CANNABIS CULTIVATION MARKET ANALYSIS

The cannabis cultivation market size is expected to reach US$ 136 Bn by 2030, from US$ 42.9 Bn in 2023, at a CAGR of 17.9% during the forecast period. The global cannabis cultivation market consists of two primary product categories: marijuana and hemp. Marijuana is primarily cultivated for its psychotropic properties and is used recreationally or medicinally. It contains significant amounts of tetrahydrocannabinol, or THC, the main psychoactive compound in cannabis. Marijuana cultivation produces flower buds that can be smoked or consumed through other means like edibles. Hemp, on the other hand, contains only traces of THC but high amounts of cannabidiol, or CBD, which is touted for various therapeutic benefits without the intoxicating effects. Hemp is grown primarily for industrial uses through its strong fibers that are processed for various products ranging from textiles, papers, biofuels, and even construction materials. However, recently, hemp cultivation has also focused on producing CBD extracts that can be used in wellness products like oils, creams, and supplements. CBD extracts from hemp do not cause intoxication but may provide relief from issues like anxiety, insomnia and chronic pain.

The cannabis cultivation market is segmented by product type, method of cultivation, medical application, end use, and region. By end use, the market is segmented into medical, recreational, and others. The medical segment is expected to account for the largest share during the forecast period due to the growing consumer awareness about its medical benefits.

Cannabis Cultivation Market Regional Insights

• North America is expected to be the largest market for cannabis cultivation market during the forecast period, accounting for over 36.2% of the market share in 2023. The growth of the market in North America is attributed to the increasing legalization of medical cannabis across the country.
• The Europe market is expected to be the second-largest market for cannabis cultivation market, accounting for over 27.5% of the market share in 2023. The growth of the market in is attributed to the increasing awareness about the medical benefits of cannabis in the region.
• The Asia Pacific market is expected to be the fastest-growing market for cannabis cultivation market, with a CAGR of over 25.5% during the forecast period. The growth of the market in Asia Pacific is attributed to the increasing adoption of energy-efficient methods in the region.

Figure 1. Global Cannabis Cultivation Market Share (%), by Region, 2023

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Analyst View

• The global cannabis cultivation market has significant growth potential over the forecast period, driven by the ongoing legalization of cannabis for both medical and recreational use worldwide. Many countries are legalizing cannabis to tap into this emerging industry and generate tax revenues. North America currently dominates the market due to legalization across Canada and many U.S. However, countries in Europe and Latin America are also expected to emerge as high-potential markets. Market growth could be restrained by conflicting state and national regulations in federal systems like the U.S. Lack of access to banking services for cannabis companies is another challenge. There are also uncertainties around long term health impacts, which some countries may later use to tighten regulations. However, the increasing acceptance of cannabis for medical use will drive prescription volumes and reduce regulatory restraints over time. Key growth opportunities lie in cannabis-infused products like edibles and beverages, which offer higher margins compared to dried flowers. Countries with a traditionally high consumption of commodities like beverages or herbal medicines are likely to adopt cannabis-infused products faster. Medical cannabis also has significant untapped potential if clinical research yields definitive results proving its efficacy for conditions like chronic pain, epilepsy, etc. Overall, with more supportive regulations globally and expanding product categories, the cannabis cultivation market seems poised for strong growth worldwide over the next.

Cannabis Cultivation Market Drivers:

• Legalization of Medical Cannabis: The legalization of medical cannabis refers to the process by which the use of cannabis for medicinal purposes is made legal under the law. This process varies greatly from country to country and even within regions of the same country. Medical cannabis is used to treat a variety of conditions including chronic pain, nausea and vomiting due to chemotherapy, and multiple sclerosis. The legalization of medical cannabis across many countries is a major factor contributing to the rise of the global cannabis cultivation market. With more nations recognizing the medical benefits of cannabis, there has been a significant increase in the number of patients and doctors recommending cannabis for various therapeutic applications over the past decade. According to estimates by the World Health Organization, around 30 countries have legalized medical cannabis programs to date. This has boosted both the domestic and international demand for high-quality, regulated medical-grade cannabis. Cultivators are expanding their operations and diversifying their product lines, including cannabis flowers and extracts, to meet the specific needs of patients and the healthcare sector. Growing acceptance of cannabidiol, or CBD, a non-intoxicating compound derived from cannabis, among mainstream consumers has also provided a fillip to the market.
• Growing adoption of cannabis-based medicines: The global cannabis cultivation market is witnessing significant growth owing to the increasing adoption of cannabis-based medicines worldwide. More and more countries are legalizing the use of medical cannabis to treat various medical ailments like chronic pain, neurological disorders, mental health conditions, and more. Various research studies have shown cannabis to have medicinal properties for relieving symptoms. As scientific evidence for the medicinal use of cannabis piles up, more countries are reviewing their cannabis policies and permitting its production and distribution under strict regulation. This has opened up huge opportunities for cannabis cultivators and producers. Countries like Canada, Germany, Italy, Australia, Colombia have legalized medical cannabis and are witnessing significant year on year growth in domestic production capabilities to meet the rising demand from their patients.
• Increasing Awareness about Therapeutic Applications of Cannabis: Therapeutic applications of cannabis are gaining more attention globally which is propelling the growth of the cannabis cultivation market. Various scientific studies and research have shown cannabis can help patients suffering from chronic pain, epilepsy, depression and anxiety, arthritis, cancer side effects like chemo side effects. There is growing anecdotal and scientific evidences about benefits of cannabis when administered safely and properly. Multiple countries like Canada, Germany, Australia have already legalized medical cannabis. South Africa's health minister also recommended making medical cannabis legally available since early 2021. This has encouraged more farmers and companies to enter into cannabis cultivation business with hope of strong future demand. Countries want to ensure people get access to locally grown high quality medical cannabis at affordable cost if prescribed by doctor. The medical acceptance and legalization has paved way for innovative cannabis products like cannabis extracts, capsules, oils, patches and topical creams. As per World Health Organization (WHO), in 2021 around 2.5% population or about 147 million people worldwide were reported using cannabis.

Cannabis Cultivation Market Opportunities:

• Emerging New Medical Applications: The emerging new medical applications provide a great opportunity to drive growth in the global cannabis cultivation market. Significant research is underway to study the efficacy of cannabis compounds like cannabidiol (CBD) and tetrahydrocannabinol (THC) in treating various chronic conditions. Cannabis shows promise as an alternative treatment for pain, epilepsy, anxiety, depression, sleep disorders, and other ailments. The changing regulatory environment is also allowing more legitimate clinical research that aims to validate its medical properties. For instance, according to an article published by the National Center for Biotechnology and Information in July 2022, between 2000 and 2018, approximately US$1.49 billion was awarded to researchers in the U.S., and a majority of these funds, approximately US$1.47 billion, were distributed through the National Institutes of Health (NIH), which includes 27 institutes and centers with different tasks. Meanwhile, more countries and U.S. are legalizing medical cannabis, which is expanding patient access. Successful trials confirming cannabis' capacity to help manage side effects in conditions such as cancer would capture a sizable addressable market. Its appeal lies in having a natural alternative to manage health issues with minimal side effects compared to conventional medicines.
• Technological Advancements in Cultivation: Technological advancements have tremendous potential to create new opportunities in the global cannabis cultivation market. Technologies such as artificial intelligence, robotics, and data analytics are being integrated into greenhouse and indoor farming operations. This allows for unprecedented control over variables like lighting, CO2, nutrients, and moisture levels. Through monitoring systems and automated adjustments, cultivators can precisely simulate optimal indoor growing conditions no matter the outdoor climate. AI and computer vision also enable real-time plant monitoring to detect issues. This improves yield quantity and quality by addressing problems early before they significantly impact the crop. As cultivation technologies advance, they will continue to drive higher productivity and consistency in production. For example, some leading cannabis cultivators have reported doubling their average yield per square foot by harnessing new control systems along with tailored environmental profiles designed by analyzing vast amounts of horticultural data. As technologies progress to support larger, more complex autonomous operations, the market stands to significantly benefit from lower production costs over time.

Cannabis Cultivation Market Trends:

• Consolidation of Cannabis Cultivation Facilities: The consolidation of cannabis cultivation facilities across global markets has significantly impacted operations in the cannabis cultivation industry. Over the past few years, there has been a notable trend of smaller cultivators being acquired by larger multi-state or multi-national operators. This consolidation allows large companies to realize economies of scale, which helps reduce production costs per unit significantly. It also grants them greater purchasing power for raw materials and equipment. For instance, in the U.S. cannabis market, companies like Curaleaf, Cresco Labs, Green Thumb Industries and Trulieve have been on an acquisition spree, acquiring dozens of smaller brands and cultivation licenses across different states.
• Increased Organic and Sustainable Cultivation Practices: The increased focus on organic and sustainable cultivation practices is having a significant influence on the global cannabis cultivation market. With consumers and regulators both demanding higher standards of environmental protection and public health safety, many cannabis growers are transitioning to organic methods. Organic farming techniques avoid the use of toxic synthetic pesticides, fertilizers, and GMOs. For cannabis cultivation, this means adopting practices like nutrient management from compost and cover cropping, as well as integrated pest management strategies that minimize pest damage through techniques such as crop rotation instead of chemical interventions. The benefits of organic cultivation includeseduced risks to nearby water sources from agricultural run-off and eliminating consumer exposure to potentially harmful residues. Several studies have also revealed that organically produced cannabis may have a more appealing cannabinoid and terpene profile for consumers. The premium prices and growing demand for organically certified cannabis products have created a major incentive for cultivators to adopt the higher costs of organic systems.

Cannabis Cultivation Market Restraints:

• Stringent regulations: Stringent regulations on cannabis cultivation by many countries around the world are currently restraining the growth of the global cannabis cultivation market. While some countries and states have legalized cannabis for medical and recreational use in recent years, most nations still consider it an illegal substance. This creates significant uncertainty and challenges for businesses hoping to expand operations internationally. The highly regulated nature of the legal cannabis industry also increases costs substantially for cultivators and producers. In order to comply with complex rules regarding licensing, security, testing, packaging, and transportation, companies must invest heavily in specialized facilities, equipment, and trained personnel. This raises the bar to enter the market and scale operations. For startup firms, it is exceedingly difficult to navigate differing regulations in multiple states or countries. The regulatory burden likely precludes many would-be cultivators and limits the overall size and speed of market expansion.
• Public Perception Issues: Public perception issues are significantly restraining the growth of the global cannabis cultivation market. While cannabis legalization is spreading globally, social stigma and cultural taboos still exist in many parts of the world. Many societies continue to view cannabis use as an unacceptable social norm or associate it with negative stereotypes of users. This negative social conditioning creates perceived risks for mainstream acceptance of cannabis that hinder market expansion. Generating positive public perception requires long-term efforts of awareness-building and education around the legitimate uses of cannabis. While medicinal applications are receiving broader acceptance, recreational uses face stronger resistance due to entrenched moral and social opposition in conservative populations. This poses challenges for cultivators seeking to establish their brands and promote their products to first-time users who may feel uneasy about societal judgment.

Recent Developments

• On July 23, 2023, Union Minister of State (Independent Office) for Science and Technology; MoS PMO, Human Resources, Public Grievances, Pensions, Atomic Energy and Space, Dr. Jitendra Singh said Jammu will drive India's first cannabis medicine project. CSIR-IIIM Jammu's 'Cannabis Research Project' is the first of its kind in India, launched under the leadership of Prime Minister Narendra Modi in a private public partnership with a Canadian company that has great potential to transform substance abuse for good to benefit humanity, especially for patients suffering from neuropathies, cancer and epilepsy.
• In October 2022, Canopy Growth Corporation, a world-leading cannabis company, announced a strategy to accelerate its entry into the U.S. cannabis industry and leverage the value of its entire U.S. cannabis ecosystem: the creation of a new US-based holding company, Canopy USA, LLC, and the implementation of a deliberate and highly structured process.
• In April 2022, New York City Mayor Eric Adams announced major new steps to welcome the cannabis industry to New York City, with an emphasis on promoting equity. Mayor Adams is proposing a US$4.8 million investment in the Fiscal Year 2023 (FY23) executive budget to promote the growth of the industry, which will fund a multiagency community outreach effort as well as technical assistance for businesses navigating the licensing process.

Figure 2. Global Cannabis Cultivation Market Share (%), by Product Type, 2023

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Top companies in Cannabis Cultivation Market

• Pacific Cannabis Growers, Inc.
• Atlas Global Brands
• Canntrust Holdings, Inc.
• The Hydropothecary Corporation
• Better Holdings
• Canopy Growth Corporation
• Aphria, Inc.
• Aurora Cannabis
• Tilray
• Organigram Holdings Inc.
• The Cronos Group
• Maricann Group, Inc.
• ABcann Medicinals, Inc.
• GW Pharmaceuticals plc.

Definition: Cannabis cultivation refers to the process of growing cannabis plants, either for recreational or medicinal purposes. This can be done in an indoor or outdoor environment, depending on the legal regulations, climate, and specific needs of the cannabis strain being grown.