Cannabis Market May Reach $57B By 2026: New Jersey And New York Lead Growth

Cannabis Market May Reach $57B By 2026: New Jersey And New York Lead Growth

BDSA, a leading cannabis data firm, recently announced an update of its cannabis market forecast, a five-year rolling global forecast by country, state, province, channel and category.

The report projects annual global cannabis sales to grow from $30 billion in 2021 to $57 billion in 2026, a compound annual growth rate (CAGR) of almost 13%.

Specifically in the United States, cannabis sales will grow from $25 billion in 2021 to $42 billion in 2026, which will make up 75% of total global cannabis sales.

“Despite an inflationary environment and concerns about recession that dampened consumer spending, legal cannabis sales in the U.S. will reach $27 billion by the end of 2022, a jump of 7% over 2021 sales of $25 billion,” stated the report.

“The U.S. cannabis market is projected to continue seeing steady growth over the next few years, driven largely by the opening of new and emerging adult-use markets,” Roy Bingham CEO of BDSA told Benzinga. “In today’s inflationary environment, competition surrounding pricing and supply is expected to increase as adoption rate begins to slow in established markets.” 

“Globally, several emerging markets are poised for strong growth in the coming years as consumer awareness and adoption continues to ramp up for both medical and recreational use,” Bingham added. 

Price Erosion, Over-Supply and New Markets

According to Bingham, “the ‘hockey stick’ trend of sales growth seen in the early years of legal cannabis has passed, while “economic and regulatory headwinds are exerting pressure on legal cannabis markets.”

“Still, our updated forecast predicts that steady gains in developing U.S. markets will continue to drive single-digit annual growth in total U.S. legal sales in 2022, with continued growth prospects out to 2026,” Bingham said.

BDSA explained that adjustments to mature market forecasts “stem partly from the continuation of the erosion of price in environments with high retail per capita numbers,” and noted that Oregon and Washington State have taken steps “to combat chronic over-supply.”

“While sales have plateaued and even fallen in some of the most mature markets (…) driven by declines in retail prices and a challenging macroeconomic situation, newer markets continue to see brisk sales growth. An example of this is the Illinois market, which is expected to bring in approximately $2 billion in total sales in 2022, a 14% increase over 2021 sales,” per the release.

Risks Of Saturated Markets: High Supply, Low Prices

BDSA warned that most established markets may soon face saturated consumer penetration as data reports that the past 6-month adult adoption topped 50% in fully legal markets in the spring.

“A slowed adoption rate will leave firms competing on high supply and low prices. Actual losses have come for the first time in some mature markets, such as Nevada. The first-mover advantage has been negated by access in newer markets, prices receding, and regulatory reforms stalling.”

New Jersey and New York: Drivers of Market Growth

Bingham noted the cannabis market is still forecast to see topline growth in 2022, driven by strong sales in new and emerging markets, such as New Jersey and New York.

“The U.S. will continue to dominate global sales over the next few years, but we see potential from emerging global markets such as Germany and Mexico,” Bingham continued.

The launch of adult-use sales in New Jersey and New York represents an expansion of access to approximately 22 million people, “who are forecast to contribute roughly $5 billion to the $42 billion legal sales total in 2026.”

Medical Markets

BDSA also noted that sales in medical markets have also been affected, “as patients have access to increasing variety and lower prices in neighboring adult-use markets.”
Declining medical sales can be seen in states that recently have passed adult-use legalization, such as Arizona.

“BDSA projects annual dollar sales in Arizona’s medical channel will be 30% lower than the 2021 annual dollar sales total and roughly half the annual sales total seen in 2020 — the last full year of medical-only sales. By contrast, the Colorado medical channel still saw modest growth in annual sales for roughly two years after the launch of its adult-use market in 2014,” concluded BDSA’s press release.

Photo by Mike Petrucci on Unsplash.

 

Posted In: BDSAcannabis marketRoy BinghamCannabisNewsMarkets

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