Fueled by strong consumer demand, legal sales in cannabis for medical and recreational use are projected to grow at a compound annual growth rate of 21 percent, to reach more than $41 billion by 2025 (from $13.2 billion in 2019), according to a report from New Frontier Data titled Cannabis in America for 2021 & Beyond: A New Normal in Consumption and Demand. Monthly consumer spending increased by an average of $149 between March and October in 14 legal markets analyzed.
“History is happening before our eyes as the events of 2020 are fundamentally redefining the U.S. cannabis market and will continue to do so for years to come,” says Giadha DeCarcer, founder and CEO of New Frontier Data. “The pace and scale of growth the industry is experiencing is a compelling proof point that cannabis is evolving into a mainstream consumer category.”
Mitch Baruchowitz, managing partner at Merida Capital Holdings, which partnered with New Frontier Data on the report, adds: “In 2021, we will likely see the legal cannabis market mature even further as it continues to cannibalize the much larger illicit market. This stratospheric growth presents incredible investment opportunities.”
By 2025, an estimated 39 percent of total annual cannabis demand across the country will be met by legal purchases in regulated marketplaces, from 17 percent in 2019.
And annual legal sales of medical cannabis are projected to grow at a 19 percent compound annual growth rate through 2025, to an estimated $16.3 billion (from $5.9 billion in 2019), while adult-use sales are projected to grow at a 23 percent compound annual growth rate, to $25.1 billion (from $7.4 billion in 2019).
Pot sales and investment prospects were given a boost during the November elections when four U.S. states approved legal recreational marijuana.
“One of the biggest surprises from the sweeping win was the staunchly republican states of South Dakota, Montana and Arizona all approving recreational cannabis, proving that cannabis has become a bipartisan issue,” says Dominick Volpini, vice president of Cloudious9 Inc., a maker and distributor of pot hardware.
Jeffrey Zucker, co-founder and president of Green Lion Partners, a cannabis-focused business strategy firm, adds, “It opens up new markets for those in the industry, as well as those looking to enter the space, which will create jobs and many life-changing opportunities.”
Mike Consol (m.consol@irei.com) is editor of Real Assets Adviser. Follow him on Twitter @mikeconsol to read his latest postings.