Forecasting the Future Growth of Medical Marijuana in America
More and more states are legalizing marijuana to at least some extent. For most, it starts with legalizing the use of medical marijuana with heavy regulations on how a patient can qualify and receive a prescription from a licensed provider. Some states are more heavily regulated than others, while others have already or are starting to move toward full legalization for recreational use.
In the meantime, it is the medical marijuana industry that has taken off in many states such as Florida which has exceeded forecasted sales and patient use ahead of its legalization. Now, after establishing a worth of $11.9 billion in 2018, forecasters are predicting that the medical marijuana industry could be worth anywhere from $30 billion to $66.3 billion by the year 2025.
That is a significant range of growth for the industry. In order to understand why the gap is so large, we will look into some of the major factors that are driving that growth.
Growth in Current Market of States with Legalized Medical Marijuana
According to the Washington D.C.-based cannabis researcher New Frontier Data, they forecasted the sales of legal marijuana in states that have legalized marijuana. Currently, there are 33 states and Washington D.C. itself that have legalized marijuana for medicinal use, while 10 have legalized recreational use as well.
They predicted that sales will grow at a compound annual growth rate of 14% by 2025, which would be just under $30 billion. Part of this large growth stems from the 2018 Farm Bill that legalized recreational use of CBD products since it does not contain the psychoactive chemical components of THC.
This growth for the current market of legal medical marijuana represents the more conservative forecasted growth for the industry. However, there is a very good chance that more states will legalize at least medical cannabis in the coming years.
Growth Based on States Projected to Newly Legalize Medical Marijuana
The effects of new states legalizing medical marijuana cannot be understated. Part of the explosion in growth already seen in the industry comes from states such as Nevada and Oklahoma more recently, as well as Florida’s significant growth. Since legalizing in 2014, Florida currently has over 200,000 active patients with prescriptions, with an additional 10,000 patients enrolling with their physicians and dispensaries in Florida every month.
In 2020 alone, there are four states that have a medical marijuana legalization initiative, either through legislation or a ballot: Alabama, Mississippi, South Dakota, and Kentucky. All four are conservative states that have been more traditionally anti-legalization, but thanks to the growth of the hemp and CBD industry are now more open to exploring legal medical cannabis as well.
Growth from Increased Investment in Medical Marijuana Industry
Finally, we have the potential growth coming from investment into the industry — both from within the country from banks and from foreign investors as well.
Aguirre de Carcer, from New Frontier Data, is quoted in Forbes as saying that foreign investment has been strong and will only increase as the industry grows through further legalization efforts.
The big room for growth, however, will come from investments by banks. Currently, banks have been holding back due to concerns over the disconnect between state and federal laws, and the fear of laundering charges being leveled against them. However, this is also something that is being actively worked on within federal and state levels.
William Barr, the U.S. Attorney General, has announced that he will not go after companies operating in states with legalization. Further, he wants to work on fixing that disconnect between federal and state levels. The American Banker’s Association, in particular, has been working toward clearing up any discrepancies, and once that is established, you can expect to see a significant amount of investment by banks in the medical marijuana industry.
Between the growth of the market into newly legalized states and further investment from foreign investors and banks, you can see how the medical marijuana industry could reach that $66 billion target by 2025. There are no guarantees, but there is significant room for growth in the next five years.