The world is shifting its position on cannabis. For nearly a century, cannabis prohibition laws have made legally cultivating or selling cannabis products anywhere on earth nearly impossible. But all that’s starting to change, at least in some regions.
In the brief time since Canada and parts of the United States legalized recreational marijuana, economists have seen massive growth in the cannabis market. Often, cannabis activists cite this growth as an indication of the people’s desire for legal cannabis. Plus, the large amount of taxable sales the industry makes annually is a compelling figure for legislators who need to balance a national budget.
But just how big is the cannabis market, really?
What Is The Cannabis Market?
The cannabis market is a measure of all legal cannabis-related sales. While this obviously includes the flower, dabs, and vape cartridges you can purchase at your local dispensary, it also includes things like industrial hemp, ancillary products like bongs, medicinal cannabis, CBD products, and cannabis-infused cosmetics.
While many industries have suffered a decline in the last two years due to complications surrounding the global covid-19 pandemic, the cannabis market has continued to soar.
US Cannabis Market Vs. The Rest Of The World
The United States is known for doing things big, and cannabis is no exception. The US cannabis market accounts for roughly half of the global market. In 2018, economists valued the American cannabis market at 11.3 billion dollars. For context, in 2020, the cannabis market for the entire world was only valued at 20.47 billion dollars.
So why is cannabis so big in the United States? Well, there are a few possible reasons. For one, the United States is the third most populated country in the world. With a population of 300 million people, there’s a lot of potential cannabis customers. Also, the United States is currently at the forefront of the legalization movement.
While there’s certainly a long way to go in terms of federal legislation, legal cannabis products are much easier to acquire in the United States than in most other countries.
Which State Has The Biggest Market Share In The Cannabis Space?
But what about inside of the United States? Which state has the largest cannabis market?
You may not be surprised to learn that California has the biggest market share in the cannabis space. The Golden State has always been known for its cannabis culture, and now that both medical and recreational cannabis is legal in the state, many former black market cultivators and distributors have shifted into the legal market.
Also, there’s the scale of the state to factor in. California is the most populated state in the union and the second-largest in terms of landmass. Plus, the region’s climate and soil are perfectly conducive to agriculture.
Cannabis Market Size Vs. Black Market Size
One might think that the introduction of legal cannabis markets into a region would completely end the black markets. However, that is not the case. The state of California is a great example of this.
Even though cannabis is legal in California, the black market persists and, in fact, has actually surpassed the legal market. This partly has to do with the difficulty distributors and cultivators have in acquiring licenses, but there’s also a financial component.
The fees and taxes required of legal cannabis growers and vendors can quickly eat away at profits. Plus, cultivators can demand higher prices when selling out of state to black market dealers. Ultimately, black market sales will continue so long as there’s a demand from regions without access to legal cannabis.
Future Of The Cannabis Market
All economic predictions indicate that the cannabis industry will continue to grow at an exponential rate, reaching nearly 100 billion by 2028. If trends continue, we can expect to see more states implement legal cannabis markets and eventually complete federal legalization.