Cannabis cultivation involves growing and harvesting of cannabis plants for medical and recreational purposes. Cannabis contains compounds called cannabinoids including delta-9-tetrahydrocannabinol (THC) and cannabidiol (CBD), which have clinical applications for treatment of chronic pain, cancer, arthritis, epilepsy and other medical conditions. With legalization of medical cannabis in many countries, the demand for cultivated cannabis is increasing significantly.
The global Cannabis Cultivation Market is estimated to be valued at US$ 13.5 billion in 2023 and is expected to exhibit a CAGR of 8.1% over the forecast period 2023-2031, as highlighted in a new report published by Coherent Market Insights.
Increasing Legalization of Medical Cannabis
Legalization of medical cannabis in numerous countries has opened up significant market opportunity for cannabis cultivators. With growing acceptance of cannabis-based medicines, many nations have allowed controlled production and distribution of cultivated cannabis for medical use under licensing and regulatory guidelines. This has boosted numerous cultivators to legally grow cannabis to meet the rising demand from medical industry. Researchers are also conducting various clinical trials to verify efficacy of cannabis-derived products for different ailments, which is creating conducive environment for advancement of cannabis cultivation market.
Porter’s Analysis
Threat of new entrants: The threat of new entrants is medium. While the market is experiencing rapid growth, it requires significant capital investment to build new cultivation facilities and meet compliance and regulatory requirements.
Bargaining power of buyers: The bargaining power of buyers is medium. Buyers have some influence over pricing as the market continues to expand and more suppliers enter. However, producers differentiate their products and services to maintain pricing power.
Bargaining power of suppliers: The bargaining power of suppliers is medium. Key inputs like seeds, nutrients and technology equipment are available from multiple sources. However, specialist knowledge is needed, giving suppliers some pricing leverage.
Threat of new substitutes: The threat of new substitutes is low. While hemp may substitute for certain medical uses, cannabis remains unique for its recreational and wellness applications.
Competitive rivalry: Competitive rivalry is high as producers look to increase market share. They compete on quality, branding, product range and customer service. Larger players are acquiring smaller competitors to consolidate supply.
SWOT Analysis
Strengths: High demand for medicinal and recreational use. Favorable regulations being introduced in major markets. Technical advances improving yields and product range.
Weaknesses: Illegal status in some countries raises financing and operational challenges. Compliance costs and regulations increase overheads. Dependency on a small number of wholesale customers.
Opportunities: New medicinal applications being discovered increases demand. Recreational markets opening in more states/countries. Acquisitions allowing firms to expand regionally.
Threats: Legalization of hemp could reduce cannabis demand for some uses. Public health concerns could strengthen restrictions. Supply from lower-cost producers in other countries.
Key Takeaways
Global Cannabis Cultivation Market Size is expected to witness high growth over the forecast period of 20 years.
North America currently dominates the market, accounting for over 60% of global supply in 2022. Growth is highest in emerging markets such as Latin America and Europe as more countries legalize medicinal and recreational use.
Key players: Key players operating in the cannabis cultivation market are Canopy Growth Corporation, Aurora Cannabis, Tilray, Aphria, ABcann Medicinals, The Cronos Group. Large players are conducting M&A to consolidate supply chains and expand their regional footprints. Production is becoming more specialized and efficient through research partnerships applying agriculture technologies.
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