According to Forbes:
With 10 newly legalized states slated to begin selling cannabis in 2021 or 2022, the legal market is projected to pull in $43 billion by 2025. That eye-opening finding is one of several made in a new study conducted and published by top cannabis market researcher New Frontier Data. Entitled “Cannabis in the U.S. 2021 Mid-Year Market Update,” the report examines recent market trends and figures following expanding legalization efforts nationwide, while casting new projections for 2021 and beyond.
The report finds that 141 million Americans, or 43% of the adult population, reside in 18 adult-use states, “representing a diverse and widely distributed consumer base for retailers to segment and target.” And by 2025, 42% of the total annual U.S. cannabis demand is projected to be met by legal purchases in regulated marketplaces. This is a 24% jump from 2020. New Frontier Data cites a surge in legal market spending as well as the conversion of existing illicit market consumer spending to legal regulated sources as reasons for the estimated increase in consumer demand.
Another interesting finding: By 2025, 5.4 million Americans, or 2.4% of U.S. adults, will be registered patients in medical cannabis states.
As more states legalize and cannabis consumption increases, investor confidence has also grown. The study found that in May 2021, fundraising in the legal cannabis market more than tripled, amassing $6 billion.
However, not all the findings were so rosy. The black market is still alive and thriving. For the pandemic-ruled 2020, illicit national cannabis demand and consumption were estimated to be over $65 billion.
Yet, with or without legalization, the market, which encompasses all consumer spending on cannabis, is growing exponentially, said Kacey Morrisey, senior director of industry analytics for New Frontier Data. Unfortunately, the increased number of legal states will not stem the illicit market.
“Despite the recent legalization in some densely populated states like New York and New Jersey, the majority of the U.S. population still lives in a state without legal adult access to high-THC cannabis,” said Morrisey. “Roughly a third of the $65 billion illicit market figure is comprised of states that have not, and do not appear to have plans to legalize any form of cannabis before 2025.”
Expensive products help fuel the black market, added Morrisey, as well as an increase in supply. But for the legal market, there is a beacon of light. “While spending by cannabis consumers in every market appears to be increasing,” she explained, “the growth in the number of cannabis consumers purchasing solely from the illicit market has stagnated as new consumers enter the legal market and existing consumers begin to transition their purchases through legal regulated sources.”