Marijuana Business Factbook 2019

3 © Copyright 2020, Marijuana Business Daily , a division of Anne Holland Ventures Inc. You may NOT copy this Factbook, or make public the data and facts contained herein, in part or in whole. For more copies or editorial permissions, contact CustomerService@MJBizDaily.com or call (720) 213-5992, ext. 1. National Trends | Chapter 1 MJBIZDAILY.COM On the recreational side, estimated sales in 2018 were revised down slightly from our original forecast at the beginning of last year. California’s massive new adult-use industry got off to a slow start, as high taxes, local licensing restrictions and a cumbersome bureaucracy made it difficult for licensed businesses to compete with the state’s entrenched black- and gray-market operators. By the end of 2018, sales reached approximately $1.5 billion ― far below most expectations. Rec sales in Massachusetts also fell short, as the market ― which was originally slated to get off the ground in July 2018 ― didn’t launch until late in the fourth quarter. Sales in mature markets such as Colorado, Oregon and Washington state continue to grow, although the pace of that growth has slowed. By the end of 2019, Washington state specifically could post single-digit, year-over-year sales gain ― the first time that’s happened in a recreational marijuana market. Nationwide, however, rec sales are set for major growth in the coming years, as California and Massachusetts are expected to hit their strides by 2020 and markets such as Illinois, Maine and Michigan come online. Additionally, many state legislatures are actively considering recreational cannabis measures. As of press time, Delaware, New Hampshire, New Mexico, New York, Rhode Island and Vermont had bills in the works to legalize adult-use sales, and Arizona will likely have an initiative on the 2020 ballot to do the same. By 2023, we project total retail marijuana sales in the United States will reach roughly $28 billion annually ― more than a threefold increase from estimated annual sales in 2018. Our estimates account for the fact that more states will likely legalize medical or adult-use marijuana in the coming years ― though it’s difficult to predict when that will happen and how big those markets will be. Using a range of estimates that incorporate several factors ― such as the likelihood of a given state passing a legalization measure, the size of the customer/patient base and time frame for the launch of sales ― helps account for this uncertainty. Our approach is refined over time as more information becomes available. (See our methodology in the Appendix for an overview on how we calculate sales estimates.) Note that our goal is to provide conservative, realistic financial forecasts that reflect the high degree of uncertainty in the industry. Total cannabis sales in any given calendar year are highly dependent upon progress made ― or not made ― in each individual state. California is currently the big wild card, as the slow rollout of its statewide regulatory system makes it difficult to get a handle on the exact size of the legal side of this enormous market. As more information comes to light over time, it could change our estimates for California and, therefore, the industry at large.