California is considered the world’s largest marijuana market and it’s legal cannabis market is currently on track to grow 23% in 2019 to $3.1 billion and to reach $7.2 billion in 2024, a 19% compound annual growth rate (CAGR) over the next five years.
California is considered the world’s largest marijuana market and it’s legal cannabis market is currently on track to grow 23% in 2019 to $3.1 billion and to reach $7.2 billion in 2024, a 19% compound annual growth rate (CAGR) over the next five years.
The forecast comes from he report; California: Lessons From the World’s Largest Cannabis Market, a new report from Arcview Market Research and BDS Analytics.
The report points out California became the first state to have legal spending on cannabis fall year-over-year when switching from medical-only access to an adult-use regulatory regime, from $3 billion in 2017 to $2.5 billion in 2018. There are many theories on this, shirtage of supply, switch to other drugs or stopping pot smoking. There is also the theory the switch was much to do with illegal purchases, off the record, cheaper prices.
States making the move before including Colorado, Washington and Oregon have typically seen consumer spending double over 12 months.
The report says in California, local bans on commercial cannabis activity caused the number of retailers to shrink sharply during the launch of the state’s adult-use program in January 2018. Stringent testing regulations that took effect in July 2018 prompted many suppliers to fold as product shortages cut consumer spending dramatically.
“California companies that survived the dual ‘extinction events’ of 2018 have emerged stronger and well-positioned to grow their market share going forward,” said Troy Dayton, CEO of the Arcview Group. “More than that, they are battle hardened, and kicked off a merger and acquisition flurry in the first half of 2019 that will allow them to leverage their positions in California to compete across the country.”
“Despite the burdens imposed on the legal market by regulators, with a $2.7 billion gross domestic product, California has the world’s largest legal cannabis market and will continue to until federal legalization makes it merely a part of the larger U.S. market,” said Tom Adams, Managing Director and Principal Analyst for BDS Analytics’ Industry Intelligence group and Editor-in-Chief for Arcview Market Research.
“At that point, California will assume its usual place in the world economy as a major exporter of agricultural commodities and their derivative products, a technology mecca, and consumer product trendsetter.”
Other key trends analyzed in California:
Lessons from the World’s Largest Cannabis Market include: California Governor Jerry Brown forecasted that legal cannabis would bring the state $643 million from cannabis taxes in 2018. Actual cannabis-related tax revenue fell short of projections, totaling just over $345 million, with $182 million coming from cannabis-specific excise taxes and $36 million from cultivation taxes.
Given the tax and regulatory load being carried by the legal market, California’s illicit market is predicted to make up 53% of all sales in 2024; compared with the majority of other states with more supportive regulatory regimes whose illicit markets are expected to shrink to 30% or less of total sales in that time frame.
BDS Analytics’ Consumer Insights research found that the average consumer in California is 44-years-old. Also, younger generations consume at higher rates, with 39% of Gen Z and millennials and 41% of Gen X reporting consumption in the past six months, compared to just 20% of Baby Boomers and older generations.
California currently has a relatively low number of retailers for its population, with only one licensed retailer for every 35,147 adults over the age of 21. Contrastingly, Oregon has one dispensary for every 5,567 adults over 21, while Colorado, the first state to launch an adult-use market, has 4,240 adults age 21 and over for each retailer.
he 61-page report is available for $297, or as part of the annual Cannabis Intelligence Briefing Series subscription service from Arcview Market Research and BDS Analytics, priced at $1,975.
Source: PRNewswire
From: The TradersCommunity Research Desk