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Future Forecast: Examining 2025 U.S. Cannabis Market Projections

Illustration: NicoElNino / Shutterstock

This year marks the tenth anniversary of Colorado and Washington legalizing adult-use cannabis and jumpstarting the nationwide legalization movement. While it is useful to reflect on the industry’s progress within such a short period of time, it is also important to look forward and understand how the U.S. cannabis market will continue to grow as the country continues to pull ahead as a global market leader.

How is the U.S. cannabis market projected to grow?

The 2020s will be seen as a period of exponential growth. At the beginning of the decade, the United States cannabis industry produced approximately $18.5 billion in sales. By the midway point of the decade, the total annual U.S. market is expected to more than double and reach the $45 billion mark for the first time in history. Growth within the cannabis space largely will be driven by large populations of young adults. For example, the population of adults over the age of 21 in states like New Jersey and Ohio are expected to expand remarkably. Meanwhile, states like New York, Florida, and California will continue to boast the largest adult populations in the country.

Beyond population growth, there is increased optimism that several states will move to legalize cannabis for either adult or medical use by 2025. Currently, eighteen states, the District of Columbia, and Guam have legalized the recreational use of cannabis. Within three years, odds are 65 percent or better that Pennsylvania, South Dakota, Rhode Island, Oklahoma, Ohio, Missouri, Maryland, and Delaware will do the same. Adding on, projections indicate relatively conservative states like Georgia, Wyoming, and Texas likely will legalize medical use by 2025. Ultimately, it appears more likely than not that more than 80 percent of the country will legalize cannabis in some capacity within the next three years, opening the door for attractive business opportunities within all facets of the industry.

What states will experience the most growth?

As the U.S. cannabis market matures, states including Florida, New York, New Jersey, Ohio, and Virginia are projected to benefit the most.

The “Big Apple” soon may be home to the largest cannabis market. While much of the state’s market has been stifled by licensing and regulatory barriers, there has been positive progress within New York as of late. Whole-flower products finally were introduced to the medical market at the end of 2021, and the state has been proactive in rolling out its adult-use market. With the most populous city in America, a booming adult population of 15 million and a forthcoming adult-use market, New York is positioned to bring in nearly $3 billion by 2025.

New Jersey will not stand in the shadow of New York for long. Medical companies are patiently waiting to convert their operations to adult-use in March. In order to fully capitalize on this new market, New Jersey’s limited operational licenses must be distributed in a timely manner. Given the established medical market, this should be sorted out in the coming months. By 2025, New Jersey’s sizable adult population should drive market value up to $1.6 billion.

In the Midwest, Ohio has the potential to be the fastest growing U.S. cannabis market by 2025. At the end of 2021, Ohio’s medical market managed to generate nearly $500 million in sales. If state lawmakers can pass adult-use legislation, the Buckeye State could create an even larger market with nearly nine million adults over the age of 21. If the state actualizes its full potential, it could post annual combined sales over $1.6 billion, slightly more than New Jersey, given its extensive population and expanded licensing.

Currently, Virginia is expected to begin adult-use cannabis sales in 2024. However, the state has a history of moving more quickly than expected in the realm of cannabis-related legislation. In fact, the Old Dominion moved to legalize recreational cannabis just one year after legalizing medical use. An existing medical market infrastructure coupled with an adult population of more than six million will allow the state’s cannabis market to amass $1.3 billion in spending power by 2025.

It is still unclear whether Florida will seek to legalize the recreational use of cannabis by 2025. Even with uncertainty regarding the matter, the state was able to generate $1.3 billion in 2021, becoming the most valuable medical market in the country. By 2025, Florida’s adult population will grow to 16 million, paving the way for a larger consumer base that can create a statewide market valued at $3.2 billion.

Much like those before it, the current decade will be one of change for the entire U.S. cannabis industry. As legalization guidelines shift and new markets emerge, Headset will continue to forecast what the future will look like in this ever-evolving field. If you’re interested in forecasting what the future of our industry will look like in the year 2025, please review the most recent report.

By Cy Scott

Originally published at https://mgretailer.com/cannabis-news/future-forecast-examining-2025-u-s-cannabis-market-projections/ on January 26th, 2022.

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mg Magazine

mg Magazine

mg is a monthly business magazine covering the recreational and medical cannabis business, meeting growing demand for business news and information.