Consumers Spend $53.3B on Legal, Medical & Illicit Marijuana Sales in North America
Legalization achieving goal of moving illicit purchases to legal,
taxed channels
OAKLAND, Calif.–(BUSINESS WIRE)–Arcview
Market Research, the leading publisher of cannabis market research,
released the first ever estimate of the entire North American cannabis
market, including legal, medical and illicit marijuana sales. The 5th
edition of the State of Legal Marijuana Markets Report estimates
consumers spent $53.3 billion on cannabis in 2016 across all markets.
This first of its kind report finds that legal regulated marijuana sales
in North America totaled $6.9 billion in 2016, a 34 percent increase
from 2015. Legal sales are projected to grow at a compound annual growth
rate of 26 percent, from $6.9 billion in 2016 to an estimated $21.6
billion by 2021. The report also found that while all categories of
legal cannabis products enjoyed healthy growth, the growth of
alternative methods of consumption outpaced that of traditional flower
sales, jumping, for example, from 30 percent of total legal sales in the
first quarter of 2014 to 45 percent in the third quarter of 2016 in
Colorado. The new legal market projections 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 BDS
Analytics.
An executive summary of the report was released at Arcview’s private Investor
Forum in L.A. January 17th. The full 200+ page report
will be released in a few weeks.
“The enormous amount of existing, if illicit, consumer spending sets
cannabis apart from most other major consumer-market investment
opportunities throughout history,” said Troy Dayton, CEO of Arcview
Market Research. “In contrast to comparable markets with fast growth
from zero to tens of billions in recent decades such as organic foods,
home video, mobile, or the internet, the cannabis industry doesn’t need
to create demand for a new product or innovation – it just needs to move
demand for an already widely-popular product into legal channels.”
Other highlights of the executive summary include:
-
Including the illicit market, consumer spending on cannabis in North
America amounted to an estimated $53.3 billion in 2016, 87 percent of
it still outside legal channels despite erosion of the illicit market
in adult-use states. That was down from 90 percent of sales in 2015; -
Advances in legalization after four new adult-use markets (California,
Massachusetts, Nevada and Maine) become active by 2018 will erode the
illicit trade further, down to 67 percent of the market in 2021; -
Colorado’s illicit market has seen the steepest decline in percentage
of overall sales -
In states that have not legalized even medical sales however, illicit
market operators thrive on the “illegality premium” built into prices
there with no competition from legal operators; -
In Q1 2014 when adult-use launched in Colorado, over 70 percent of
legal sales came from dried flower; in Q3 2016, it was less than 55
percent. In contrast, concentrate sales were $20 million in Q1 2014,
or 13 percent of sales. By Q3 of 2016 they had quadrupled to $80
million, and 22 percent of sales; -
By Q3 2016, Washington legal sales were already 21 percent
concentrates, 9 percent edibles and 10 percent pre-rolled marijuana
cigarettes, with flower accounting for only 59 percent. In Oregon
where concentrates and edibles were only allowed for the first time in
the adult-use channel in July 2016, the transformation in category and
brand sales was almost overnight.
“This is the most dynamic market I have analyzed since the early days of
the Internet in the 1990s,” said Tom Adams, Arcview Market Research’s
new Editor-in-Chief. “Just one example: a huge surge in private equity
investment in 2014 and 2015 helped drive the number of brands with
concentrates in Colorado stores from 465 to 975 in one year. The largest
brand grew its sales 84 percent in the first nine months of 2016, but
several competitors posted triple digit growth rates such that it barely
held on to its share of the market in a very crowded field.”
Arcview’s Investor Forum for high net worth accredited investors takes
place January 16-18, 2017 in Los Angeles, CA. For more information on
the event and Arcview Investor Network, please click here.
Prior authorization for press access is required.
About The Arcview Group:
Founded in 2010, The Arcview Group is responsible for a number of
groundbreaking ventures in the cannabis industry. Arcview Market
Research is the first and most oft-cited publisher of market research on
the cannabis industry. The Arcview Investor Network includes 600+
dues-paying accredited investors who have put more than $99 million
behind 136 companies. Arcview is a partner in Canopy,
a seed-stage mentor-driven business accelerator. Arcview is also
co-founder of Cannasure
Insurance Services, the leading provider of business insurance to
the cannabis industry. For more information or media inquiries, please
visit www.arcviewgroup.com.
About BDS Analytics:
BDS Analytics helps cannabis industry executives make quality decisions
based on the best data by capturing millions of transactions from
dispensary point-of-sale systems and then mining that data for the most
actionable insights. For more information please visit http://www.bdsanalytics.com/.
Contacts
for The Arcview Group
Alex Howe, 202.271.7997
alex@powerplantstrategies.com
