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Acceptance of Cannabis or Marijuana Increasing Rapidly

Updated on February 22, 2018

Cannabis producers scrambling to raise capital to increase capacity

One of the interesting things happening in the cannabis or marijuana industry has been the rapid acceptance of it at the government level; not only for medical marijuana, but for recreational pot as well, although the latter will take a lot longer to gain acceptance than the former.

What this has done has resulted in a number of cannabis producers like Canopy Growth, Aurora Cannabis, Aphria and OrganiGram, among others, to scramble to meet the soaring demand of marijuana, as the rapid acceptance by governments has caught them off guard.

This is why so many producers, especially Canadian producers, are using their company shares as a means of raising capital quickly, so they and add capacity in order to boost production.

Reasons for acceptance

There are a couple of key reasons by various governments around the world, including individual states in the U.S. are moving toward acceptance of cannabis.

One is the fact it has been proven as a legitimate means of treating some diseases and conditions. Public pressure to legalize medical marijuana has resulted in a lot of laws being passed to decriminalize the medical usage of the plant.

Second is the accompanying tax revenue that will be generated as a result of legal sales. If the industry remained fully underground, it not only criminalized all those participating in growing and using cannabis, but it left a gaping whole in tax revenue that could be used by governments for a wide variety of reasons.

With that in mind, there is no doubt cannabis will continue to grow in acceptance - individually and governmentally, as well as medically and recreationally.

But as mentioned earlier, legalizing marijuana for recreational use will be much slower and focused on different regions, and in the case of America, in different states.

Medical implications for cannabis users

What the legalization of cannabis for medical reasons does is open up the door for treatments that in many cases, had to be obtained illegally in order to gain access to them. That time is rapidly ending.

I believe in a few short years we'll probably see medical marijuana legalized in most nations and states in the U.S. There'll be some exceptions, but not enough to stop the massive trend from quickly expanding.

The purpose of this article isn't to get into specific cannabis treatments for various conditions, but to point out the fact that at the macro level, patients responding to these treatments will have it available with no fear of legal repercussions.

Social acceptance won't be as strong because of the perception a lot of people use medical conditions for getting access to pot for recreational uses.

While the stigma of recreational use will decline, it won't do so at the pace acceptance of medical marijuana will.

Major production locations

At this time Canada is by far the top country for cannabis production, led by Canopy Growth and Aurora Cannabis. Once recreational marijuana is legalized, demand will soar in the country, as it has in California and other states in the U.S. that have made it legal to use marijuana recreationally.

As mentioned earlier, the acceptance of marijuana has accelerated at a more rapid pace than people or the market were expecting, and it has the potential, in the short term, to make it difficult to meet growing demand.

Another issue is it's not really known the level of recreational use there is in Canada and other nations, as well as individual U.S. states, which makes it hard for companies to know how much demand there really is, and how much capacity they need to add to meet medical and recreational demand.

For now, and for a long time into the future, because of the slowness of other nations to embrace the cannabis industry, Canada will remain the market leader. A number of companies are already looking to other markets for growth, including Germany, which will be a doorway to Europe, and Australia, which interestingly, at least at the time I'm writing this, is a doorway into the South American market.

The reason I say interestingly is because Australia, historically, is usually a means of entry into Asian markets. It has chosen instead to base itself in Chile and expand from there.

An issue in Australia is its licensing process is stifling to potential producers. As of early 2018, only AusCann Group has the licenses in place to produce and supply markets.

In the case of Australia, producers have to meet domestic demand before they are allowed to export, but will only a few hundred medical cannabis customers in the country, it won't be an issue for some time.

The reason there are so few medical cannabis patients in Australia is because Australian doctors are very skeptical about the legitimate medical benefit of cannabis as a treatment.

For now, most demand should be able to be met, assuming the projections for recreational use are close to the reality of what is now being illegally grown and consumed.

Conclusion

With current capacity levels, medical cannabis patients should have no trouble having demand met in North American, and most other parts of the world.

As legalization of recreational use of marijuana expands, it could tighten the market some, and possibly drive up the price of cannabis.

With companies starting to build brands, it's no longer simply a case of buying some cannabis at a market price. The market has started to become diversified, and branding of cannabis is providing an increase in margins, which will be beneficial to producers, but more costly to the end user.

Through at least 2021, we will continue to see cannabis accepted medically and recreationally. It would surprise me if most of the world and U.S. states don't legalize medical marijuana by them.

With current capacity and deals being made in various strategic markets around the world, those in need of medical cannabis shouldn't have a problem obtaining it. That will be the first priority of almost, if not all, governments around the world.

Whether a patient, potential patients, or an investors, the rapid pace of acceptance of medical cannabis or recreational marijuana will continue on, and will benefit everyone involved; with the caveat that the benefit of recreational pot is dubious to many.

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