Since the late 1970s, coffee shops in the Netherlands were places of yearning for marijuana consumers. Possession of small quantities of marijuana was tolerated, but the dried buds of cannabis plants were never entirely legalized. That’s why Amsterdam had to cede its status as a marijuana mecca by early 2018, when Canada, following Uruguay in 2017, became the first industrialized nation to completely legalize the cultivation and sale of cannabis. The legalization move by the Canadian government was aimed at promoting safer marijuana use and more effective youth protection, as well as opening a new business and investment sector for the economy.
Hopes in the latter aspiration, at least, are justified. The market for marijuana-related businesses (MRBs) possesses huge growth potential. Around 30 more countries in addition to Uruguay and Canada have since legalized marijuana at least for medical purposes. MRBs have accounted for 3% of all initial public offerings (IPOs) in those countries thus far in 2019. Annual worldwide sales revenue of MRBs is projected to climb to above USD 60 billion by 2024.
Gold Mine or Reputation Trap?
Marijuana seems to be losing its stigma as a gateway drug. However, investing in this market isn’t a no-brainer given the heterogeneous regulatory landscape worldwide, which looks set to stay jumbled for a long time to come. What’s legal on one side of the globe can be punishable under criminal law on the other side of the world. Take the sub-market for cannabidiols (CBDs) as an example. CBD products contain only a very small concentration of psychoactive tetrahydrocannabinol (THC). They have been sold freely in Switzerland since 2011, whereas in Texas their sale is restricted to epilepsy patients.
Particularly in the US market, the legal landscape is exceptionally complicated. Drug offenses in the USA fall under the legislative jurisdiction of the 50 individual states. State laws, though, can deviate from US federal law, which banks are heavily subject to.