Cannabis sales hit $6.7 billion in 2016, but industry uncertainty persists
Written By Emily Gray Brosious Posted: 01/04/2017, 10:27am
Rows of cannabis plants grow in the 20,000 square foot greenhouse at Vireo Health’s medical marijuana cultivation facility on August 19, 2016 in Johnstown, New York. New York state lawmakers voted to legalize marijuana for medical use in 2014, and the law took effect in January 2016. Currently, five organizations are allowed to grow and sell the drug for medical use in the state. New York’s new law only allows people with “severe debilitating or life threatening conditions” to obtain marijuana for medical use. (Photo credit: Drew Angerer/Getty Images)
North Americans spent approximately $6.7 billion on legal marijuana products in 2016, according to new data from cannabis industry data and analysis firm Arcview Market Research.
The legal cannabis industry grew by 30 percent between 2015 and 2016, far outpacing broader U.S. economic growth, which expanded by about 1.7 percent nationally in 2016, as reported by CNN Money.
“Sales growth is a tale telling sign of increased market demand … But it is also a strong indicator for job growth as the industry now requires more labor to produce and sell in order to meet increased demand,” said Keegan Peterson, CEO of Wurk, a workforce management company designed specifically for cannabis companies.
“With well over 100,000 jobs in the industry as of last year, this number will continue to grow as markets continue to mature and expand,” Peterson told Extract in an email.
Arcview projects North America’s legal cannabis market will hit $20.2 billion in annual sales by 2021, assuming a 25 percent compound annual growth rate.
“The only consumer industry categories I’ve seen reach $5 billion in annual spending and then post anything like 25% compound annual growth in the next five years are cable television (19%) in the 1990′s and the broadband internet (29%) in the 2000′s,” Arcview editor-in-chief Tom Adams told Forbes.
Despite strong market growth and policy reforms sweeping through many states, the U.S. cannabis industry faces a great deal of uncertainty heading into the next presidential administration.
Eight states and the District of Columbia have now legalized recreational marijuana for adults and 28 states have legalized comprehensive medical cannabis programs, but the drug remains illegal for all purposes at the federal level.
Under President Obama’s leadership, the Justice Department has largely allowed states to implement their own marijuana laws without major federal interference. But many now fear the incoming administration may take a more aggressive approach to enforcing federal pot laws. Many of President-elect Donald Trump’s top cabinet picks are vocal marijuana reform opponents, including his choice for U.S. Attorney General, Alabama Sen. Jeff Sessions.
“While the new presidency has brought some uncertainty to our industry, I look at this as short term noise,” Peterson told Extract. “With the new presidency putting job growth at the front and center, the cannabis industry has an opportunity to support those initiatives. With an additional 400,000 jobs needed over the next five year to support the market growth, the future of the cannabis industry is bright.”
John Manlove, director of sales at Tradiv, a leading online wholesale platform for legal marijuana businesses, is equally optimistic about the prospect of the economic benefits of legal marijuana overpowering ideological and political opposition.
“Our industry’s strong and continued growth in 2016 is an indication that we’re in the right business,” Manlove said in an email. “We are hopeful that the new administration recognizes the tax revenue potential of our industry and takes a progressive approach to capturing those dollars rather than the short-sighted tactic of returning to archaic prohibition-era policies.”