In case you haven't noticed, the marijuana industry is growing at a breakneck pace. Depending on your source, sales growth for the legal cannabis industry is slated to increase by between 23% and 35% on an annualized basis over the next couple of years. That's growth that investors simply can't ignore, which is a big reason why pot stocks have shot through the roof over the past year.
Then again, it's not just sales growth that has marijuana stock investors captivated. In pretty much every major national poll in the U.S., Americans overwhelmingly approve of the idea of legalizing cannabis. National pollster Gallup found the strongest support in October 2017, with 64% favoring legalization, while the independent Quinnipiac University in August of last year noted that a whopping 94% of respondents favored seeing medical weed legalized.
These cities are consuming the most pot per year
Growing support and stronger sales pretty much mean one thing: People are consuming a lot of cannabis. How much, you ask? For that answer, we'll turn to Seedo and its recently released "2018 Cannabis Price Index." Seedo's report examined the price per gram of pot in 120 cities worldwide, the potential tax that could be collected if weed were taxed at the same rate as tobacco cigarettes and, perhaps most interestingly, analyzed which global cities consume the most and least marijuana each year, in metric tons.
If you're wondering why we should care about which cities are consuming the most marijuana, the answer is simple: Public opinion is changing, and it gives cannabis enthusiasts and investors a clue as to which regions of the globe might be softening their stances on pot or may be able to take advantage of recreational-level legalization.
Below, you'll find the 10 global cities that are consuming the most marijuana per metric ton:
Here's what's notable about these cities
What's most surprising about the above data? First, you'll note that four of the top 10 cities for highest annual consumption are in North America, including three U.S. cities among the top eight spots. What'll be interesting to see is if Los Angeles climbs the ranks now that recreational marijuana is fully legal -- sales began on Jan. 1, 2018. California is expecting adult-use sales to boost tax-revenue collection by around $1 billion a year.
Likewise, Toronto at No. 10 could soon see a boost. Canada is currently reviewing legislation that would legalize recreational weed by July 2018. As a result, Canadian growers like Canopy Growth Corp. (NYSE:CGC) are expanding their operations as quickly as their cash-raising abilities will allow. Canopy Growth ended its fiscal second quarter with 2.4 million square feet of capacity under construction or in development in British Columbia, and it had the option to lease another 1.7 million square feet in B.C.
It also is definitely noteworthy that marijuana is wholly illegal in three of the top 10 cities by consumption -- Karachi, Cairo, and London. However, punishment for being caught with small amounts of marijuana isn't particularly harsh in these cities. Prosecution rates in some parts of Britain are very low, while police forces in the U.K. mostly have moved away from focusing on recreational pot users. Likewise, cannabis-focused travel blogs suggest that law enforcement in Cairo only tends to focus on people carrying large amounts of pot.
Even with high consumption potential, the U.S. won't change its stance on weed
Though this analysis by Seedo would seem to confirm the idea that the United States could easily lead the world in cannabis sales and consumption, the prospects of that happening are quite slim. In fact, with Jeff Sessions as Attorney General, the chance might as well be zero!
Sessions is no fan of cannabis, and he's made that quite clear during his tenure in the Senate and now, as Attorney General. Last year, Sessions sent a letter to a few of his congressional colleagues requesting that they repeal the Rohrabacher-Farr (also known as Rohrabacher-Blumenauer) Amendment, which is what protects medical-marijuana businesses from federal prosecution. More recently, Sessions announced that the Cole memo, which was a loose set of "rules" that legalized states abided by in order to keep the federal government off their backs, would be rescinded. Sessions is effectively waging war on the weed industry, and that's not going to stop anytime soon.
Add to this the simple fact that Congress has more pressing issues than marijuana. The Republican-led congress has healthcare reform, an infrastructure bill, and ongoing budget discussions to contend with, leaving no room for cannabis reform.
When it comes to intriguing markets for marijuana stock investors, Canada is the clear No. 1! Assuming parliament moves forward with the proposed legislation, recreational weed in Canada could generate an additional $5 billion in sales per year. Growers like Canopy Growth could potentially be rolling in cash within the next couple of years, assuming they can meet the expected influx of demand.
While the cannabis industry isn't static, it's time for investors to move beyond the hope that the U.S. will change marijuana's scheduling and focus on the reality that Canada is leading the way for investors and pot enthusiasts.