Legal Marijuana Sales Could Hit $21.8 Billion in 2020
The cannabis industry has transformed from an “interesting curiosity” into a booming market. With 30% annual growth and predictions of $6.7 billion in 2016 and $21.8 billion in 2020, it’s the fastest growing industry in the US.
Window of Opportunity
National polls show that public opinion has been moving in favor of legal marijuana for years. This change in attitude towards marijuana and cannabis culture, in general, has given birth to the state-by-state legalization efforts that have moved large portions of the industry out of the black market, and into the kettle of mainstream commerce.
Many in the business and financial sector have taken a ‘wait and see’ approach to the legal cannabis industry,” says Troy Dayton, CEO of The ArcView Group. “The new data confirms what pioneer investors and entrepreneurs suspected. Legalization of cannabis is one of greatest business opportunities of our time and it’s still early enough to see huge growth.”
According to a new report, the legal cannabis industry in the U.S. may grow to $50 billion in the next decade, expanding to more than eight times its current size as lawful pot purveyors gain new customers, and win over users from the illicit market.
These numbers are also attracting investments from stakeholders and firms. ArcView’s investor network alone invested $45 million into 66 cannabis companies in 2015.
The expanding industry will affect big business even though the current competitive landscape is largely made up of smaller startups.
Cannabis: The next big thing
Just how big is the market for legal pot? A new report by a leading marijuana industry investment and research firm, found legal cannabis sales jumped 17%, to $5.4 billion in 2015, and they will grow by a whopping 30% this year to reach $6.7 billion in total U.S. sales. This would mean that the legal marijuana market could be bigger than the National American Football League.
“The new data confirms what pioneer investors and entrepreneurs suspected. Legalization of cannabis is one of greatest business opportunities of our time and it’s still early enough to see huge growth.”
The growth in edibles, which are higher priced, have helped fuel sales, says New Frontier Director of Analytics John Kagia, who authored this year’s State of Legal Marijuana Markets report. “They also come at higher price points than the flower does, which means the businesses are able to capture higher sales per customer through the sale of these new products.”
Continued revenue growth attracts more investors (and convinces them to dig deeper for investments). The industry has already begun to see signs of that, such as last year’s news that cannabis-focused Privateer Holdings, had secured a $75 million investment from Founders Fund, the firm founded by the billionaire Peter Thiel.