Introduction

New Frontier Data, a premier data, analytics, and technology firm specializing in the global cannabis industry, presents the 2023 US Cannabis Report, an extensive analysis of the dynamic and ever-evolving American cannabis sector. It is crucial to emphasize that New Frontier Data is dedicated to providing unbiased and actionable data, taking no stance on the legalization of cannabis. This compelling report is indispensable for industry stakeholders, investors, and policymakers, elucidating trends, challenges, and opportunities that mold the cannabis landscape in the US. Encompassing subjects such as state-level legalization, financial forecasts, consumer demographics, medical cannabis program participation, and the combat against the illicit market, the report offers a holistic perspective on the industry’s expansion and influential factors [1].

In this newsletter, we will delve deeper into the critical findings of the 2023 US Cannabis Report, scrutinizing the most essential trends and forecasts that will shape the future of the cannabis industry in the United States. Equipped with this knowledge, readers will be better prepared to adapt to fluctuating market conditions.

The Persistent Surge of State-Level Legalization

As previously discussed in our newsletter (2. Modern History and Legal Status), the United States has experienced a remarkable surge of state-level legalization, with an increasing number of states embracing cannabis for medical or adult-use purposes. To date, 22 states have legalized high-THC cannabis for adult-use, and 39 states have legalized high-THC cannabis for medical use. The first state to legalize medical cannabis was Oregon, and the first to legalize recreational Cannabis were Washington and Colorado and the latest addition being Maryland and Missouri. New Frontier Data anticipates this trend will persist, identifying nine states, where the states Minnesota and Oklahoma are expected to be the first in 2023, with a high probability of legalizing adult-use cannabis and another nine states likely to legalize medical use by 2030 [1,2].

New states venturing into the legal cannabis market must confront the ongoing struggle against the illicit market. In the absence of federal action, the patchwork of state regulations and varying degrees of legal access to cannabis create opportunities for the illicit market to thrive. States must diligently devise strategies that can effectively compete with and reduce the illicit market share, encouraging the growth of a safe, regulated, and accessible legal industry.

Financial Forecasts and Industry Expansion

As the legal cannabis market continues to flourish across the United States, financial projections depict an impressive scenario. In 2022, the U.S. cannabis industry boasted an estimated $30 billion in annual sales. By 2023, sales in legal states are expected to surpass $35 billion. Assuming state-level legalization persists without federal policy reform, the market could reach a staggering $71 billion by 2030 with a compound annual growth rate (CAGR) of 12% [1].

The rapid expansion of the national legal industry is driven by several key factors, such as [1,3]:

1. 1. 1. Novel revenue streams from states that have recently reformed their cannabis laws and established retail markets for high-THC cannabis products;
      2. Sustained demand growth in legal states as consumers transition from unregulated to legal markets;
      3. Increased cannabis consumption nationwide due to growing awareness of its therapeutic benefits, normalization and destigmatization of usage, and diversification of cannabis for additional medical and wellness applications.

In states that have legalized adult-use cannabis alongside existing medical cannabis programs, market size and growth heavily rely on specific regulatory structures. Factors with the most significant impact on legal market sales include [1,3]:

1. 1. 1. The approach taken to integrate retail access for both market types;
      2. Availability and accessibility of retail outlets;
      3. Maturity of the existing medical market;
      4. Effective tax differences between medical and adult-use programs;
      5. Ease of medical market entry for new participants;
      6. Differences in product type restrictions between markets;
      7. Home cultivation/caregiver laws.

New Frontier Data projects that, by 2030, California, New York, and Florida will be the three largest legal state markets in the US, followed closely by Illinois, Michigan, and Pennsylvania. These financial projections underscore the incredible potential of the cannabis industry and the opportunities and challenges that may arise due to broader macro factors and the constantly evolving regulatory landscape [1].