Many assume the recreational marijuana market will surpass medical cannabis but there are many reasons to suspect they will be proved wrong.
Medical marijuana could become the bigger of the two within a few years thanks to three factors.
Here’s what entrepreneurs should know about the difference between these two markets, and how the cannabis industry’s astronomical growth could evolve differently than one might expect.
The current state of the cannabis market.
Global cannabis sales reached a new high of $12.2 billion in 2018, up from $9.5 billion in 2017, according to a report by BDS Analytics. More than half of that was recreational. Some examples:
- Colorado: Out of total revenue of almost $1.55 billion, according to the Colorado Department of Revenue, only $332 million was medical cannabis.
- California: Sales reached approximately $1.2 billion per state data, more than half of which was recreational.
- Canada: Statistics Canada reported total sales for October through December reached $115 million USD. At the same time, the number of medical marijuana patients grew in Canada.
Sales in US states that have legalized weed appear to be moving away from medical cannabis and towards recreational, though this has not held true in Canada, though there are indications it will once the market matures and there is wider accessibility.
In the U.S., the legalization of recreational weed has meant a corresponding decline or stagnation in medical cannabis sales. This makes sense for a few reasons. Depending on the state, obtaining a medical marijuana card can be complicated with few doctors willing to prescribe and applications, and medical marijuana patients sometimes must pay a fee.
In California, the biggest cannabis market to date, lenient laws created an artificially large medical marijuana market. Today, many of those patients are switching to recreational.
The rise of recreational weed has lead to some panic about the future of medical marijuana. Will producers entirely shift their focus away from medical marijuana and to focus on the hottest cannabis products like concentrates vapes, and other high-THC options? Will patients have access to the product they need for target-specific conditions, rather than get you high?
There are a few reasons why this will not happen.
CBD will be bigger than recreational weed.
The recreational market isn’t just booming because people want concentrated THC. In fact, the products with the biggest sales increase in 2018 were high in CBD. The growing interest in medicinal and medical cannabis is a strong indication CBD market will explode in the upcoming years.
CBD, also known as cannabidiol, is a compound in cannabis that does not produce a high. ThoughCBD is the second-most popular compound found in weed after THC, it can be found in hemp, too, which is non-psychoactive. This means that it cannot produce unwanted effects, by law.
CBD can address a variety of conditions ranging from the severe to the preventative according to a growing body of research and anecdotal evidence. These include both physical conditions including seizures, pain, Alzheimer’s and Parkinson’s disease and mental health issues such as depression and anxiety. CBD provides a much-needed, non-addictive alternative without negative side effects for pain management and epilepsy These conditions afflict millions of Americans who don’t yet use medical marijuana. The potential market is enormous for all-natural products that can address these ailments.
CBD edible sales grew astronomically in 2018. In one year alone CBD gummy sales went up 925 percent, sales of CBD chocolate market increased by 530 percent and CBD tincture, also known as cannabis oil, sales went up 111.5 percent.
Most predict that the CBD market will eclipse the recreational cannabis market — something that couldn’t have been predicted at the beginning of the legalization movement. The most optimistic projection comes from the Brightfield Group, which says the CBD market could reach $22 billion by 2022, more is more than the projected recreational cannabis market.
But is CBD medicinal or medical cannabis? Most people take CBD medicinally, not recreationally, with some replacing pharmaceuticals with CBD. Others use it to address conditions for which they never took a prescription, and a growing number use it as preventative medicine.
In other words, the distinction between medicinal and medical cannabis is hazy. With more research demonstrating CBD’s effectiveness, cannabidiol could soon be redefined. This is most likely to occur after national legalization — and once Big Pharma becomes more involved.
Big Pharma could change the cannabis industry.
The American pharmaceutical industry is the biggest industry in the country and it continues to grow. It represents 45 percent of the global pharmaceutical industry, according to Statista. Big Pharma is investing in weed research, a second big reason why medical cannabis could surpass recreational sales. Because pharmaceutical companies are investigating cannabis medicine, CBD could become a more common form of medical marijuana, not just a supplement categorized as recreational.
Pharmaceutical companies are putting more resources than ever into CBD research to satisfy the demand for cannabis-wellness. There has already been a breakthrough. Epidiolex in 2018 became the first FDA-approved cannabis-derived medication. It is prescribed to treat two types of epilepsy. FDA reclassified Epidiolex as a substance with a lower likelihood of abuse than recreational cannabis. Though just one drug, Epidiolex has opened the floodgates for other pharmaceutical companies to start exploring medical cannabis.
Medical marijuana research is still in its infancy. But in 2018, pharmaceutical companies filed more cannabis patents than ever. Six of the top 10 cannabis patent holders are pharmaceutical companies, according to a recent report. Expect to see many more cannabis medicines available in coming years.
Cannabis consumer demographics keep shifting.
The U.S. baby boomers are the largest generation in American history. There are 76 million baby boomers in the U.S., according to Pew Research, ranging in age from 54 to 73. That is a large segment of the population that is either eligible for Medicare or soon will be.
It isn’t a coincidence that seniors are one of the fastest expanding cannabis users. Not only are seniors spending more on marijuana than ever before, but they’re accustomed to spending a lot on medication. A report found that brand name drug prices have almost doubled in nine years.
As a result, seniors are more likely to look for less expensive alternatives, like cannabis. Pharmaceutical companies are incentivized more than ever to create medical cannabis products to appeal to their older demographic.
An additional factor in coming years is that contemplated changes to global treaties could create an international medical cannabis market, with CBD specifically exempted from international prohibition. This creates the potential for eventually allowing cannabis producers, such as those in Canada projected to eventually glut domestic markets, to export to newly opened markets. The United Kingdom and Thailand recently legalized medical marijuana, and many European countries are in the process of relaxing their laws.
For more developed markets with bigger producers, this translates to massive potential for medical marijuana overseas in markets that are far away from recreational legalization.
Will medical cannabis surpass recreational?
Recreational cannabis will be huge but increasing interest in medicinal cannabis, global market growth and involvement from Big Pharma could make medical cannabis the larger of the two markets. For this to happen, however, there are a few things that have to change. Specifically, this would require better accessibility to medical cannabis — more doctors, easier applications and more options when it comes to medication targeting specific illnesses — and a better understanding of how we can use CBD medically. Lastly, for the market to really reach its potential, international expansion of the medical cannabis market needs to be legalized.
One thing is for certain: The market for cannabis medications will continue to grow as baby boomers come of age, stigma decreases and continuing research confirms the effectiveness of cannabis for many common ailments.
Source: 420 Intel
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