Moneycontrol PRO
Open App
you are here: HomeNewsBusiness

The marijuana industry is high on business opportunities

If cannabis is made legal for industrial or medicinal use in India, regularised cultivation of the plant could prove immensely profitable for the government.

July 25, 2019 / 07:13 PM IST

Cannabis by far is the world's most widely cultivated, trafficked and abused illicit drug as per the World Health Organization. Around 2.5 percent of world population (147 million people) consume cannabis as compared to 0.2 percent cocaine users.

There have been long standing debates on legalising marijuana in numerous countries to make cannabis legal for recreational purposes. In India, it continues to illegal for medicinal use. In a 2018 report, Deloitte called the marijuana sector a "sophisticated industry that will create new jobs, new opportunities for businesses, and new revenues for government."

Marijuana is banned for recreational and medicinal purposes under the Narcotic Drugs and Psychotropic Substances Act, 1985. Besides the industrial use or the use of "bhang" during Holi celebrations, there is a massive black market that exists in India. It operates only in cash, but if brought under the purview of the organised system, it could generate crores in revenues.

Experts suggest that the industry would add $40 bn to the US economy by 2021 and would provide 4,14,000 jobs. The industry in Canada is expected to grow to $6.5 bn by 2020, while in Europe it is expected to be worth £106 bn by 2028.

In a previous article, former union minister Shashi Tharoor had written, "Rather than leaving the trade of cannabis in the hands of an unregulated criminal market, the drug should be safely produced by competent farmers, packaged and tested in suitable facilities, and sold by reputable and licensed vendors."


The sale of cannabis has had a significant positive impact on markets that have chosen to regulate and tax its consumption, according to a World Finance report.

In India, Baba Ramdev's Patanjali has successfully entered numerous segments and could be the first indigenous company to realise the investment potentials in cannabis. It spoke about legalising the plant last year and is reportedly carrying out industrial and medicinal research.

The Bombay Hemp Company, a Mumbai-based startup is also looking to revolutionise agriculture by using a strain of cannabis. The company seeks the revision of policies to use the industrial variety of cannabis called hemp. The fiber from this strain will be used in making fabric and oil. There are reports that suggest cannabis could ease the agrarian crisis and move the economy to a more sustainable framework.

Lack of awareness and misconceptions surrounding words like cannabis, marijuana and weed has limited industrial investments in this sector in India. Other countries in Europe and Americas where cannabis is partly legal, have seen immense investment potentials.

US-based cannabis-investment company, The Arcview Group has claimed to have invested more than $260 million in 212 ventures through its members. The company has invested in Eaze, an app that delivers cannabis -- it is now now valued at over $100 million -- and Mirth Provisions, which is known for its cannabis-infused tonics. The latter raised $1.8 million from The Arcview Group.

Cosmetics brand Sephora has launched body lotions and hemp seed oil with marijuana's non-psychoactive ingredients (CBD). Milk Makeup has also launched its own line of "green" makeup. There were reports of Coca-Cola launching cannabis-infused drinks that will mainly contain CBD.

American alcohol giant Constellation Brands that owns Corona beer had bought a 9.9 percent stake in Canada's largest licensed cannabis producer, Canopy Growth, for $190 million Livemint reported.

"Weed activists" in India believe that the legalisation of cannabis would threaten the tobacco and cigarette industry. Although, cannabis is legal in a few countries countries for recreational use, it doesn't mean that the plant can be declared harmless.

The health consequences of cannabis use in developing countries are largely unknown because of limited and non-systematic research points WHO.

"The potential risks that cannabis pose illustrate why it is our duty to legally regulate this drug," Shashi Tharoor had added.

But considering the use of cannabis for industrial or medicinal use, regularised cultivation of the plant could prove immensely profitable for the government and would attract massive investments.
Shraddha Sharma
first published: Jul 25, 2019 07:52 am
ISO 27001 - BSI Assurance Mark