Many state and federal governments around the world deemed cannabis businesses as essential, keeping their doors open and catalysing what ended up being a watershed year for the industry.
Despite the prompt rollout, the state’s licensing process limited the number of retailers, inhibiting supply and immediatescale.
As of April 2021, only about 110 licensees serve Illinois’ population of approximately 13 million — that’s around 1 licensee to every 120,000 people.
Illinois is one of the most undersaturated legal cannabis markets, and we believe that an expansion of licenses in 2021 will go a long way in addressing this.
Market Update: Michigan legalised recreational cannabis in November 2018 and the market has scaled quickly in the three years since.
Dry flower products became less popular as the pandemic raged, due in part to Michigan’s generous at home cultivation policy.
In an encouraging sign for the industry, highly profitable derivative products led the way for a sales recovery in early 2021.
Outlook: Michigan’s recreational cannabis market stands to benefit from stable supply dynamics and high volumes of cannabis derivative sales.
We expect high-margin derivatives such as edibles, concentrates, and THC-infused beverages to continue to constitute a large percentage of Michigan’s product mix, much to the benefit of retailers and distributors.
Additionally, high excise tax rates, and licensing costs associated with a robust regulatory process add to the costs.
Notably, the state achieved this sales growth even though cannabis retailers were not considered essential and were closed state-wide for 60 days in 2020.
Outlook: Massachusetts must find ways to incrementally cut costs if it wants to propel the growth of legal cannabis sales.
Though a complex and strict regulatory framework governs the market, a characteristic that typically hampers supply, licensing is progressing without issue.
California was the first state to mandatenon-essential business closures and it set the tone for the rest of the country when it designated cannabis businesses as essential.
According to MarijuanaBusiness Daily’s 2021 Factbook, adult-use sales could total $6.7bn by yearend 2025, representing an 8.8% compound annual growth rate .
Market Update: Colorado became the first US state to legalise recreational cannabis with the passage of Amendment 64 in 2012.
While Colorado’s legal market is oldest in the country, it is still growing quickly Legal retailers sold $2.2bn worth of cannabis in 2020, a 25% YoY increase.
Total sales attributed to tourism increased leading up to the pandemic, even as an increasing number of states legalised recreational cannabis.
Incumbent state markets like Colorado and California are demonstrating that properly scaled markets can generate significantrevenue and provide a glimpse of what a bona fide legal cannabis industry might look like.
New state markets are still facing some of the same problems that incumbents did in the past, but now have playbooks to turn to.
Canada’s federally legal market is hitting its stride after an underwhelming inaugural full year in 2019.
Market Update: Cannabis became legal in Canada in late 2018 after the passage of bill C-45, better known as the Cannabis Act.
Ontario Canada’s most populated province, only had 24 licensed retailers one year into legalisation.
Things are different today, though, and processes around licensing have markedly improved.
Greater supply resulted in lower prices and more consumption, driving recreational cannabis sales to a record $2.2bn in 2020.
A part of this success was thematuration of Cannabis 2.0, a term used to describe sales attributed to derivative cannabis products like edibles, extracts, and cannabis-infused food and beverages.
The continued growth of such products will likely prove essential in further capturing illicit sales.
We understand that regulators must be thoughtful of initial policy, but we also believe that legal markets that find a happy medium between regulation and policy that sparks market-capture will be the mostsuccessful moving forward.
Consumers across the country embraced recreational cannabis, purchasing more product than ever and enjoying it in their newfound leisure time.
They also represented an entry point for new consumers, expanding the total addressable market.
International investments may involve risk of capital loss from unfavourable fluctuation in currencyvalues, from differences in generally accepted accounting principles or from social, economic or political instability in other nations.
The cannabis industry is a very young, fast evolving industry with increased exposure to the risks associated with changes in applicable laws , as well as market developments, which may cause businesses to contract or close suddenly and negatively impact the value of securities held by the Fund.
Given the uncertain nature of the regulation of the cannabisindustry in the United States, the Fund’s investment in certain entities could, under unique circumstances, raise issues under one or more of those laws, and any investigation or prosecution related to those investments could result in expense and losses to the Fund.
This and other information can be found in the Fund’s summary or full prospectuses which may be obtained by calling 1-888-GX-FUND-1 , or by visiting globalxetfs.com.
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238054 and any other relevant CMC Markets Documents before you decide whether or not to acquire any of the financial products.