If voters support initiatives legalizing recreational marijuana in five American states and medical marijuana in Montana and Florida, those states will receive a $7.8 billion revenue from the legal weed market by 2020, the latest report suggests.
A recent market research report conducted by the Arcview Group and New Frontier Data provides information for the update of their general report titled “The State of Legal Marijuana Markets,” which thoroughly describes the sales trends and projections in the legal cannabis industry.
According to this update, the weed industry is expected to get a $7.4 billion revenue for the current year, which is bigger than the previous estimate of $7.1 billion.
In contrast, the 2020 projection was changed to $20.6 billion from the previous estimate of $22.7 billion. This adjustment was based on the precise information that took into account operational challenges in Maryland and Alaska, changes of states' regulatory models, and overestimated sales in New York and Illinois.
A good part of this amount, more precisely $7.8 billion, accounts for the adoption of adult-use cannabis ballot measures in Maine, Nevada, California, Arizona, and Massachusetts, along with medical weed initiatives in Montana and Florida. The sales of recreational cannabis in California alone are expected to bring $3.9 billion of the mentioned $7.8 billion.
The authors of the report are sure that in case of marijuana adoption in the November election, marijuana market expansion would skyrocket faster than ever before in the pot industry's history.
California has a large cannabis market, which would rapidly increase in case of Proposition 64 adoption this fall and have a great impact on the re-examination of domestic and international cannabis policies. According to the recent Arcview and New Frontier estimates, the overall legal weed market in California could reach $6.5 billion of revenue in 2020 if the adult use of marijuana was legalized.
As for the new pot industry's trends, the report updated the previous information, taking into account the future presidential elections, changes in statewide legislation, federal regulations, along with prices on weed products and technology advancements.
Marijuana legalization covered the majority of American states after Ohio and Pennsylvania adopted cannabis regulations earlier this year. Some states are also going to legalize cannabis this fall. Thus, the report underlines the importance of tracking “social outcomes,” like youth usage rates, illicit drug use, or highway safety in the states with legal weed.
The report also reveals the main tendencies in weed product sales. Though flower sales are still dominant, concentrates are also in high demand with weed consumers, especially in Washington state. Moreover, consumers show interest in pot edibles and vaping, so the sales of weed products and paraphernalia will probably increase in the near future.
Prices for cannabis have already dropped because of the increased number of legal growers in the first half of 2016. Consequently, if new states legalize recreational cannabis, weed producers in those states will have to meet the price competitive market environment, the report states.
Moreover, the future period will be quite difficult for producers who grow weed in urban warehouses, as they will have to compete with growers who cultivate marijuana the greenhouse way and use energy-saving equipment. This trend will slowly lead to the commoditization of marijuana, according to the report.