US Cannabis Sales Predicted to Reach $42 Billion by 2026 Despite Lagging Legacy Markets

American cannafans are fueling the worldwide weed economy, responsible for 75% of global sales, while newly legal states like Michigan, Massachusetts and New Jersey are keeping the home fires burning. These and other findings come from BDSA in a report released this week that projects global cannabis sales will increase from $30 billion in 2021 to $57 billion by 2026, a 13% annual growth rate. (Areas to watch include Germany and Mexico.) In the U.S., weed sales are expected to climb from $27 billion by the end of 2022 to $42 billion in 2026, despite consumers’ ongoing battle with inflation. BDSA—a Colorado-based firm that tracks consumer purchasing, point-of-sale and other data—releases semi-annual projections for the U.S. and global cannabis industries. The newest numbers are slightly more conservative—with a few billion dollars shaved off—than the researcher’s March predictions. The revised figures come after a difficult six months in legacy markets such as California, Oregon, Nevada and Washington, where an oversupply of weed has caused wholesale prices to drop precipitously. Other conditions are putting the squeeze on weed brands and sellers, including tax and regulation issues, a fierce illicit market and fewer sources of capital, creating “a challenging environment," according to Roy Bingham, BDSA’s CEO. “The mature markets in the West aren’t just having a little hiccup—there’s a significant problem,” Bingham told Adweek. “But we’ll continue to see growth in the Northeast and in emerging markets, which we can call a ‘boom with caution.’” Recession resistant Some researchers, like Headset, have pointed to the explosive green rush during the early days of the Covid-19 pandemic that saw double-digit gains in the bottom lines of legacy states like Colorado. The current drop could be attributed, at least in part, to “market correction,” the firm said in an August report. Even so, multi-state operators and brands have their work cut out for them in mature markets, analysts say. Among the immediate concerns are the high gas, food and housing prices that are straining consumers’ budgets. Like alcohol and some other so-called vice categories, cannabis has long been considered recession proof. Bingham would amend that theory, qualifying weed as “recession resistant” because “it’s not getting hammered like some other sectors.” Joining the party Meanwhile, the industry is anxiously awaiting the start of recreational sales in New York, expected but not guaranteed by year’s end. Analysts think it could mirror its neighbor New Jersey, which sold $80 million worth of flower, vapes, concentrates, edibles and other products in the first 10 weeks of adult-use legalization. That healthy number came via less than a few dozen dispensaries to serve a populous area. The addition of these two states means legal access to cannabis for 22 million residents, who are predicted to contribute about $5 billion to the total $42 billion in nationwide sales by 2026, per the report. In another bright spot from a nascent market, Illinois will likely top $2 billion in sales this year, a 14% jump over 2021, BDSA says. Smoke out The BDSA study comes on the heels of a recent Gallup poll that found cannabis use has surpassed cigarette smoking for the first time on record. In keeping with a decades-long downturn, tobacco consumption has dropped to about 11% of the population, Gallup found. Compare that to the mid-1950s, when 45% of Americans said they smoked. According to the Gallup data, 16% of the U.S. population says they smoke cannabis and 48% admit to trying it. Those numbers are expected to increase as more states legalize weed. And as stigmas continue to fall away, consumers are more likely to cop to cannabis consumption, making public polls more accurate, researchers say. BDSA’s report found that 51% of consumers in adult-use states say they have consumed cannabis in the past six months and 26% are open to the experience. People who say they aren’t interested—currently 23%—say they have no objection to others’ use, per the study. Ballot measures And on the state-by-state regulatory front, voters in Oklahoma, North Dakota, Arkansas and Missouri are likely to have adult-use initiatives on their ballots in November. Nebraskans, meantime, may decide on whether to allow medical sales. Continuing the domino effect in the Northeast, both Rhode Island and Connecticut are poised kick off their adult-use sales programs late this year. That brings the total to 38 states, plus Washington D.C., that allow some form of legal weed sales, and 19 states have legalized recreational sales. It’s the newly minted territories, with an underserved audience for legally tested products, that will provide “steady gains” for the business overall going forward, BDSA says. “Growth close to 14% over five years is still pretty exciting,” Bingham said. “There aren’t many other consumer segments with those characteristics.” Off Madison Episode Three: Changing Course With Cannabis