What is the Potential Size of the Legal Cannabis Industry?
In news reports about the potential size of the cannabis industry – and indeed in our own posts on this site – figures are often cited like a value of $22 billion dollars by 2020. These projections, provided by excellent sources like the ArcView Group and Marijuana Business Daily, are safe, conservative numbers based on the likelihood of continued legal expansion and available market data. They are also number based solely on sales of cannabis itself. What, though, is the potential size of the entire industry nation-wide and including ancillary markets? How big can the cannabis industry truly grow to be?
In 2012 the RAND corporationestimatedthat the total size of the illicit cannabis market in the United States was $40 billion dollars, and we’ve heard a few people say that legal cannabis is simply a matter of moving those illegal sales into legal territory. That, however, is undervaluing the potential size of the market. Black market sales will only ever tell you how many people are willing to purchase cannabis from a drug dealer – it will not tell you how many would potentially purchase it if it were available legally. According to the Marijuana Business Daily 2015 Factbook up to 30% of cannabis consumers in states with legal cannabis have only purchased the drug legally. As cannabis normalizes the number of mainstream consumers can only be expected to increase.