Report lists six trends to watch as legal cannabis goes global

New Frontier Data has published a report titled “Global Cannabis Trade: Emerging Regional Import & Export Opportunities”.

Washington D.C.-based cannabis business intelligence firm sees an “emerging global cannabis economy”. Konstantin T./Getty Images

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On December 2, 2020, UN’s drug policy-making body made what many consider to be a historic decision regarding cannabis.

The Commission of Narcotic Drugs (CND) voted to remove cannabis from Schedule IV of the 1961 Single Convention on Narcotic Drugs.

Schedule IV lists substances with little to no therapeutic purposes, like opiods.

As an official UN media release noted on that day, the move “opened the door to recognizing the medicinal and therapeutic potential of the drug”.

However, the release also stated, cannabis use for “non-medical and non-scientific purposes will continue to remain illegal”.

A recent report by a Washington, D.C.-based business intelligence firm cites the same milestone as it sketched the outlines of what it describes as an “emerging global cannabis economy”.

“With the vote, the CND opened the door to recognizing myriad medicinal and therapeutic applications for cannabis, likely driving expansive scientific research and international attention towards the cash crop,” New Frontier Data stated.

In addition, the firm noted that cannabis was “already in the spotlight” on account of its value as a cash crop.

“In the United States, a wholesale pound of quality smokable cannabis flower can fetch between

$1,500 and $3,000 (whereas a pound of corn, rice, or grapes cost $0.10, $0.70, and $0.11 per pound, respectively),” New Frontier Data explained.

In “Global Cannabis Trade: Emerging Regional Import & Export Opportunities”, the company stated that “as the market matures, disparate regulations will continue to have outsized impacts on the trajectory of the global cannabis industry”.

Overall, “With more than 70 countries globally having liberalized their cannabis policies, a foundation is being set for the emergence of a global cannabis economy.”

With this, New Frontier Data listed six trends to watch as cannabis goes global.

First is that medical use will be the “prevailing form of liberalization” worldwide.

“While a few countries like Canada, Uruguay, and South Africa have legalized adult-use cannabis, much of the world will be focused exclusively on the plant’s therapeutic applications, with significant implications for the product types permitted in each market, any regulations governing the industry, and engagement of which consumers participate in the market.”

Second, the “race race is on to be the low-cost producer for the world”.

“According to Cannabis Benchmarks (i.e., June 11), the wholesale spot price for cannabis in Canada was $2,090 USD per pound. Comparatively, in Colombia the wholesale price can be as low as $50 USD. With many countries in Latin America, Africa, and Asia strongly positioned to undercut production costs in Western markets, the locus of production for cannabis biomass will increasingly move to low-cost production countries, even as the manufacturing of value-added products remains centralized in Canada and Europe.”

Third is the emergence of centres of excellence.

“Some regions are establishing themselves for respectively different aspects of cannabis production:

Israel and Australia are global leaders in cannabis research, whereas Colombia, Lesotho, and Eswatini are pioneering legal outdoor cultivation at scale, and some North American companies are leading the world in technology-driven innovation.”

Fourth, European Union standards on agriculture and manufacturing will “form the basis for global import/export standards”.

“As countries beyond the EU begin importing medical cannabis, most are expected to adopt similar standards for the products which they import. Consequently, companies seeking to participate in the global market should expect stricter product standards (rather than any laxity) as markets expand.”

Fifth, the U.S. will be “largely sidelined during the early years of international cannabis trade”.

“Some companies will seek to acquire assets in foreign countries where cannabis is nationally legal, but pending passage of similar laws in the U.S., American companies will remain limited in their abilities to directly participate in the global cannabis trade.”

And sixth, “regulatory variance creates transcontinental complexity and risk”.

“While nations considering the import or export of cannabis tend to share many of the same guiding principles, variations in the letters of laws across countries can result in some negative externalities, introducing further complexity and risks for the international cannabis trade.”

Follow Carlito Pablo on Twitter at @carlitopablo

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