9 Things Cannabis Investors Should Know
The swift regulatory changes taking place in the global cannabis sector are almost without modern precedent.
While some find the situation analogous to the repeal of Prohibition in the United States, it’s also fair to point out that such events happened 85 years ago in the midst of the Great Depression. It was a long time ago, and in a very different economic climate.
Today’s infographic comes to us from Evolve ETFs, and it shows what investors should know as the legal cannabis sector comes out of the dark.
What Cannabis Investors Should Know
Since there is so much happening at once with little precedent for what such a market will look like, it’s worth summing up the sector’s potential in broad strokes:
1. Global Size
According to research from The Brightfield Group, the size of the legal cannabis sector is expected to surge from $7.7 billion to $31.4 billion between 2017 and 2021.
Currently the recreational market makes up only 37% of the global total – but by 2021, that will rise to 57%.
2. Versatile Uses
Cannabis comes in different forms. One gram of dried cannabis is roughly equivalent to:
- 5g of fresh cannabis
- 15g of edible product
- 70g of liquid product
- 0.25g of concentrates
- 1 cannabis plant seed
These can be used in various medical applications, including to fight chronic pain, migraines, anxiety, multiple sclerosis, and nausea. Cannabis can also be used to treat Alzheimer’s, PTSD, and cancer.
3. North American Growth
By 2021, it’s estimated that North American sales will make up 86% of the global market. Specifically, the U.S. legal market is projected to hit $18.1 billion by that time, while the Canadian legal market is expected to be $8.9 billion in that same year.
4. A Shifting Legal Landscape
Canada will be the first G7 country to legalize cannabis at a federal level.
In the United States, recreational cannabis is already legalized in nine states – but this could change swiftly as various states undergo referendums.
5. European Markets
In 2017, the legal market for cannabis is estimated to be just $0.11 billion, but by 2021 it will have expanded to $3.8 billion.
According to The Brightfield Group, growth will be quite impressive in Western Europe: Germany’s market will grow at a 284% annual rate, the Netherlands at 364%, and Spain at 334%.
6. Rest of the World
Although markets outside of North America and Europe will not see the same growth in absolute dollar terms, the legal cannabis market will still expand from $80 million to $350 million, led by activity in Latin America.
7. Pharmaceutical Research
Israel has a special place in the cannabis world – the country is world leader in medical cannabis research, and industry expects that it will eventually translate into a $1 billion export opportunity. That said, export plans have hit a recent road bump.
8. Investment Activity
Compare the start of 2018 to that of 2017, and you’ll see an impressive difference in investment activity.
For this we use Canada with its impending recreational legalization as an example: in the first six weeks of 2018, investment was up nearly 7x over the previous year. Further, the average deal size increased from $5.6 million to $18.7 million.
Meanwhile, the Canadian Cannabis Index rose 201% between January 2017 and January 2018.
9. How to Invest?
There are a variety of ways to gain exposure to the sector, including:
- Licensed producer stocks
- Biotech stocks
- Ancillary services stocks
- Licensed retailer stocks
- Cannabis ETFs
Regardless of how you play it, the legal cannabis sector is coming out of the dark – and it will be interesting to see how the industry takes shape.
Visualizing China’s Energy Transition in 5 Charts
This infographic takes a look at what China’s energy transition plans are to make its energy mix carbon neutral by 2060.
Visualizing China’s Energy Transition in 5 Charts
In September 2020, China’s President Xi Jinping announced the steps his nation would take to reach carbon neutrality by 2060 via videolink before the United Nations Assembly in New York.
This infographic takes a look at what this ambitious plan for China’s energy would look like and what efforts are underway towards this goal.
China’s Ambitious Plan
A carbon-neutral China requires changing the entire economy over the next 40 years, a change the IEA compares to the ambition of the reforms that industrialized the country’s economy in the first place.
China is the world’s largest consumer of electricity, well ahead of the second place consumer, the United States. Currently, 80% of China’s energy comes from fossil fuels, but this plan envisions only 14% coming from coal, oil, and natural gas in 2060.
|Energy Source||2025||2060||% Change|
Source: Tsinghua University Institute of Energy, Environment and Economy; U.S. EIA
According to the Carbon Brief, China’s 14th five-year plan appears to enshrine Xi’s goal. This plan outlines a general and non specific list of projects for a new energy system. It includes the construction of eight large-scale clean energy centers, coastal nuclear power, electricity transmission routes, power system flexibility, oil-and-gas transportation, and storage capacity.
Progress Towards Renewables?
While the goal seems far off in the future, China is on a trajectory towards reducing the carbon emissions of its electricity grid with declining coal usage, increased nuclear, and increased solar power capacity.
According to ChinaPower, coal fueled the rise of China with the country using 144 million tonnes of oil equivalent “Mtoe” in 1965, peaking at 1,969 Mtoe in 2013. However, its share as part of the country’s total energy mix has been declining since the 1990s from ~77% to just under ~60%.
Another trend in China’s energy transition will be the greater consumption of energy as electricity. As China urbanized, its cities expanded creating greater demand for electricity in homes, businesses, and everyday life. This trend is set to continue and approach 40% of total energy consumed by 2030 up from ~5% in 1990.
Under the new plan, by 2060, China is set to have 42% of its energy coming from solar and nuclear while in 2025 it is only expected to be 6%. China has been adding nuclear and solar capacity and expects to add the equivalent of 20 new reactors by 2025 and enough solar power for 33 million homes (110GW).
Changing the energy mix away from fossil fuels, while ushering in a new economic model is no small task.
Up to the Task?
China is the world’s factory and has relatively young industrial infrastructure with fleets of coal plants, steel mills, and cement factories with plenty of life left.
However, China also is the biggest investor in low-carbon energy sources, has access to massive technological talent, and holds a strong central government to guide the transition.
The direction China takes will have the greatest impact on the health of the planet and provide guidance for other countries looking to change their energy mixes, for better or for worse.
The world is watching…even if it’s by videolink.
Visualizing 50+ Years of the G20’s Energy Mix
Watch how the energy mix of G20 countries has evolved over the last 50+ years.
Visualizing 50+ Years of the G20’s Energy Mix (1965–2019)
Over the last 50 years, the energy mix of G20 countries has changed drastically in some ways.
With many countries and regions pledging to move away from fossil fuels and towards cleaner sources of energy, the overall energy mix is becoming more diversified. But shutting down plants and replacing them with new sources takes time, and most countries are still incredibly reliant on fossil fuels.
G20’s Energy History: Fossil Fuel Dependence (1965–1999)
At first, there was oil and coal.
From the 1960s to the 1980s, energy consumption in the G20 countries relied almost entirely on these two fossil fuels. They were the cheapest and most efficient sources of energy for most, though some countries also used a lot of natural gas, like the United States, Mexico, and Russia.
|Country (Energy Mix - 1965)||Oil||Coal||Other|
|🇸🇦 Saudi Arabia||98%||0%||2%|
|🇿🇦 South Africa||19%||81%||0%|
|🇰🇷 South Korea||20%||77%||3%|
But the use of oil for energy started to decrease, beginning most notably in the 1980s. Rocketing oil prices forced many utilities to turn to coal and natural gas (which were becoming cheaper), while others in countries like France, Japan, and the U.S. embraced the rise of nuclear power.
This is most notable in countries with high historic oil consumption, like Argentina and Indonesia. In 1965, these three countries relied on oil for more than 83% of energy, but by 1999, oil made up just 55% of Indonesia’s energy mix and 36% of Argentina’s.
Even Saudi Arabia, the world’s largest oil exporter, began to utilize oil less. By 1999, oil was used for 65% of energy in the country, down from a 1965 high of 97%.
G20’s Energy Mix: Gas and Renewables Climb (2000–2019)
The conversation around energy changed in the 21st century. Before, countries were focused primarily on efficiency and cost, but very quickly, they had to start contending with emissions.
Climate change was already on everyone’s radar. The UN Framework Convention on Climate Change was signed in 1992, and the resulting Kyoto Protocol aimed at reducing greenhouse gas emissions was signed in 1997.
But when the Kyoto Protocol went into effect in 2005, countries had very different options available to them. Some started to lean more heavily on hydroelectricity, though countries that already utilized them like Canada and Brazil had to look elsewhere. Others turned to nuclear power, but the 2011 Fukushima nuclear disaster in Japan turned many away.
This is the period of time that renewables started to pick up steam, primarily in the form of wind power at first. By 2019, the G20 members that relied on renewables the most were Brazil (16%), Germany (16%), and the UK (14%).
|Country (Energy Mix - 2019)||Natural Gas||Nuclear||Hydroelectric||Renewables||Other|
|🇸🇦 Saudi Arabia||37%||0%||0%||0%||63%|
|🇿🇦 South Africa||3%||2%||0%||2%||93%|
|🇰🇷 South Korea||16%||11%||0%||2%||71%|
However, the need to reduce emissions quickly made many countries make a simpler switch: cut back on oil and coal and utilize more natural gas. Bituminous coal, one of the most commonly used in steam-electric power stations, emits 76% more CO₂ than natural gas. Diesel fuel and heating oil used in oil power plants emit 38% more CO₂ than natural gas.
As countries begin to push more strongly towards a carbon-neutral future, the energy mix of the 2020s and onward will continue to change.
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