Study: Legal cannabis market is forecast to generate $43 billion in revenue by 2025

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Bethan Rose Jenkins, Cannabis News Writer/Editorial

As 10 more states prepare to start selling cannabis before the end of this year or the next, it’s safe to say that the U.S. cannabis market is on a roll. In fact, analysts from New Frontier Data predict that the legal market will rake in $43 billion by 2025. 

This insight, along with many other sales forecasts, was published in a new report on the industry at large.

Covering recent market trends and post-legalization figures, the report, titled, “Cannabis in the U.S. 2021 Mid-Year Market Update,” draws up new estimates for the foreseeable future.

An interesting take away from the report on the U.S. cannabis market is that 141 million Americans – or 43 percent of the adult population – lives in 18 adult-use states that portray “a diverse and widely distributed consumer base for retailers to segment and target.” 

In addition to this, by 2025, an impressive 42 percent of total consumer demand for cannabis in the U.S. is expected to be satisfied by legal, regulated purchases. In comparison with figures recorded last year, this is a 24 percent increase.

Legal regulated sources contributing to surge in U.S. cannabis market spending

Based on the recent report from New Frontier Data, the legal market is undergoing serious evolution. Additionally, analysts say that existing illicit cannabis spending is being converted nicely into legal spending.

The rise of consumers switching from illegal to legal markets has been attributed to a preference of regulated sources.

Another interesting finding from this report on U.S. cannabis market spending is that 5.4 million Americans – equivalent to 2.4 percent of U.S. adults – will have enrolled for medical cannabis programs by the year 2025.

Investors are keeping a close eye on the progression of the U.S. cannabis industry, too. Fundraising from investors tripled in May 2021, when cash injections surpassed $6 billion.

Black market cannabis continues to pose threat to legal regulated U.S. cannabis 

Although this report on the U.S. cannabis market revealed that more consumers are moving to legal avenues, the findings also suggest that the black market continues to stay afloat; in spite of more states introducing legal markets.

The illicit “black market” slightly benefited from the COVID-19 pandemic. After all, many consumers were forced to stay at home while businesses closed their doors.

Despite the fact that delivery and curbside pick-up managed to help some licensed business owners continue serving their beloved customers, some buyers chose to purchase cheaper weed from local dealers. 

Consequently, illicit national cannabis demand and consumption was believed to have generated more than $65 billion in revenue.

“Despite the recent legalization in some densely populated states like New York and New Jersey, the majority of the U.S. population still lives in a state without legal adult access to high-THC cannabis,” said the senior director of industry analytics for New Frontier Data, Kacey Morrisey. “Roughly a third of the $65 billion illicit market figure comprises states that have not, and do not appear to have plans to legalize any form of cannabis before 2025.”

She says that the black market is fueled by the expense of legal cannabis.  

“While spending by cannabis consumers in every market appears to be increasing,” she explained, “the growth in the number of cannabis consumers purchasing solely from the illicit market has stagnated as new consumers enter the legal market and existing consumers begin to transition their purchases through legal regulated sources.”

You can download a copy of the report by clicking here.