Take a hard look at the cannabis market.
Look closely, and you'll see the single biggest market to hit the global economy in decades.
It's bigger than the global PC market. It's bigger than gaming. In fact, consumers spend more money on cannabis each year than what hits the top lines of social media companies like Facebook Inc. (NASDAQ: FB) and online marketplaces like Amazon.com Inc. (NASDAQ: AMZN) combined.
It's almost as big as one of the most predominant, innovative, and disruptive sectors of the 20th century.
Now, I expect everyone reading this would happily hop in a time machine and buy shares in Microsoft Corp. (NASDAQ: MSFT), Apple Inc. (NASDAQ: AAPL), and Amazon for a second chance to get in early on those unexpected but remarkably high-growth industries.
Imagine the wealth you could have built.
But with cannabis now on the scene, you don't need a time machine.
You just need to appreciate the massive size of the cannabis market today and how much bigger it will get as legalization inevitably spreads.
Because once it does, cannabis will overtake some of the most significant industries to emerge in the 21st century...[mmpazkzone name="in-story" network="9794" site="307044" id="137008" type="4"]
A Well-Known Industry
Part of the beauty of cannabis is the fact that we know the current size of the market.
In 2018, global demand for cannabis reached $344 billion.
That number includes both legal and illegal sales. And that $344 billion base gives us a sense of how much of that existing demand cannabis companies will soon be able to turn into legal revenue.
Over the last few years, cannabis demand has grown steadily at about 15% per year. This means that in 2019, global cannabis demand likely hit close to $400 billion.
Let's compare that $400 billion base to the total global demand for the products and services sold by some of the biggest tech companies in the world - companies that have minted millionaires and billionaires for decades.
And I'll wager that when you think of major tech innovations over the last 40 years, your list includes many of the sectors included in the chart below.
These industries pull in hundreds of billions of dollars in revenue each year.
PCs are a $200 billion industry. Semiconductor sales reached $412 billion last year. Social media, online marketplaces, and video games racked up a total of $410 billion between them.
We're talking significant sectors of the economy made up of behemoths like Microsoft, Apple, Amazon, and Facebook.
And the demand for cannabis outstrips the entire market for the total goods and services sold by a few of these industries combined!
When these industries hit the scene, no one knew how big they could get. They were unexpected, and very few people knew whether the demand would be there for these products in the future.
With cannabis, we have a big head start. We know how much spending happens now.
Of the $400 billion global market for cannabis, the legal market makes up a mere $12 billion. That means legal cannabis revenue must make a 33-fold leap just to meet last year's estimated $400 billion demand.
And as legalization spreads, the cannabis market will even surge past the one industry that literally sits in the hip pockets of almost every person on the planet.
As Ubiquitous as Smartphones
Spending on smartphones reached $522 billion in 2018. The industry grew 5% from the prior year. Assuming that same level of growth, last year's total probably jumped to around $550 billion.
But with cannabis legalization quickly sweeping the globe and the new product opportunities this expansion creates, the global cannabis market has the potential to more than double over the next few years.
I'm talking about entirely new markets like CBD in all its forms, cannabis-infused drinks and edibles, and expanded consumption as the stigma around cannabis disappears. There's also the rapidly growing demand for medical cannabis. Because, after all, cannabis as a powerful and effective medicine is what triggered legalization in the first place.
And let's not forget the massive opportunity to develop pharmaceutical products from the over 100 cannabinoids manufactured by the remarkable cannabis plant.
All these new markets could turn cannabis into an over $1 trillion market. This will put cannabis on par with an even bigger industry - one that smartphones are just a part of.
Smartphones are a technical consumer good, or "TCG." In addition to smartphones, the TCG industry includes wearables like the Apple Watch, small domestic appliances like Google Home and Amazon Alexa, consumer electronics, photography, and even information technology and office equipment designed for personal use.
When you add up sales of all these products around the world, you're talking about a $1.2 trillion market.
As cannabis legalization takes the handcuffs off researchers, innovators, and entrepreneurs around the world, the demand for cannabis and the ecosystem of services and products supporting this industry will outstrip them all.
And it won't take decades to get there.
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About the Author
Don Yocham is Executive Director for the National Institute of Cannabis Investors (The Institute) and Director of Cannabis Investing Research for Money Map Press. Before starting his role with the Institute, he was the Head of Private Deals for the publication Cannabis Venture Syndicate. From his first foray into the trading pits of Chicago to introducing institutional investors to entirely new markets in the early 2000s, Don has pretty much covered the entire field of investing in his 25-year career. In the depths of the financial crisis, when the typical investor had lost more than half of their money, his portfolios were up.