The nation’s medical marijuana market is forecast to reach $5.3 billion in 2017 before growing to $13.2 billion by 2025.
Medical marijuana patient spending surpassed that of adult use consumer spending by a factor of three in 2016, according to a new market research report.
New Frontier Data partnered with software and marketing company Baker to examine cannabis consumer trends in their new more than 400-page report, The Cannabis Industry Annual Report: 2017 Legal Marijuana Outlook. The Washington, D.C. cannabis analytics firm found that in 2016, medical consumers shopped for cannabis every 10 days, spending an average of $136 per transaction. Adult use consumers shopped every 14 days and spent an average of $49 per transaction.
Medical marijuana sales are projected to reach $5.3 billion in 2017 and account for 67 percent of total cannabis sales. By 2025, medical marijuana sales will grow to $13.2 billion and account for 55 percent of all legal cannabis sales. Adult use sales are projected by reach $2.6 billion in 2017 before growing to $10.9 billion by 2025.
New Frontier produced the report for investors, operators, and policy makers interested in keeping up with the rapidly changing cannabis industry.
“Given the size of the market, knowing who your customers are, how and when they shop, and what they buy are fundamental building blocks of developing any effective retail strategy. This is simply one of the many fundamental insights presented in our annual report,” said New Frontier Data CEO Giadha Aguirre De Carcer, in a statement.
“The market does not just hold grand potential, the data points to the potentials in our evolving landscape that make business intelligence so critical in making good decisions,” said Leslie Bocskor, Founder and President of Electrum Partners, a medical and recreational cannabis advisory firm that sponsored the report.
The New Frontier report found that both medical and adult use consumers are becoming more interested in cannabis products outside of flower. Last year, the demand for flower products in adult use markets fell from 85 percent in January to 64 percent in December. In the medical market, flower share of the market dropped from 87 percent to 65 percent in 2016. During that same period, the demand for concentrates among medical patients grew from 10 percent of sales to 27 percent. Concentrates grew from 10 percent to 21 percent in the recreational marijuana market.
Medical patients were found to more likely to purchase cannabis on Thursday and Friday, while adult use buyers preferred Friday and Saturday.
With the legal cannabis market growing at a faster rate than the dot-com boom of the 2000s, and legalization potentially expanding to all 50 U.S. states by 2021, operators, investors, and entrepreneurs that monitor and adapt to the changing spending and consumption habits of consumers will be the ones that succeed, suggests New Frontier.
“California offers the perfect example of why it is so important to understand trends in consumer behavior. The state’s legal industry is forecast to grow from $2.8 billion in 2017 to $5.6 billion in 2021. That spending will be increasingly directed at products and retailers who understand and serve the market’s evolving tastes and preferences. The market is changing, and the most successful operators will be those who adapt most quickly to the change,” added De Carcer.
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