Marijuana sales in the U.S. are catching up to those of beer and wine.
America’s legal marijuana industry could be worth as much as $47 billion in a decade’s time, according to investment bank RBC Capital Markets. In a lengthy memo to clients last week, RBC analysts outlined the rapid growth of the U.S. marijuana sector and showed how the cannabis market is quickly catching up to beer and wine sales.
“In this U.S., the legal cannabis category is set to grow at a 17% CAGR over the next decade to as much as $47 billion in annual sales (this compares to the current diaper category at $4 billion in sales),” RBC Capital Markets analyst Nik Modi wrote in the letter, as reported by Business Insider.
Modi also cited recent data from BDS Analytics showing that consumers are shifting away from marijuana flower and toward cannabis edibles and concentrates, which he believes will help fuel greater sales.
“Driving the growth is recreational use of the product, particularly concentrates and edibles,” Modi said. “Estimates already suggest that the U.S. category alone is $50 billion, which compares to spirits $58 billion, wine $65 billion, and beer $117 billion.”
Modi’s $50 billion estimate of the marijuana industry includes both legal and illegal sales. It is unclear what proportion of the bank’s $50 billion figure comes from the illegal market.
While marijuana remains illegal under federal law, recreational marijuana has been legalized in Washington, D.C. and nine states so far, with at least two more states voting on adult use measures this November. Medical marijuana is legal in 30 states plus Washington, D.C., and voters in Missouri and Utah will consider medical marijuana measures in November.
Expanding Access Vs. Legal Uncertainties
While access to legal cannabis is expanding nationwide, the U.S. cannabis market continues to face uncertainties caused by shifting regulatory environments and an attorney general who has actively opposed the industry.
However, Modi in his letter to clients brushed off concerns about the legal cannabis industry’s unpredictability and said he anticipated continued cannabis reform and market growth.
“We believe further U.S. decriminalization of cannabis including for recreational use is very likely over time,” Modi said. “It ultimately starts with U.S. voters who across demographics are supportive of cannabis legalization.”
As the marijuana economy flourishes, legislation decriminalizing or legalizing marijuana has become more popular. Support for marijuana legalization in the U.S. has grown considerably over recent years and is now at a record high.
While Democrats have led the recent push for cannabis reform, many conservatives have also recently shifted their attitudes regarding marijuana. The Republican Party of Texas just recently endorsed marijuana decriminalization, and conservative leader and long-term cannabis opponent John Boehner announced that he supports cannabis reform.
Nearly two-thirds of Americans now consider using marijuana to be a “morally acceptable” activity. A recent survey from Gallup found that one in four young adults uses marijuana at minimum “occasionally.”