Cannabis Market Information

Black Legend Capital Describes in Detail, the Investment Outlook in the Cannabis Industry

As governments open more avenues for investment, the cannabis industry’s progression toward cannabis legalization presents a unique opportunity given the cannabis market’s numerous growth drivers including the large base of potential cannabis consumers, the expected end of federal prohibition, advancements in alternative forms of consumption (delivery methods) of cannabis, new product platforms, and R&D on medical studies funded by pharmaceutical giants.


A History of the Cannabis Industry

In November 2000, Colorado voters legalized the use of medical marijuana with the approval of Amendment 20. This authorized the possession of limited amounts of medical marijuana for patients and their primary caregivers. After this victory, the Colorado court’s ruling paved the way for small, low-volume dispensaries to spring up quickly to meet the demand; however, the sector’s lack of formal legal status and financial recognition forced it to remain informal, unintegrated, and unincorporated.

Figure 1

While the United States cannabis market’s immense growth continues as a result of the legalization effort, its trends are global. Cannabis possession is illegal in most countries under the 1925 International Opium Convention. However, many nations have since adjusted their laws to legalize its medical or recreational use. In December 2020, the U.N. Commission on Narcotic Drugs transferred cannabis from a Schedule 4 to a Schedule 1 drug; however, Schedule 1 drugs are still prohibited substances but are seen as having medicinal value. Countries that have legalized medical use of cannabis include Argentina, Australia, Austria, Barbados, Belgium, Bermuda, Brazil, Canada, Chile, Colombia, Costa Rica, Croatia, Cyprus, Czech Republic, Denmark, Ecuador, Estonia, Finland, France, Georgia, Germany, Ghana, Greece, Ireland, Israel, Italy, Jamaica, South Korea, Lebanon, Lithuania, Luxembourg, Malawi, Malta, Mexico, Netherlands, New Zealand, North Macedonia, Norway, Panama, Peru, Poland, Portugal, Romania, Saint Vincent and the Grenadines, San Marino, South Africa, Spain, Sri Lanka, Switzerland, Thailand, the United Kingdom, United States, Uruguay, Vanuatu, Zambia, and Zimbabwe. (1) Currently, many countries are exploring cannabis business opportunities by legalizing and regulating Cannabis products for medicinal and recreational uses. The state of Colorado has been the first role model in creating a modern cannabis economy. In 2010, the Colorado legislature passed the Colorado Medical Marijuana Code regulating the commercialization of marijuana. The Code proved the industry’s legitimacy, and prepared it for investor capital. In 2012, Colorado became the first state to legalize marijuana. (2) In 2022, the medical use of cannabis is legalized with a doctor’s recommendation in 38 states, four out of five permanently inhabited U.S. territories, and the District of Columbia. Thirteen other states have laws that limit THC content for the purpose of allowing access to products that are rich in cannabidiol (CBD), a non-psychoactive component of cannabis. Although cannabis remains a Schedule 1 drug, the Rohrabacher–Farr amendment prohibits federal prosecution of individuals complying with state medical cannabis laws. The recreational use of cannabis is legalized in 18 states, the District of Columbia, the Northern Mariana Islands, and Guam. Commercial distribution of cannabis is allowed in all jurisdictions where cannabis has been legalized except the District of Columbia. (3)

Cannabis: Growing Rapidly

Figure 2

The U.S legal cannabis total economic impact is booming. The total U.S. economic impact from marijuana sales is expected to increase in 2022 more than 20% compared to the previous year and reach $99 billion. The marijuana sales are expected to continue increasing the next years and surpass the $150 billion in 2026. (4) Even more conservative U.S. states are overcoming their objections, opening to CBD production and sales as legislators seek new ways of addressing growing healthcare concerns. The legal cannabis now supports 428,059 American jobs, which is an increase of 33% in a single year. In 2021, the U.S. legal cannabis industry created more than 280 new jobs every day. Within California alone, cannabis sales reached $5 billion in 2021 and remains the nation’s leading cannabis employer with 83,607 jobs.

The continued success observed in states that have legalized recreational cannabis provides incentive for other states to legalize for-profit marijuana. In Florida, medical cannabis sales reached $1.5 billion in 2021, compared with $1.2 billion in 2020. In Colorado, retail cannabis sales grew substantially between 2014 and 2021. Starting at $303 million in 2014, sales grew to a high of $2.2 billion in 2021. (5)


Verticals of Cannabis

Testing labs: As the medical and recreational cannabis markets continue their steady climb toward legitimacy, the demand for lab-tested products climbs alongside it. The global cannabis testing services market size was valued at $950 million in 2020, and is expected to grow at a compound annual growth rate (CAGR) of 15.4% from 2021 to 2027. Cultivators are signing up agreements with testing laboratories and research centers, as governments in many countries have imposed restrictions on the THC content present in cannabis products. (6)

Industrial hemp: Industrial Hemp is known as a variety of the Cannabis sativa plant species that is grown specifically for industrial use. The global industrial hemp market size was valued at $3.6 billion in 2020 and is expected to register a revenue based CAGR of 16.2% from 2021 to 2026. Industrial hemp and marijuana are different varieties of the same species. Cannabis sativa L. Marijuana typically contains 3 to 15 percent of THC on a dry-weight basis, while industrial hemp contains less than 1 percent. (7)

Wellness and Recreational Markets: With CBD, a third cannabis category – wellness – is emerging. CBD products work on everything from headaches to aching joints, relieve anxiety, and skin conditions. (8) The global cannabidiol market was valued at $2.8 billion in 2020 and is expected to grow at a compound annual growth rate (CAGR) of 21.2% from 2021 to 2028. (9)

Cultivation: The global cannabis cultivation market size was valued at $141.6 billion in 2020 and is expected to grow at a CAGR of 21.2% from 2021 to 2028. (10) Based on biomass, the hemp segment dominated the market for cannabis cultivation and accounted for a revenue share of 94.5% in 2019. For that year, based on application, industrial consumption accounted for the highest revenue share of 93.8% in the cannabis cultivation market. (11)


Capital Markets and M&A in the Cannabis Industry

The COVID-19 pandemic slowed down the whole economy and the M&A activity in 2020. The cannabis industry was not the exception and the capital inflow decreased to $4.2 billion in 2020 compared to $11.3 billion raised in 2019. 2021 was a strong year for the cannabis industry and the pre-pandemic levels were reached after the first three quarters. U.S. MSOs and Canadian LPs were the primary acquirors of companies in 2021 – 52% of acquisitions were made by U.S. companies and 40% were made by Canadian companies. The majority of M&A deals have targeted companies in the cultivation & retail space (83%). (12)

Figure 3

The last trends are showing that Canadian LP’s are focusing on the foreign markets where U.S. MSOs are focusing on the domestic market. 50% of Canadian M&A transactions in 2021 have been in foreign markets while only 5% of U.S. M&A transactions in 2021 have occurred in the foreign markets. (13) Public capital markets have been centered around the cultivation, production, and retail sectors due to a generally faster return on investment. Private capital markets have been centered around ancillary companies. Specifically, capital raises in technology, software, and ancillary companies have been the largest in cannabis. Capital raises in 2021 exceeded $12 billion, three times more than the amount of capital raises seen in 2020. The use of debt has risen considerably from constituting 18% of capital raises in 2018 to approximately 40% in 2021. Average debt raised also doubled from $20.2 million to $47.4 million from 2018 to 2020. Debt is becoming increasingly popular due to decreasing cost of debt amongst the leading cannabis companies. 2021 marked the first year a major listed U.S. cannabis company received a debt deal with a coupon below 10%.

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(5) Barcott, B., Whitney, B., Levenson, M. S., & Kudialis, C. (2022). Jobs Report 2022. Retrieved 5 2022, from
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(13) New Frontier Data. (2021). Cultivating Capital. Retrieved 5 2025, from
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