Global cannabis industry worth $350 billion by 2030

Investment bosses project that the global cannabis industry will be worth $350 billion by 2030, with the launch of what will be the world’s largest medical cannabis fund.

A London-based investment firm expects the global cannabis industry to be worth $350 billion in the next 10 years, generating ‘trillions’ of dollars in shareholder value.

Chrystal Capital Partners launched the $100 million Verdite Capital Fund – Europe’s largest cannabis-focused investment fund – in October, with plans to take it to $200 million through later fundraising.

This would make it the largest cannabis fund outside of North America and the largest medical-focused cannabis fund in the world.

Investment partner Kingsley Wilson, who has over 20 years experience in finance, told Cannabis Health that the global sector was in the ‘sweet spot’ for investors to cash in on capital growth.

“The timing is absolutely spot on. We’re through the pioneering early years and in the last two years, the sector valuations have gone up substantially, he said.

“Initially there was a lot of excitement and a lot of companies got backed – some of which potentially shouldn’t have – but now we’re into the cannabis 2.0 era and we can see great companies emerging delivering very strong revenue and profit growth.”

Regulated in Guernsey, the Verdite Fund intends to invest in 10 to 15 businesses operating in the legal and regulated cannabis markets, prioritising those in the health and pharmaceutical industries.

It recently closed in on its first $75 million investment and has now launched the marketing to raise the last $25million for a first close of $100 million, before continuing to fundraise to reach $200 million

“At $200 billion, that would put us in the top five funds globally, but most of those are very focused on recreational cannabis,” Kingsley said.

“We expect to be the largest medical focused healthcare fund in the world.”

The sector is expected to grow expedentionally over the next decade as cannabis is legalised medically and recreationally in more countries across the world.

“There is some nervousness but we think that fear is passing as the wave of legalisation is spreading across the world,” he continued.

“Last year, legal cannabis sales globally were $15 billion and this year it is expected to be $20-25 billion – that is already larger than the global music industry.

“If we fast forward 10 years we think medical, wellness and pharmaceutical products will be pretty much legal on a global basis and that drives a legal market worth $350 billion. Those sectors typically trade at about three times sales, so we think there’s around one trillion dollars of shareholder value that is created over the next decade.

“That is why investors of all sizes should be starting to look at cannabis.”

In recent years big-name brands from other sectors, namely Nestle, Altria and Constellation Brands have moved into the cannabis space and Kingsley expects this to accelerate once cannabis is legalised federally in the US.

“We can see lots of examples of blue-chip companies from other sectors, whether that’s pharmaceutical, tobacco, alcohol, or fast-moving consumer goods, recognising the growth potential of cannabis. A lot of them are still nervous about going in, while it is still federally illegal in the US, but we expect that once that situation gets resolved, we’ll see the floodgates open,” he said.

“When you look at states in the US where cannabis has been legalised for a number of years, there has been a substantial decrease in consumers spending on over-the-counter products, pharmaceuticals, tobacco and alcohol.

“These companies want to capture the growth potential of the legal cannabis market and protect the consumer dollars by investing the sector.”

While North American cannabis funds tend to be steered towards recreational use, Kingsley sees the biggest potential in the pharmaceutical and medical industries and has formed a team of 12 expert advisors, including founder of Canopy Growth, Bruce Linton.

“We are only focused on health care. Europe is a very different market to the US and where we see the most value is towards the higher-regulated end of the market, which is pharmaceutical and science,” he added.

“We think those will be the largest and the fastest-growing sectors and that is where investors will make a lot of money over the next few years.”