Athos HQ – Group Business Services (Cyprus) Ltd
The cannabis industry has experienced rapid evolution in recent years, perpetuated by COVID-19 as lawmakers classified dispensaries and other cannabis operators as essential businesses during the pandemic.
With rapidly increased demand for wellness and medical use, along with recent decisions by the European Court of Justice (that CBD is neither a drug nor a narcotic, has no harmful effects on human health and benefits from the free movement of goods in EU) and the United Nations (to remove cannabis for medical purposes from a category of the world’s most dangerous drugs) the industry is now projected to reach USD 73.6 billion by 2027, according to a new report published in Feb 2020 by Grand View Research, Inc. It is anticipated to expand at a CAGR of 18.1% during the forecast period with Europe is on track to become one of the world’s largest legal cannabis markets within the next 5 years.
Key findings from Grand View Research, Inc. include:
Type: the medical segment held the leading revenue share of 71.0% in 2019, owing to the growing adoption of cannabis as a pharmaceutical product for treating severe medical conditions (such as cancer, arthritis, Parkinson’s disease, and Alzheimer’s disease among other neurological conditions). The increasing need for pain management therapies along with the growing disease burden of chronic pain among elders is expected to boost product demand.
Product type: the legal cannabis buds segment accounted for the largest market share in terms of revenue and was valued at USD 9.1 billion in 2019. Buds are primary plant products and are readily available without any processing, which makes them relatively affordable for low-income patients.
Medical applications: the chronic pain segment dominated the legal cannabis market in 2019 owing to the presence of a large patient pool. On the other hand, mental disorder application is expected to witness the fastest growth over the forecast period owing to the increasing number of patients suffering from mental disorders (such as anxiety disorder, depression, and Alzheimer’s disease).
Geography: North America held the largest revenue share at 88.4% in 2019, owing to the increasing legalization of medical cannabis and liberalism of government regulations regarding the same. The legalization of medical cannabis in Canada, Israel, and some countries in Europe and South America owing to its multiple therapeutic applications is expected to promote growth. Recent legalization of cannabis for medical purposes in Australia, Germany, Poland and Cyprus is expected to create lucrative opportunities for market stakeholders.
Funding platforms in Cyprus
This projected growth potential in the legal cannabis sector has many investors taking notice. Funding platforms with the goal of supporting cannabis -related businesses are on the rise. One primary factor now attracting investors to the cannabis industry is that there is still ample room for innovation.
When news broke in 2015 that Founders Fund, venture capital firm helmed by PayPal co-founder Peter Thiel, was going to invest $75 million in Privateer Holdings (a company focused on producing, distributing and educating consumers about legal cannabis) it opened the floodgates for other investors to barrel in. Their latest multi million investment in LeafLink a tech-enabled wholesale marketplace for the cannabis industry, marks Founders Fund’s largest technology investment in the cannabis space to date.
With so much interest in the growing cannabis industry it is hardly surprising that so many have turned their attention and funding to a rapidly evolving cannabis industry. Considering such demand, investors are looking for appropriate and robust fund structures through which they can route their cannabis investments.
Cyprus offers numerous benefits to venture capitalists as a funding platform for their cannabis related activities, including:
Others are bound to follow suit. Legal cannabis is, unquestionably, in great demand, the potential is unlimited, and Cyprus is perfectly positioned to maximise the opportunity.