October 5, 2020

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By Kacey Morrissey, Senior Director of Industry Analytics, and J.J. McCoy, Senior Managing Editor, New Frontier Data

An unanticipated result of the COVID-19 pandemic in the United States has been the accelerated growth of legal cannabis markets in states having active medical and adult-use sales. In 2019, the total combined illicit market for cannabis in the U.S. was an estimated $64 billion, which through the growth of currently legal markets is projected to shrink some $4 billion by 2022.

Leading into the 2020 U.S. elections, 34 states plus the District of Columbia (D.C.) have legalized cannabis for medical use, and 11 states plus D.C. have legalized cannabis for personal or adult use. Those numbers bring the total population of U.S. residents living in a state (or D.C.) with legalized medical or adult-use cannabis to 230 million, or 70% of the nationwide population.

November’s elections could mark the most consequential and historical events to change the landscape of the legal U.S cannabis industry. In a new release this month from New Frontier Data, The U.S. Cannabis Report: 2020 Industry Outlook examines the trends shaping the markets for cannabis and the nation at large.

“There’s a couple of reasons why we think this is going to be such a consequential year for cannabis in the U.S.,” said John Kagia, New Frontier Data’s chief knowledge officer. “One is the fact that we have five states and six initiatives on the ballots that are going to be voted on this November, making this year a pretty significant milestone in terms of voters getting a voice in the status of cannabis in our society.”

He added that “the second reason is New Jersey, which is going to be a phenomenally consequential market for the East Coast. If you think about the proximity of the state to New York, Pennsylvania, Maryland, and other mid-Atlantic states, we expect that New Jersey in and of itself is going to be a huge market, but once you add in the added regional element to it, the state could be earning nearly $2 billion by 2025. So, it is a huge market for the East Coast, and a beachhead for the industry at large.”

Those trends coincide with support for cannabis legalization as one of the fastest-evolving social movements in the U.S. According to the Pew Research Center, more than two-thirds (67%) of Americans support full legalization – that is up from 41% in 2010, and more than double what it was in 2000 (31%). Research by both the General Social Survey (GSS) and the Gallup Poll (two other leading institutions reporting on long-term trends in public opinion on cannabis) likewise corroborate Pew’s results: The GSS pegs support for cannabis legalization at 62%, while the Gallup Poll shows support at 66%.

In 2019 the U.S. legal cannabis industry generated an estimated $13.2 billion in consumer sales across all legal medical and adult-use state markets combined. In 2020, midst the seismic economic disruptions caused by the COVID-19 pandemic, cannabis sales have surged, and are projected to surpass $19 billion. Total legal sales (i.e., both medical and adult-use cannabis) of cannabis nationwide are projected to see a compound annual growth rate (CAGR) of 18% over the next five years, to reach $35 billion by 2025.