According to new data from Arcview Market Research, marijuana consumers in the United States and Canada spent over $53 billion in the legal and illegal cannabis markets combined in 2016.
About $7 billion of that came from the legal recreational and medical marijuana markets, with the rest coming from the black market. Of course, estimating the black market sales of any substance or product is a tricky proposition; it’s not like drug dealers are keeping accurate books or filing detailed tax returns. But according to Arcview, black market sales accounted for about 87% of all sales in 2016, down from 90% in 2015.
As the legal supply of marijuana increases in North America – several states joined the list of legalizers last election in the U.S. and lawmakers are expected to begin the process of recreational legalization in Canada later this year – the market share for illegal sellers will continue to drop.
The estimated $53 billion in sales is more than was generated by McDonald’s and Starbucks combined in 2016. Anyone that doubted the sheer size of the cannabis consumer market or its popularity must be having second thoughts at this point.
And now that customer base is being moved, slowly but surely, into the legal market, which creates jobs and real economic activity. “The enormous amount of existing, if illicit, consumer spending sets cannabis apart from most other major consumer-market investment opportunities throughout history,” said Troy Dayton, CEO of Arcview. Unlike most other industries throughout history, “the cannabis industry doesn’t need to create demand for a new product or innovation — it just needs to move demand for an already widely-popular product into legal channels.”
While legal marijuana flower sales will be big in the legal market as it expands, the biggest area for growth is in sectors like edibles and concentrates. It is much easier (and safer, when it comes to extracts) to buy these things from a retailer than it is to make them at home, so new and old cannabis consumers alike will be driving up demand in these areas.
A massive customer base exists for those who are bold enough to take the risk to jump into an industry that still has a lot of question marks hanging over it. But as is the case with so much in the business world, the bigger the risk, the bigger the potential reward.
And if there is one thing the growing legal cannabis industry needs right now it’s entrepreneurs that are willing to take risks.