The legal marijuana industry is the fastest-growing in the United States, and if the trend of its legalization expands to all 50 states, cannabis could grow bigger than the organic food industry.
This was the headliner of a new research report from The ArcView Group, an Oakland, California-based investment firm that delves in the cannabis industry.
According to the report, the US legal cannabis market grew by 74% in 2014 alone, amounting to $2.7 billion in that year as compared to $1.5 billion in 2013.
The research involved a survey of hundreds of medical and recreational cannabis retailers in states where sales of the herb is legal. Also included in the survey were ancillary business operators and independent marijuana cultivators. The survey was conducted over the course of seven months in 2013 and 2014. ArcView complemented the results with data from state agencies, private companies, and nonprofit organizations in the marijuana industry.
Troy Dayton, ArcView Group CEO and third-edition publisher of the State of Legal Marijuana Markets, wrote the executive summary of the report. He observed that the marijuana industry has gone from being just “interesting cocktail conversation” to gaining serious note as America’s fastest-growing industry.
The ArcView report also sees a strong year for marijuana in 2015, projecting a 32% growth in the market. Dayton emphasizes that such growth puts “cannabis in the top spot” among other fast-growing industries.
Further, ArcView expects that the cannabis industry will continue to grow over the next five years. Specifically, the report forecasts that recreational marijuana will be legalized in 14 more states while medical marijuana will be legalized in two more states.
Currently, at least 10 states are considering the legalization of recreational cannabis in the next two years through state legislatures or ballot measures.
Retail marijuana is legal in four states to date: Colorado, Washington, Oregon, and Alaska. Recreational marijuana is also legal in Washington DC, though sales are still banned. Medicinal marijuana is meanwhile legal in 23 states. But despite all these, marijuana remains an illegal substance at the federal level.
ArcView’s projections, however, are hopeful, at least at the state level. It expects that Oregon and Alaska will make a combined $275 million in retail cannabis sales in just their first year of operation.
Overall, ArcView calculates that by 2019, the state-legal marijuana markets will make a potential combined market of $11 billion annually.
Aside from these projections, the report highlights several cannabis industry trends around the US. California, for example, continues to have the nation’s largest market for legal cannabis, at $1.3 billion. Arizona, meanwhile, was the fastest-growing major cannabis market, growing from $120 million in 2013 to $155 million in 2014. Both states have already legalized medical marijuana and are anticipated to have recreational legalization measures on their 2016 ballots.
In addition, five states now have marijuana markets worth over $100 million. In Colorado and Washington, where first US retail marijuana shops opened, consumers bought $370 million worth of marijuana products in 2014 alone. All across the country, more than 1.5 million shoppers bought legal cannabis – either medical or recreational – from dispensaries.
This huge growth potential for the marijuana industry seems to be hindered only by the possibility of states refusing to loosen their pot laws. For instance, ArcView could not project the market size in Washington DC because of ongoing efforts by congressional Republicans to block the law legalizing recreational marijuana use.
The report further suggests that if the legalization trend continues and drives all 50 states to legalize recreational cannabis, the marijuana industry could be more valuable than the organic food industry. The 50-state total market value of legal marijuana would reach $36.8 billion – over $3 billion bigger than that of organic food.