Legal marijuana is one of the fastest growing industries in the United States, with expansion of more than $1 billion between 2014 and 2015, according to data released in April.
The numbers come from New Frontier, a company that tracks cannabis sales and industry statistics, and ArcView Market Research, which publishes market projections and other information on commercial marijuana. The two groups released the fourth edition of their State of Legal Marijuana Markets Report in early April.
The report found a compound growth rate of 31 percent between 2014 and 2015, an unusually high number for American industry. Nationwide cannabis sales grew from $4.6 billion to $5.7 billion in that time, the two groups reported.
Colorado driving the boom
The boom has been especially pronounced in Colorado, which saw a 93 percent jump in sales, according to the data. The state’s legal pot market is expected to grow by another $500 million by the end of this year, reaching more than $1.5 billion per year.
“Colorado is the most advanced cannabis market in the country,” New Frontier founder and CEO Giadha DeCarcer wrote in the study. “The state has been a case study for other jurisdictions debating if and how to legalize cannabis. Colorado’s refinement of their marijuana business regulations have helped to push the state’s legal cannabis market past the $1 billion mark.”
ArcView CEO Troy Dayton added: “By 2016, Colorado will account for 21% of the total U.S. market for cannabis. Demand has been strongly fueled by residents and tourists and will continue to do so with the growth of the canna-tourism market. Nearly half of the state’s visitors chose Colorado as their destination, in part, because of the cannabis market.”
There are several factors driving the explosion in the marijuana market, according to the report. The biggest is the rate of cannabis use in Colorado. The state has the highest use rate in America, according to the Substance Abuse and Mental Health Administration, though those numbers conflict with other sources.
Colorado’s thriving marijuana tourism industry
Population growth has also played an important role. Between 2010 and 2015, Colorado’s population grew faster than the populations of all but three other states. Roughly 250,000 people moved to the Centennial State from other places, a large number of them Millennials.
Another critical element of the industry’s growth is strong tourism demand. Colorado, with its mountain scenery, skiing, and legal cannabis, is one of the most popular states in the country. More than 8 percent of the 71 million people who visited between 2014 and 2015 stopped by a pot shop.
Finally, demand for non-bud cannabis remains strong. Hash oil and concentrates, edibles, topicals, and other THC-laced products command higher prices than typical marijuana flower.
The Legal Marijuana Markets Report can be downloaded at frontierfinancials.com/SOLMM/and www.ArcViewMarketResearch.com, but it’s not cheap. The cost of the full study, including detailed data reports, is about $500.