How Big Is The Cannabis Industry?
In recent years, the global push for cannabis reform has created a new big industry in several regions of the world, most notably in North America, and has put the substance on the radars of entrepreneurs and investors alike.
Currently, viable economic models include not only greenhouses and dispensaries producing and selling dried flowers, but also a weed delivery service like Eaze, a cannabis seed bank like Fast Buds, not to mention innumerable businesses that cater to the consumers of CBD and CBD-infused products.
Overall Global Demand for Recreational Marijuana
Cannabis is by far the most widely-used illicit substance in the world. In 2017, the United Nations’ World Drug Report estimated the number of active users at 182-million or 2.4-percent of the whole world population. This is a conservative number which in reality can be as high as 238 million users.
Collectively, these people consume around $344 billion worth of weed every year. This figure includes both the legal sales and the black market and gives a general idea of what the industry can strive for when the substance is legalized and regulated globally.
However, the current illegal status of marijuana in the majority of the world’s markets is pushing the prices up, and it is safe to assume that they will plummet as soon as cannabis is descheduled. According to Cato, the price of an ounce of flowers in the state of Washington has dropped from $270 to $230 post-legalization. Similar patterns are observed in other ‘green’ states.
At the same time, the number of users tends to slightly increase after the passage of a legalization initiative. This may even out the effect of decreasing prices.
An $80+ Billion Market in the US Alone?
When compared region to region, Asia—with an overall demand worth $132.9 billion—is at the top of the list, followed by North America that consumes approximately $85.6 billion.
However, experts in the field estimate that the legal cannabis industry in the US alone has the potential to overshoot this mark and reach $100-billion by 2030. Others make a more conservative forecast of $84-billion by 2028.
This is equivalent to the annual growth of more than 14% in the coming years as more and more states accept the reform. In 2019, all ‘legal’ states combined had a cannabis market worth $13.6-billion, with 340,000 jobs devoted to the handling of plants, according to Investopedia.
It is worth noting that the transition from the black market model to the legal and regulated industry is never a smooth one. According to a report by New Frontier Data, as much as 80% of all cannabis sales in California—which legalized the substance in 2016—take place on the black market. This data is representative of what is happening in other states that have ended the prohibition, as well as in Canada.