Report includes unprecedented new data on product purchase trends in OR, WA, and CO that show an explosion in the number of brands and products
Arcview Market Research, publisher of cannabis market research, on Thursday released the full 200+ page 5th edition of The State of Legal Marijuana Markets which projects that the state-legal cannabis markets will continue to grow at a 27 percent CAGR through 2021, despite conflicting signals from the Trump Administration.The report, according to Arcview, is “the industry’s most robust ever released.” It includes market projections that rely on a proprietary bottom-up point of sale foundation with millions of individual consumer transactions from dispensary partners in the largest legal cannabis markets across the country created by Arcview’s data partner, BDS Analytics.
The report details how the two biggest drivers of growth are the passage and subsequent implementation of new adult-use laws and growth of branded product subcategories, such as vape cartridges, edibles, and other alternative consumption methods.“While the uncertainty created by the mixed signals coming out of the Administration may cause a temporary dip in some valuations of cannabis companies and some more risk-averse institutional investors and multinational companies may continue to stay on the sidelines, it won’t impact the growth of the market much at all,” said Troy Dayton, CEO of Arcview Market Research. “No matter what the administration does, states will continue to issue cannabis licenses to a long line of applicants and licensed cannabis outlets will continue to have long lines of consumers ready to purchase this product from regulated establishments.”
Dayton and others in the industry say a crackdown is unlikely, because of the popularity of cannabis and the funds it would take to renew the war on weed, reports Jennifer Kaplan at Bloomberg. “It’s just so politically unpopular it would be silly,” he said.
About 71 percent of voters say “the government should not enforce federal laws against marijuana in states that have legalized medical or recreational use,” according to a recent poll from Quinnipiac University.
“We’ve got all these other countries that are passing more laws and also other states, and presumably the federal government could end marijuana prohibition as soon as 2021,” Dayton said. “There’s never been a market that’s grown at 20-plus percent growth each year for 10 years, right? But that’s possible here.”
- Legal cannabis consumer spending across North America grew 34 percent to $6.7 billion and can be expected to grow at a 27 percent compound annual growth rate (CAGR) over the next five years, from $6.7 billion in 2016 to $22.6 billion in 2021.
- North Americans spent $56.1 billion on legal and illicit cannabis products in 2016, about half of the $105 billion they spent on beer. But only $6.7 billion of that was spent legally and 87 percent of that came from just five states and Canada.
- Growth in legal cannabis sales has already eroded the illicit market. This erosion will greatly accelerate in 2018 with the arrival of legalized adult-use programs in North America’s two biggest markets, California and Canada. Meanwhile, the 20 states without legal cannabis programs contributed nothing to the accelerating erosion of the illicit market.
- Voters in Florida, Arkansas, Montana, and North Dakota passed medical cannabis initiatives. This means that 63 percent of Americans can now legally obtain cannabis with a doctor’s recommendation.
- Voters in California, Massachusetts, Nevada, and Maine passed adult-use measures. This more than tripled the portion of Americans that will be able to purchase cannabis without a doctor’s recommendation in their home state to 21 percent.
- Adult-use spending will surpass medical spending for the first time in 2019. By 2021, $14.9 billion (66 percent of total revenue) will be generated through adult-use programs and $7.7 billion (34 percent) through medical use.
- Compound annual growth rates above 50 percent since adult-use legalization in Colorado and Washington drew significant new segments of the investment community into the legal cannabis industry in 2016, driving triple-digit gains in public stocks and double-digit gains in capital raised by operating companies and a growing group of cannabis-focused investment funds.
- Pre-rolled product growth sales went up 63 percent in CO, 318 percent in WA and 236 percent in OR; the growth of concentrates and edible products (including in pill form) were similarly well-above the growth of flower in all three states.
- In the relatively mature Colorado market, there are now hundreds of branded products on shelves. The top five brands accounted for nearly half of all edible sales, the top 10 brands for more than two-thirds, and the top 20 for almost 90 percent; Sales of dried cannabis flower still accounted for more than half of all cannabis product sales in 2016 in Colorado, Oregon, and Washington.
- Volume of flower sold continued to grow at a rapid pace throughout 2015 and 2016, while average retail price per gram has declined steadily.
The report also includes 30 in-depth state profiles.“The explosion in the number of brands and products is dizzying,” said Arcview Editor-in-Chief Tom Adams. “When the #1 concentrate brand in CO grows 84 percent but its market share percentage remains constant it becomes clear we are in a remarkable business boom.
“It reminds me of 1998, when Google was just one of dozens of search engines, or 1988 when Blockbuster was just one of dozens of video store chains; future market leaders are just now being launched,” Adams said.
The executive summary for the 5th edition of the State of Legal Marijuana Markets is available for free and the full digital and hardbound report is available for purchase for $597 at www.ArcviewMarketResearch.com.