Looking at how the USA hemp industry is currently performing, and how it could progress into the future, can give us a great window into the possibilities for our own fledging nz hemp industry.
Worldwide there has been a huge push for the legalisation of the use of hemp and marijuana for individuals and industry. This has exciting implications for business opportunities and the economy here in New Zealand. Our progress to date has been sluggish, when compared to many other countries, but signs are showing that the pace of change is quickening.
Changing Public Attitude
Since the 1930’s, when the public was subjected to USA propaganda such as the ‘Reefer Madness’ film, a better educated public has been more accepting to the concept of legalisation. Now, 67% of American’s believe marijuana should be legalised. This is more than double the 31% of 2000 and a staggering percentage increase from the more than the 12% of 1969.
Changing Government Attitude
Marijuana is already legal in over 35 states, or 70%, of the USA. As the government feels pressure from the public, plus grasps the economic potential this plant can give to the economy, there have been great shifts in political policy circles.
Current US president, Joe Biden, has expressed that he wants marijuana decriminalised, as well as having the criminal records of those convicted of possession expunged.
Market Size and Potential Growth
The CBD market alone, will reach US$5.3 billon in retail sales for 2021. This implies a 15% growth when compared to the $4.6 billion in sales for 2020.
Researches predict this growth to continue with sales projected to reach $16 billion by 2026.
On-line sales made up $2 billion of this 2021 sales figure (38%) and, in line with projections for other on-line products, will increase exponentially.
Projections for the marijuana industry are even more amazing, with projections of US$85 billion in sales for 2030 predicted.
The connections between cannabis, wellness, medical solutions, and CBD will become increasingly important and, from a business perspective, company mergers and acquisitions are already showing signs of heating up. Large companies not already in the hemp/marijuana market, will increasingly partner and acquire established CBD brands to position themselves and expand their realm of consumer reach. This is already happening in USA where companies invest in, or acquire established market players.
(eg, Constellation Brands – maker of Corona Beer – invests $4 billion in publicly traded Canadian cannabis producer, Canopy Growth).
Forward thinking New Zealand hemp companies will already have good positioning for when (not IF) this very scenario plays out on our shores.
So what does all this mean for New Zealand?
Industry diversification is very important to an economy, especially to the relatively small New Zealand marketplace. We learned the harshness of this in 1973, when the UK joined the European Union, effectively ending our access to this prized market. Prior to this year the UK was taking an amazingly huge 50% of NZ’s exports.
In past years, all our farm goods were easily snapped up by this one giant market and we didn’t feel the pressure to find new countries to market to, or indeed create new products. We were, in a nutshell, lazy and got away with being way too complacent.
But this devastating blow would actually become a blessing in disguise.
From this low point in NZ’s history, we gradually learned the importance of diversification and the need to explore the potential for new products and industries.
We have now learned how this approach significantly helps employment and the NZ economy as a whole.
Fast forward to today and we know the importance of investing in R&D, and how this can help us to diversify and create new products and markets. We understand the importance of this ongoing research and this and how lucrative it can become. We have successfully done this with our kiwifruit and wine industries and New Zealand now has many smaller niche markets growing at phenomenal rates of growth.
Much of the growth success of these new industries can be attributed to the positioning of New Zealand products as high-end, thus attracting greater pricing premiums. New Zealand soils and growing conditions are envied around the world and looked on as the industry benchmark in many sectors. This positioning advantage can be applied with increased R&D spending, and sophisticated marketing to produce superior global products.
We’ve done it successfully before – We can do it again!