The legal cannabis market in the United States is expected to grow by 12% by the end of 2023, reaching $29.6 billion, according to a report by BDSA on Wednesday. By 2027, the U.S. is forecasted to achieve $45 billion in total legal sales.
Globally, the legal cannabis industry is predicted to reach $36.7 billion in 2023, with 80% of sales coming from U.S. markets, says BDSA. The industry is projected to grow at a compound annual growth rate (CAGR) of 13% from 2022 to 2027.
“Over the next five years, the thriving Midwest and East Coast markets will be the primary drivers of growth in the U.S. cannabis industry,” stated Roy Bingham, co-founder and CEO of BDSA (and a GCT100 2023 Winner for Technology & Business Services). “New markets, particularly adult-use markets like Missouri, New Jersey, and New York, will lead this growth. Although mature Western markets such as Colorado and California have experienced sales stagnation or decline due to price compression, they will continue to contribute significantly to legal sales through 2027.”
Here are the key updates by market:
Emerging Adult-Use States Drive U.S. Growth:
– Missouri’s legal cannabis sales are forecasted to reach $1.4 billion in 2023, fueled by a strong start to adult-use sales.
– New York’s legal cannabis sales are projected to total $631 million by the end of 2023. The state is expected to reach $2.5 billion in sales by 2027, demonstrating an impressive CAGR of 71% between 2023 and 2027.
New Markets to Watch:
– Minnesota legalized adult-use cannabis in May 2023, with adult-use sales expected to commence in 2024 and reach $177 million for the year. BDSA predicts total sales to grow at a CAGR of 68% from 2023 to 2027, reaching $875 million in 2027.
– Maryland and Delaware are scheduled to launch adult-use sales in July 2023 and late 2024, respectively.
– Despite legal challenges, Florida is anticipated to initiate adult-use sales in 2025 and achieve $4.3 billion in sales by 2027.
Midwest Cannabis Markets Poised for Further Growth:
– In Illinois, total spending is forecasted to increase by 8.3% to surpass $2 billion this year as the state commences the rollout of new licenses.
– Adult-use sales in Michigan have surpassed expectations in 2023, despite the struggles of other mature cannabis markets. Michigan is projected to experience a 19% growth in total sales by the end of 2023, surpassing $3.5 billion in 2027.
Despite Declines, States Still Hold Promising Potential:
– California continues to face challenges from price compression and illicit competition, resulting in a decline in annual legal sales in 2022. Based on slow sales in Q1 2023, BDSA forecasts a 9% decline in California sales for 2023, totaling $4.8 million.
– Pennsylvania is also expected to witness a slight decline in cannabis spending in 2023, with total legal sales forecasted to be slightly above $1 billion this year.