Marijuana is big business in the United States, and getting bigger at a phenomenal rate. Legal sales rose more than 17% year over year in 2015, and sales to adults rose 184% to $998 million. Total sales in 2016 are currently forecast to rise 25% to $6.7 billion. By 2020, sales will more than triple to $21.8 billion.
The data were released Monday by New Frontier and ArcView Market Research in the fourth edition of the “State of Legal Marijuana Markets.”
From 2014 through 2020, the researchers expect the combined medical and adult recreational use market for marijuana to growth at a combined annual growth rate of 30%. In 2020, adult use is forecast to account for 53% of sales compared with just 8% in 2014.
Among the 10 trends to watch in 2016 from New Frontier and ArcView, these five that will help shape the future of the cannabis industry over the next several years:
- Congressional action: Areas of influence include DEA funding for prohibition enforcement, medical research approval and allowing banking and financial services for the industry.
- Price wars and competition: Competition on price in both the wholesale and retail markets has increased significantly and will continue to do so in 2016.
- Cannabis unfriendly president elected in 2016: Although public opinion is shifting toward embracing cannabis reform, presidential candidates are a bit more reluctant to join the parade.
- Increased emphasis on compliance and regulation: Virtually no other industry has as much regulatory scrutiny at the same time that it lacks any federal recognition. This is a particular problem for companies looking to expand across state lines.
- Energy use: Cannabis is the most energy intensive agricultural crop produced in the United States. The unrestrained use of energy to cultivate cannabis cannot be sustained in legal cannabis markets.
Some 86% of Americans now live in states that allow some degree of legal cannabis use, including cannabidiol (CBD) only, medical and adult recreational use. The researchers note that the number of Americans who are now exposed to legal marijuana use “has been shaping the public’s increasing acceptance of cannabis.”
The federal government has begun cutting funding to the Drug Enforcement Agency in states where marijuana is legal. This, together with removing marijuana from its listing as a Schedule 1 dangerous drug and reclassifying it as a Schedule 2 drug, along with lifting banking restrictions on marijuana-based businesses, are probably the top three factors to watch for this year.
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