blog

Report: Cannabis Industry Will Triple in Size to $32 Billion by 2022

Image result for cannabis

By Jimi Devine

A new report predicts that the cannabis industry can expect to see its massive growth continue over the next few years, culminating with the industry tripling in size by 2022.

The sixth edition of Arcview Market Research and BDS Analytics’ “The State of Legal Marijuana Markets” report was published today. The report has historically been considered the gold standard of marijuana industry data research and we’ve got a full breakdown with insight from the researchers to help you wrap your head around how and why the industry is expected to keep booming.

While it seems every year means a new monstrous projection about the size of the cannabis market, this year’s projection is especially large. By 2022, the report estimates that the global legal cannabis industry will be valued at $32 billion dollars, a three-fold increase in just five years. The United States is expected to be home to much of that growth, with an expected market value of $23.4 billion. The report estimates that the annual compound growth rate globally will be at 27.5 percent through this period, with the U.S. coming in a bit lower at 22.3 percent.

59 Million More People Have Access to Legal Cannabis
Outside the dollars and cents, the report offers many fascinating insights into the evolving and expanding industry. It particularly focused analysis on the state of the cannabis industry after the 2016 elections. Since then, 59 million adults in the U.S. have seen their access to marijuana improve.

Most of the massive growth of the adult-use consumer base occurred on Jan. 1, when California’s adult-use market came online and the total number of people on the planet that could buy legal adult-use marijuana increase nearly three-fold. Before Jan. 1, roughly 17 million people in five states and Uruguay could purchase state-legal marijuana. When the clock struck midnight and 2018 began, that number rose to 47 million.

The Potential for Federal Legalization
David Abernathy, Arcview’s vice president of data and government affairs, spoke with Cannabis Now about the political atmosphere around the release of this year’s report.

“For one thing, this is really a remarkable time for the cannabis industry because of the latest political developments,” Abernathy told Cannabis Now. “People like Mitch McConnell, Chuck Schumer and Donald Trump are making statements that make it seem like the end of federal cannabis prohibition might be coming sooner than expected. We did a rundown and analysis of what those statements might mean in the next few years for the market.”

Abernathy emphasized he didn’t anticipate federal legalization to happen this year. “If it did, it would take a while to kick in,” he said. “If it did, it would probably leave regulating up to the states.”

He expects in a scenario where the federal government legalizes cannabis, existing states would move forward with what they have now and new states would come on board more rapidly than they would have previously. “When the federal law does change, we expect an even more rapid flood of investment and that should have an accelerating effect in states that already have markets to capture that investment,” said Abernathy.

International Cannabis Markets & Public Cannabis Trading
The most surprising thing for Abernathy this year is the rise of international markets. This report does not just give a breakdown within each U.S. state and each Canadian province, it also covers Europe, South America and other emerging markets. Abernathy says seeing those markets develop has been an exciting development to track.

Plus, Abernathy noted that the report was able to analyze the industry along both private and public investment lines. “There has been a lot of activity in the public markets that people have been trying to make sense of,” said Abernathy. “Being able to compare the public market against the private investment market so people can figure out how to best deploy their capital or raise it is critical.”

California’s Overregulation Sparks a Dip in Growth
The main catalyst for expansion of the industry as a whole is new markets opening up, according to BDS Managing Director Tom Adams, who heads up the investment research division. Adams spoke exclusively with Cannabis Now on the eve of the report’s release. However, there was a little hiccup in this year’s growth rate.

“The drop in growth this year is due to California regulators,” Adams said.

When California began to implement its adult-use regulations, the state went from thousands of legal distribution points to a few hundred — overnight. Adams said it was difficult for their researchers to take into account just how massive an impact that would have, until they were able to track it through first six months of the year.

However, the other expansions will eat up the short-term California woes, as markets — particularly in Canada — come online. Adams expects annual growth to bounce back to epic proportions next year.

Adams also noted that cannabis is different from some of the big booms of the last twenty years because the process of changing the law from state to state is basically a phased rollout. There were no laws holding back Google or Netflix from expanding to places like Indiana. Because marijuana faces this delay, the industry is able to amass collective experience and intelligence that makes it more prepared for a new market to open every time one does.

We asked Adams what surprised him the most in this year’s findings.

“The Republicans coming on board,” he replied.

Original Publication in CannabisNow.