Micah Tapman, CEO of BDSA, a leading provider of market research solutions for the global cannabinoid industry, stopped by last week's Cannabis Capital Conference in New York to review the cannabis market of the northeast. He provided and an update on the size and drivers of the legal cannabis market, growth trends and implications of cannabis regulations in the northeast.
The CEO explained how BDSA works with different product areas to achieve this goal: retail sales track; market forecast; and, consumer insights, which is “what is moving through the POS systems at the actual stores.”
2021 Is Showing A Substantial Growth
The legal cannabis market in California grew 25% in 2021, considering this is a mature market, the figure is staggering. The largest single cannabis market in the world.
Washington and Oregon grew 19% in H1, above Colorado, whose cannabis market increased over 16%, and is expected to be a $2.5 billion market by the end of 2021.
However, the big winner was the market of Massachusetts, experiencing exponential 127% growth in 2021, followed by Illinois, with 101%.
When looking at the average spend and the number of citizens in the state, BDSA predicts that the northeast is slated to provide huge revenue opportunities.
Tapman highlighted the discrepancies between market size and average spending.
In California, the cannabis market is forecasted above $7 billion for the year 2026 with an average spend around $271. However, the average spending is considerably higher in Colorado. Tapman noted that although the state has only 5 million citizens, receives 45 million visitors a year.
“Apparently when you come to town, you swing by the dispensary and pick up some products”, clarified Tapman.
The New York market is projected to be around $2.92 billion, above Pennsylvania whose projected market for 2026 is about $2.30 billion, $2.28 billion in Massachusetts and $2.25 billion in New Jersey, although the amount of money projected to be spent by adults differs in these markets.
BDSA Predicts A USD 62 Billion Legal Cannabis Market in 2026
Compared to potential analog industries to cannabis, like wine, with a global market of USD 340 billion, cannabis, currently valued at USD 30 billion, might not seem much. “It is a very small piece of the overall global economy,” Tapman said. However, cannabis becomes interesting when we look at the growth rate of the industry. Wine growth rate (CAGR) for example, sits at 4.20%, while cannabis accumulates 41.40%.
BDSA projects that growth will be sustained, slowing down in the period 2024-2026, a trend that will attract the interest of global players.
The driver of the (projected) $ 62 billion global cannabis market, is the US adult-use cannabis market.
California and Colorado alone make up 16% of global cannabis sales. These, combined with Florida, New York and Michigan, will comprise 39% of revenue by 2026, according to BDSA.
Pennsylvania: Medical Marijuana Today, Adult-Use Tomorrow?
BDSA predicts that if PA accepts adult-use cannabis it would bring legal access to another 10 million adults. Currently, there are 320,445 registered patients authorized to buy medical cannabis, and this population grew 17.5% Y-o-Y. Patients spend $80 per trip and $100 on average in medical dispensaries.
The state accumulated USD 812 million in sales in 2021, has 132 active retailers and 101 brands doing business, six times fewer brands than in California. That is a competitive environment that is completely different from California.
Tri-State Regulations and Implications
According to Tapman, to understand the effects of regulations we need to look at why people are purchasing along with issues of supply and demand.
For example, Massachusetts has doubled the price of concentrates, mainly because of problems of distribution and shortages of inputs. “If you try to buy flowers when they first launch and you didn't preorder, you won’t get flowers because there are not enough cultivators,” explained Tapman. “If there is no interstate commerce allowed the state borders will become very interesting to watch, because of different taxes and regulations. For example, if NY allows different amounts than New Jersey, and people can get a discount, people would go there."
So why are people purchasing cannabis? And more importantly, how do they decide what to consume?
According to BDSA data, consumers who seek to relax and cope with anxiety rather use inhalable products, while those who seek to relieve pain, incline for topical cannabis products. Meanwhile, those who consume cannabis to sleep, on average, prefer to consume edibles.
Contemplating these central aspects remains key to understanding interstate trade in the Northeast.
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