U.S. and Canadian weed consumers plopped down $53.3 billion for legal and illegal marijuana in 2016, according to a new report from Arcview Market Research. However, the vast majority of those transactions took place on the black market.
Still, this is more money than Americans spent at McDonald’s and Starbucks combined, according to QSR Magazine.
Arcview’s 22-page executive summary for the “State of Legal Marijuana Markets” estimated that the black market still accounts for 87 percent of marijuana sales, down 90 percent in 2015.
The North American legal weed market posted $6.9 billion in revenue in 2016 alone, a 30 percent increase from the year before—meaning that it’s growing as fast as broadband internet grew in the 2000s, according to the Pew Research Center.
But, still, it sounds like quite a bit of revenue is going into the illegal market.
Troy Dayton, CEO of Arcview, says consumer spending in the black market creates a path for growth in the legal market.
“The enormous amount of existing, if illicit, consumer spending sets cannabis apart from most other major consumer-market investment opportunities throughout history,” Dayton said in a statement published by Business Insider.
Unlike other fast-growing markets, Dayton pointed out, “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.”
Dayton said the growing popularity of alternative ingestion methods—edibles, topicals, sprays, etc.—has also helped the legal market, especially among those who don’t smoke.
Indeed, edibles are one of the fastest growing categories in the legal weed market, according to Arcview.
“It’s one of the major reasons that people are going to leave the underground market to go to the aboveground market. It’s about variety,” Dayton told Business Insider. “You just can’t get these products on the underground market.”
Here’s an idea.
Legal pot sales could benefit and grow in an organic fashion if the U.S. government and DEA would re-schedule pot and stop equating it with heroin. Maybe then, more dispensaries could open up and sell legal weed without authorities breathing down their necks.
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