Like it or not, the U.S. marijuana industry is expected to grow at an annual compound rate of 25 percent over the next 5 years (Forbes, January 3, 2017). Estimates of gross industry sales (medical plus recreational) by 2020 range from $11 billion (Marijuana Business Factbook 2016) to $44 billion (CBS News, March 18, 2016) with the general consensus falling in the $20-25 billion range assuming that no additional states pass medical marijuana and/or legal recreational marijuana laws (a very conservative assumption, at best).
To date, 28 U.S. states plus the District of Columbia (29 total) have legalized Medical Marijuana. The percent of U.S. citizens living in areas with Medical Marijuana is 63.49, as illustrated in the table below. The average number of medical marijuana patients per 1000 people is 8.795 with a minimum of .1 per 1000 (Delaware) and a maximum of 19.8 per 1000 (Colorado) according to Statista.com.
The Medical Marijuana States and Populations (March 2017)
Legal recreational marijuana is available in eight states plus the District of Columbia, covering 21.46 percent of the U.S. population.
The Legal Recreational Marijuana States and Populations
Based on estimates developed by New Frontier Data, as reported in The Cannabist (February 22, 2017), my projections for medical marijuana sales and legal recreational marijuana sales for the 2017 through 2020 period are presented below. These projections are limited by two broad assumptions: 1) no additional states will pass medical or legal recreational laws in this period, and 2) state populations will remain constant for the period 2017-2020.
Medical and Legal Recreational Sales 2017-2020 ($US Billions)
|Year||Medical||Legal Recreational||Total ($Billions)|
During the period 2017 through 2020, medical marijuana (MMJ) sales will grow from $6.11 billion to $13.46 billion annually. The average total of sales per capita for MMJ, given the assumptions above, will be $65.31 by 2020.
For legal recreational marijuana, sales are expected to grow from $3.74 billion in 2017 to $11.18 billion in 2020 for average sales per capita of $160.74. Total gross industry sales (MMJ plus Recreational) are expected to grow from $9.85 billion in 2017 to $24.64 billion in 2020 equating to $119.56 sales per capita in the combined MMJ and Recreational markets.
Graphically, the two tables below present total sales and percent of total sales trends for 2017 through 2020. Sales will reach categorical equilibrium (50/50) just after 2021.
Finally, estimates of total industry employment by 2020 range from 255,000 (The Cannabist) to 300,000 (High Times). Thus, the average expectation is that 277,500 industry jobs will be created by 2020. Based on my estimate of total industry sales in 2020, this translates into 1 job created per $88,793 in total industry sales.
It is time for business schools to engage and embrace the marijuana industry as an economic catalyst. My colleagues and I are developing an active research agenda to focus on consumer habits and preferences in the nascent legal recreational marijuana industry in Massachusetts, expected to reach combined sales (MMJ and Recreational) of over $1 billion by 2020. Join us as we embrace this opportunity.