Tuesday, January 3, 2017
Legal marijuana sales in 2016 in North America over $6.5 billion after another year of remakable growth
As reported in this new Forbes article, "North American marijuana sales grew by an unprecedented 30% in 2016 to $6.7 billion as the legal market expands in the U.S. and Canada, according to a new report by Arcview Market Research." Here is more reporting on a new report on the legal marijuana marketplace:
North American sales are projected to top $20.2 billion by 2021 assuming a compound annual growth rate of 25%. The report includes Canada for the first time as it moves towards implementing legal adult use marijuana.
To put this in perspective, this industry growth is larger and faster than even the dot-com era. During that time, GDP grew at a blistering pace of 22%. Thirty percent is an astounding number especially when you consider that the industry is in early stages. Arcview's new editor-in-chief Tom Adams said, "The only consumer industry categories I've seen reach $5 billion in annual spending and then post anything like 25% compound annual growth in the next five years are cable television (19%) in the 1990's and the broadband internet (29%) in the 2000's."
ArcView's analysis uses data provided by BDS Analytics that has access to millions of individual consumer transactions from dispensary partners. “One of the biggest stories was the alternative forms of ingestion,” said ArcView Chief Executive Officer Troy Dayton. “Concentrates and edibles are becoming customer favorites versus traditional smoking.”
Even though the market is putting up huge sales numbers, there is still a great deal of uncertainty that comes with the new administration's approach towards legalization. Dayton believes that President-elect Donald Trump has been consistently in favor of states rights when it comes to legalization. “It's one of the few things he has been consistent on,” he said. Dayton also believes that even if Trump backed away from adult use, he would still favor medical marijuana.
The proposed attorney general Jeff Sessions is a confirmed critic of legalization, but Dayton believes that marijuana will be a low priority for the new administration. In any event, the group is reviewing and preparing for a more aggressive stance toward marijuana from the federal government should that happen. Even with this cloud of uncertainty, Dayton is bullish for the market. He said investment dollars are pouring into California, Florida, Massachusetts and Nevada. “Twenty-one percent of the total U.S. population now live in legal adult use markets,” said Dayton. He also noted that Colorado, Washington and Oregon saw their sales jump 62% through September of 2016 over 2015.
Investors are predominantly interested in investing in new technology within the industry like testing technologies and new growing technologies. Retail also remains attractive as new brands vie to win market share. Dayton also said there is a great deal of interest in Canada. That country's market is smaller than the U.S., but without the overhang of government conflict, it is a good indicator for which businesses could be replicated and thrive in the U.S.