ArcView Market Research has published the fourth edition of its “State of Legal Marijuana Markets,” which it calls “The most comprehensive report on this industry to date.”
The full report, at more than 200 pages, offers forecasts, examines developments and outlines trends in the cannabis industry — with an emphasis on Washington and Colorado markets.
The full report, priced at $497, is available at arcviewmarketresearch.com. Among the comments and other information in an executive summary:
▪ “2015 was another watershed year for the legal cannabis market. National legal sales grew to $5.4 billion, up from $4.6 billion in 2014.”
▪ “Demand is expected to remain strong in 2016, with legal markets projected to grow to $6.7 billion, a 25 percent increase over 2015.”
▪ “In Washington, the first year of legal sales generated $70 million in tax revenues from sales of $257 million.”
▪ Nationwide, total adult sales are expected to rise to $21.8 billion by 2020.
▪ 86 percent of Americans live in a state that allows some degree of legal cannabis use.
▪ “With nearly a dozen states debating changes to their cannabis laws in the coming year, 2016 will be the tipping point at which a majority of U.S. states transition from cannabis prohibition to some form of regulated legal markets. Key states, including California, Nevada and Massachusetts, are expected to legalize adult use, while Florida is expected to pass a medical cannabis bill.”
▪ Washington saw strong growth in monthly sales in 2015, from $18.8 million in January to $75.3 million in December.
▪ Among the matters that will be important this year: Congressional action, price wars and competition, integration of technology, increased industry sophistication and business intelligence, and energy use.
▪ The United States is not alone in legalization. Countries where cannabis is or may soon be legal: Israel, Canada, Spain, Mexico, Australia, Uruguay, Jamaica, Germany, Colombia.
▪ Washington is projected to be the largest legal sales market by 2020 at $2.3 billion, followed by Colorado at $2 billion.
▪ Washington is projected to receive $636 million from the cannabis market over the next five years.
▪ “The downward pressure on prices will continue to grow as production capacity increases. While this will be a positive development for consumers who will benefit from lower prices, it will challenge the long-term viability of businesses which have pegged their operational models to wholesale prices at current market rates.”
▪ A decline in Washington sales after Oregon’s legalization can be attributed to an absence of sales taxes in Oregon, a decline in Oregonians buying in Washington and an increase of Washingtonians buying in Oregon.
▪ ArcView investors invested $4 million in eight cannabis-related companies in 2013 and $45 million in 66 companies in 2015.
▪ “Publicly traded cannabis companies performed poorly (in 2015) with New Frontier’s Marijuana Stock Index losing nearly half its value during the year … marijuana stocks had greater than 44 percent worse performance over 2015 than both the NASDAQ and S&P 500 indices.”
▪ “Savvy investors are already looking to the future for new ways to capitalize on the growth of legal marijuana, but early enthusiasm has been tempered by the poor performance of public companies in the past year.”
▪ “Once the behemoth multinational corporations enter the market, they will likely go on an acquisition spree versus directly competing against companies that have years of experience in navigating the complex market.”
C.R. Roberts: 253-597-8535