Why 2024 Will Be the Best Year Yet for Cannabis Investment
Year over year, global cannabis revenues exceed expectations and now stand at an estimated $50 billion in global sales in 2023. If you add in the illicit market, the number could be more like $344 billion, and this does not even take into account new demographics that will open as legalization increases, as it’s already the most-used drug worldwide while still being illegal in most countries.
2024 is shaping up to be a year of potential big wins for cannabis from legislative, valuative, and popular opinion viewpoints.
Big Cannabis Players Are Making Major Regulatory Moves
Clearly, politics and regulations have always been an Achilles heel for cannabis. Recent movements show that regulators are rejecting political lobbyists and going for what is right and popular.
In August, the United States Health and Human Services (HHS) Assistant Secretary for Health Rachel Levine sent a communication to Drug Enforcement Administration (DEA) Administrator Anne Milgram about rescheduling cannabis from a Schedule I narcotic, like heroin or LSD, to a Schedule III.
The Germans are facing similar calls on both sides of the aisle to de-list cannabis as a narcotic and decriminalize the plant. The recently approved proposal to decriminalize cannabis, enact social clubs and remove cannabis as a narcotic looks like it will progress through the German parliament.
These two landmark regulatory events could send the global legalization efforts in most countries into overdrive. Already, we see major cannabis policy announcements from almost every continent, and countries like Thailand, Ukraine, Czechia, Albania, Morocco, Brazil, and Japan to name a few, are all pushing cannabis programs. In 2024, expect countries you never thought would join the cannabis train hopping aboard.
Cannabis Business Valuations Are on the Up-and-Up
U.S. and Canadian valuations have never been cheaper.
Although there are major issues in Canada regarding insolvency rates, recently, companies have been pushing back at unprofitable margins and begun to swing to profitability by abandoning the “race to the bottom.”
The U.S. is plagued by insane taxes both on the state and federal levels. Plus, onerous regulations have made it impossible to operate in some states and have collapsed prices due to over-licensing in highly competitive states like Oregon and California. Many big companies have exited over-licensed states and focused on core business models that work like CuraLeaf, with some trading around one-time earnings. Of course, regulated financial access for cannabis companies, such as that proposed in the SAFER Banking Act, would enormously help to get loads of bad debt off the books. Still, for the most part, American cannabis companies are growing and becoming more profitable.
European and Australian entrance into the cannabis market boosts valuations in already-operating markets like the U.S. and Canada. Companies in mature markets are eyeing emerging markets for merger and acquisition expansions outside the U.S. Expect 2024 to show a significant uptick in cross-Atlantic M&A activity as U.S. companies eye growth and Canadian companies eye survival by seeking better margins.
Cannabis is Increasingly the People’s Choice
The world is global, and as people travel to the U.S., Canada, Germany and Australia and visit social clubs and coffee shops in Spain, Malta and the Netherlands, they understand that cannabis is no longer only an illicit market, and they push for legalization. Nobody has ever died from consuming cannabis, and it is as common as alcohol in many jurisdictions. Cannabis’ health benefits compared to alcohol for pain, common stress and relief uses are undeniably superior.
In a time of strife and global conflict, it’s abnormal for legislators to hold back something healthy while advocating and spending billions on destructive measures. Constituents increasingly pressure their politicians to bring home wins, and cannabis is an easy one that should gain more traction in 2024. Big Pharma’s anti-cannabis political efforts are becoming less effective with the success of cannabis markets, and politicians are having a hard time voting against progress, considering 88% of U.S. adults think medical cannabis should be legal and a majority in most European countries.
Cannabis’ 2024 Upswing Is Near-Guaranteed
2024 should be a turning point after six years of turmoil and inconsequential legislative moves. The Biden administration needs an easy win, and regulatory action is one. German politicians need a win and will most likely secure it administratively. Globally, countries need to bring about change in turbulent times. Generally speaking, valuations cannot get cheaper as companies have successfully survived and are now on the upswing. Additionally, consumer preference will outweigh lobbyists’ influence through 2024.
Let’s not wait for 2025. Urge regulators to make 2024 the year they do what their constituents want instead of pursuing ideas benefiting corporations.
By Mike Sassano @ Technical 420
