during the forecast period

Based on application, the recreational segment is expected to be the fastest-growing during the forecast period. This segment is rapidly growing as it is highly demanded and consumed by the consumers. Also, high demand for recreational cannabis can translate into larger market if it gets legalized across various regions.

 

By compound, the THC-dominant segment is estimated to account for the largest share

The THC-dominant segment of the cannabis is dominating the market. The dominance of this segment is majorly attributed to the fact that THC is the psychoactive substance in cannabis products that is responsible for the high. It also provides important medical benefits and is effective in relieving nausea, appetite loss, and insomnia.

The Europe region is projected to grow at the highest CAGR during the forecast period

Europe is projected to be the fastest-growing market for the period considered for this study, due to the increasing legalization of medical cannabis in the region. Also, the healthcare system present in several European countries covers the health expenditure of most patients in this region, further contributing to the growth of cannabis market.

The cannabis market is segmented region-wise, with a detailed analysis of each region. These regions include North America, South America, Europe, and RoW (Israel and Australia).

 

Market Dynamics

Drivers

  • Growth in the Medical Applications of Cannabis
  • Increase in Legalization of Cannabis and Rise in Social Acceptance of Marijuana
  • Increase in R&D and Technological Innovation

Restraints

  • Complex Regulatory Structure for the Usage of Cannabis

Opportunities

  • Product Development Via Research and Novel Product Delivery Solutions
  • Emergence of Cannabis Legalization in Asia-Pacific

Challenges

  • Intensive Energy Consumption and Maintaining Product Consistency for the Cultivation of Cannabis
  • Myths Associated with Cannabis
  • Declining Prices as Products Get Commoditized

 

Industry insider BDSA (formerly BDS Analytics) said in an April 2021 report that: 

“The cannabis industry faced numerous challenges in the past few years, none so potentially disruptive as the coronavirus pandemic in 2020,” said Micah Tapman, Chief Executive Officer, BDSA. 

“Our previous forecast was conservative based on the expected economic fallout from the pandemic, but the industry not only survived, it thrived and legal cannabis gained considerable ground, exceeding our expectations in several markets.”  

The report projected that: “Global cannabis sales reached nearly $21.3 billion in 2020, an increase of 48% over 2019 sales of $14.4 billion. 

BDSA forecasts global cannabis sales will grow from $21.3 billion in 2020 to $55.9 billion in 2026, a compound annual growth rate (CAGR) of more than 17%.” 

 

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