Cannabis industry data and analytics firm, Headset has released a new report forecasting the potential for the U.S. cannabis industry to reach $45.8 billion by 2025, according to the Ganjapreneur.
“Despite the country’s piecemeal approach to legalization, individual states have created optimal conditions for improved scalability and sophisticated operations across distinct markets,” Cy Scott, CEO, and co-founder of Headset said in a statement. “With record levels of public and regulatory support for the regulated cannabis industry, the value of the domestic market will increase significantly over the next three years.
Headset’s forecasts are based on current legalization and regulations.
Canadian and U.S. markets are expected to grow throughout 2021 and into 2022. Significantly lower than the U.S. market’s projected $23 billion, Canadian cannabis sales should reach $4 billion this year.
But, Canada’s cannabis market is expected to grow three times faster than the U.S.
Cannabis flower is the most popular product category in the U.S. and Canada and accounts for the majority of total annual sales in the U.S.
In the U.S., roughly $11 billion in 2021 sales with projected growth to $12 billion in 2022.
But, vapor pens, edibles, and concentrates hold more market share in the U.S. than Canada. In both markets, concentrates and edibles will gain slightly larger market shares in 2022 at the expense of flower and pre-rolls
The forecast predicts Florida will become the second-largest market – behind California – with more than $3 billion in total sales.
Florida is a medical-only state, but in 2021, expectations are approximately $1.3 billion in sales. Despite legislative failures, Headset believes there is a 50% chance that Florida will begin adult-use sales no later than 2025.
The downside is the limited number of operators in the state and the high barrier to entry. Additionally, Florida multi-state operators’ determination to protect their first-to-market advantage could slow sales growth.
Currently, a medical-only state with adult-use licenses expected by 2023, New York could become third-largest with $2.86 billion in sales. Complicating New York’s growth potential, its illicit market is robust and thriving and has low adoption as a limited license state. But the potential market population is more than 15 million, and current state operators could convert quickly.
Within the last ten years, growth and development have accelerated due to legalization in Colorado and Washington.
Despite the Arizona market not being expected to be one of the top five cannabis markets, Headset forecasts sales to reach $2.79 billion by 2025. The state’s most recent monthly sales increased from the previous year’s $85 million up to $181 million. Both medical marijuana and adult-use are legal in Arizona.
Headset also highlights Ohio as an emerging market. The state’s medical market is growing steadily and has the potential for $500 million in sales by the end of 2021.
Despite stalled adult-use legalization efforts and being a limited license market, Headset predicts $1.6 billion in sales for Ohio for 2025.
According to the report, “By 2025, census data is predicting that Ohio will present a massive addressable market of 8.8 billion potential adult-use consumers over 21+. The medical cannabis in Ohio seems to be bursting at the seams with demand as regulators are seeking to expand both licensing limitations as well as access for patients in the state.”
New Jersey and Virginia passed cannabis reforms only last year and have yet to issue adult-use licenses.
But both states will have similar populations of adults 21 and older by 2025 and are expected to reach sales of $1.6 billion and $1.3 billion, respectively.
Headset anticipates “electrifying growth” in New Jersey. Regulators are working quickly to create a solid foundation for the adult-use market and capitalize on an adult population of nearly 7 million.
State medical operators are eagerly awaiting the opportunity to convert their medical operations to adult use by March of 2022. As with New York, likely, operators can quickly convert to adult use.
In Virginia, regulations permit adult-use sales beginning in 2024. Headset envisions a possibility for an expedited timeline. Virginia’s medical market is not as robust as New Jersey’s, but there is considerable momentum for the advancement of its cannabis market.
With $144 million monthly sales, Illinois projected market of $2.5 billion in sales places it in the top five. The state benefits from being the first fully legal state in the Midwest. Illinois attracts many customers from neighboring states that have not moved as quickly toward legalizations.
One of the first legal adult-use states, Colorado sales dipped to $2.1 billion, and it appears to have lost its first-to-market luster. While Michigan is forecast to reach $2.4 billion in sales, Massachusetts $1.6 billion in sales puts it squarely in the middle of the pack.