With several key markets legalising it in recent years, foreign investment in medical cannabis has taken off since 2017, at which time only 12 FDI projects were undertaken worldwide, according to FT data service fDi Markets.
However, last year witnessed 28 foreign investments in the nascent sector, while the first five months of this year have already seen 30 projects, valued at $1.16bn. Correspondingly, venture capital investments in the cannabis market also hit a record high in the first five months of 2019.
Twenty-one countries, including eight emerging markets, have received greenfield investment from 42 companies since 2017, the vast majority from Canada, where both recreational and medicinal use of cannabis is legal, reports fDi Markets.
Canada is joined by other nations in the Americas that are pioneering the legalisation of cannabis, such as the US, Colombia, Uruguay and Chile. It is no surprise, therefore, that the US has received the most FDI in the sector in terms of project numbers and capital investment, followed by Colombia.
Many Canadian investors have looked to cheaper production markets, such as Colombia, to respond to Canada’s nationwide shortage of cannabis, as well as the growing global demand for medical marijuana.
For example, the UK market for cannabinoids (known as CBD, a legal product that has no ‘high’) could be valued at roughly £1bn a year by 2025, thereby matching the size off the current entire UK herbal supplement market, says the Centre for Medicinal Cannabis.