BOULDER, Colo. — May 5, 2020 —The eighth edition in the series of the widely-cited “State of Legal Cannabis Markets” Reports, released today by Arcview Market Research and BDSA (formerly BDS Analytics), forecasts that worldwide legal cannabis industry revenue will grow another 38% to $20.4 billion in 2020, and sales are forecast to reach $46.8 billion in 2025, growing at a 21.2% compound annual growth rate (CAGR) from 2019-2025.
In 2019, worldwide spending grew 46.1% to $14.8 billion, capping a 2013-2019 period that saw legal spending grow at a 34.3% CAGR.
According to the report, COVID-19 quarantines will slow the march of legalization. Eleven states, including generally conservative ones in the Deep South and Great Plains, were on their way to having qualifying initiatives on the November ballot. Now, just three states have ballot initiatives set for this year: Mississippi will vote on medical use, New Jersey on adult-use, and South Dakota will vote on both simultaneously which, if they pass, would be the first in history.
“The shelter-in-place orders that began in mid-March could prompt cash-starved state governments to accelerate legalization in a bid for tax revenue,” said Troy Dayton, founder and chief strategy officer of The Arcview Group. “The current forecast shows all Americans having access to medical cannabis by 2025, with the majority getting adult-use access by 2022.”
While legalization historically brings illicit buyers into legal channels, much of the growth ahead will come from new consumers. BDSA’s Consumer Insight studies have shown in recent years that legalization leads to a growing consumer base. In Colorado, the percentage of adults reporting cannabis consumption in the past six months jumped from 24% in Q1 2017 to 42% in Q3 2019.
“The fundamental fact underlying the forecast of worldwide growth to $46.8 billion in 2025 is simple: even at $14.8 billion in 2019, legal spending represented just a sliver of global cannabis spending, including the illicit trade,” said Tom Adams, editor in chief at Arcview Market Research and principal analyst at BDSA. “BDSA’s fourth-quarter 2019 Consumer Insights study shows that 29% of American adults report using cannabis in the past six months compared to 54% that report alcohol consumption. This is just the early days of a growth story that will play out over decades to come.”
Other key trends analyzed in the State of the Legal Cannabis Markets, Eighth Edition, include:
- Several key features of the U.S. market that will support a compound annual growth rate (CAGR) of 18.2% to $33.9 billion in 2025;
- The implications for companies and investors as publicly traded cannabis companies transition from “story stocks” to equities that trade more on fundamental analysis and management execution.
- Canada’s combined medical and adult-use spending nearly tripled from $582 million to $1.6 billion in 2019. Revenue is forecast to grow 73% to $2.8 billion in 2020 due to growing store counts in populous provinces, plus the late-2019 allowance of new product types;
- Germany constitutes 22% of overseas sales with its medical-only program. With most countries limiting legalization to medical cannabis, the major driver of spending for the forecast period will be Mexico’s anticipated legalization of adult use. Mexico and Germany are on-track to account for 40% of 2025 international sales, excluding the U.S. and Canada.
Through seven annual editions, “The State of Legal Cannabis Markets” has been the definitive report on the worldwide legal cannabis industry. Since the 5th Edition, the report has been produced by Arcview Market Research in partnership with BDSA, bringing BDSA’s unique retail-sales tracking and consumer studies to the forecasting of legal cannabis spending in 50-plus US states and territories, 10-plus Canadian provinces and territories and 40-plus countries.
Headquartered in Boulder, Colo., BDSA (formerly BDS Analytics) helps businesses improve revenues, reduce innovation risk and prioritize market expansion. The company provides a holistic understanding of the cannabinoid market by generating comprehensive, accurate and actionable insights across point-of-sale data, consumer research and global cannabis industry forecast models, available through the award-winning GreenEdge® data platform. To learn more about how you can utilize BDSA’s market research and insights, please visit www.bdsa.com.
About The Arcview Group
The Arcview Group is the leading investment and market research firm focused on connecting high-net-worth individuals, institutional investors and money managers with the investment opportunities, key players and indispensable insights to realize their goals in the cannabis sector. Founded in 2010 and listed recently by Forbes as one of the top five financial firms in the cannabis industry, investors in the Arcview Investor Network have invested more than $270 million in over 200 companies. Arcview Market Research has published more than 20 market reports, which forecast and analyze the rapidly evolving industry. Arcview co-founded and partnered with Canopy Boulder, the first seed-stage mentor-driven business accelerator that has graduated more than 100 companies. Arcview is also co-founder of Cannasure Insurance Services, the leading provider of business insurance to the cannabis industry. For more information, visit arcviewgroup.com.