The latest annual report from New Frontier Data projects that America’s legal cannabis market will grow to over $24 billion by 2025.
America’s cannabis market is expected to be more than $24 billion by 2025, according to the 2017 annual report from cannabis market research firm New Frontier Data. The Cannabist, given first look at the report before its publication, says that New Frontier hopes its analysis will show that the nation’s industry is not “just a flash in the pan.”
“It’s very hard to look at both the numbers and associated economic dynamics and envision that this genie could be put back in the bottle,” John Kagia, New Frontier’s executive vice president of industry analytics, told The Cannabist.
Of the estimated $24.5 billion market, New Frontier anticipates that medical marijuana will account for more than half. The firm’s calculations have the nation’s medical marijuana sales increasing at a compound annual growth rate of 13 percent to hit $13.3 billion in 2025. The recreational market is expected to grow at a 25 percent compound annual growth rate to $11.2 billion.
New Frontier expects that by 2025, all of the 28 states with medical marijuana laws and the eight states that have legalized recreational market will have fully operational programs. Colorado, a state with operational medical and recreational programs that generated $1.3 billion in cannabis sales in 2016, is projected to reach $1.94 billion in sales by 2025. California, which just legalized recreational marijuana last November, is expected to be the top cannabis state, accounting for more than $6.59 billion in that time.
The New Frontier forecast also projects that employment within the cannabis industry could grow to hit 255,000 jobs in three years. The research and editorial team at Marijuana Business Daily calculated that the American marijuana industry has already generated an estimated 100,000 to 150,000 jobs.
The Marijuana Policy Group has voiced criticisms of market research forecasts on the marijuana industry, claiming that they often overestimate potential sales, but Kagia at New Frontier told The Cannabist that the firm’s projections this year are made with “an even more precise model” than previous research. He added that he wouldn’t be surprised if the report ended up underestimating the market, citing a likelihood that more states will adopt legalization before 2025. Recent moves from lawmakers in several states indicate that recreational and medical marijuana legalization could expand.
“It’s not hard to imagine that the total cannabis industry could be substantially larger than even our conservative projections,” Kagia said.
For its projections, New Frontier reportedly factored in several elements, including regulation changes, demographic trends, qualifying conditions for medical cannabis, tourism, and the rate of population growth. The firm didn’t offer any specifics on the formulas it used to weigh the variables.
“We realize this is such a dynamic environment that even minor changes do have substantiate [effects],” said Kagia.
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