Most of you probably already guessed this, but now we know it to be true. According to a report released by ArcView Market Research, the U.S. market for legal cannabis grew over 74% in 2014, up to over $2.7 billion in estimated market value. These numbers make cannabis the clear winner for fastest growing industry in the country. This report also shows that if these trends continue and all states legalized the plant, the market will exceed $35 billion. If this were to happen, the cannabis industry would be larger than the organic food industry in the United States.
According to the report (and common sense), the main driver of projected growth in the next five years will be passage of more state laws legalizing cannabis for recreational use and sales. The report predicts that 14 more states will legalize adult use sales in the next five years. These new markets would combine with maturation of current markets in Colorado and Washington to create a $10 billion market potential by 2019.
There are many other interesting findings in the report. We’ll list some of them below:
- More than 1.5 million consumers purchased cannabis legally from a retail medical or Adult-use store in 2014
- In Colorado, 64% of the total demand for cannabis in the state is being met by the retail medical and adult-use markets, the highest in the nation.
- Arizona’s was the fastest growing major marijuana market, expanding from $35 million in 2013 to $155 million in 2014.
- Full legalization of marijuana in Oregon and Alaska will add a combined $275 million in retail sales to the market in their first full year of operation. AMR cannot predict market size in the District of Columbia because of uncertainty of congressional action.
- Consumers purchased $370 million worth of cannabis products under the new Adult-Use regulations in Colorado and Washington
- California is still the largest legal cannabis market in the country at $1.3 billion.
And last, some trend highlights we thought you might find interesting:
- Investment in all businesses related to the cannabis industry skyrocketed in 2014 leading to a fast maturation of a previously nascent industry
- Businesses in states with highly restrictive patient access and arduous regulatory systems like Illinois, New Jersey, and Delaware are not likely to be particularly profitable as long as the market constraints remain.
- Donations to the political efforts to legalize cannabis have remained constant despite the vastly expanded opportunities for passing legalization in more states making lack of political funding one of the top risks facing the future of the cannabis industry.
- Cannabis concentrates and various infused products are quickly gaining market share at the expense of the traditional cannabis flower market
- National brands are beginning to emerge and spread to various states via multi-state licensing arrangements for their brand IP
“The Legal Marijuana Markets report shows cannabis is the fastest growing industry in the U.S.”, said Troy Dayton, CEO of the ArcView Group, the publisher of the report. “Entrepreneurs and private investors are flocking to these markets. While there is a lot of hype around the marijuana industry, our report provides hard data and in-depth analysis for sophisticated players looking to capitalize on the seismic shifts occurring in the regulatory environment.”
“I’ve studied the growth of the nutrition and the organic food industries for years. I believe the cannabis industry will be an even bigger opportunity. Yet, there are risks associated with a fragmented and nascent industry that is growing so fast. Those with insider analysis and actionable data will be best positioned to mitigate those risks and maximize returns. That’s what we’ve distilled in this report.” said Patrick Rea, former editor of the Nutrition Business Journal and Executive Editor of the report.
The ArcView Group is an investment and research firm based in Oakland, California founded by cannabis industry and advocacy pioneers Troy Dayton and Steve DeAngelo. In edition to ArcView Market Research which is the first and most oft-cited market report on the cannabis industry, The ArcView Group is responsible for a number of cannabis industry innovations including the ArcView Investor Network which is responsible for more than $20 million in investments into more than 40 companies.