Cannabis sales projections for US markets in 2025

Team Headset
January 4, 2022
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Total annual sales for the US in 2025

The opportunities presented in the United States cannabis market have been consistently increasing year over year since the inaugural states of Colorado and Washington voted in 2013 for legalization. Despite the piecemeal approach we have seen in new states approving and implementing adult-use cannabis markets, we are seeing synergies within regional approaches and established operators improving scalability across distinct cannabis markets. With public support increasing for advancement in medical and recreational cannabis, we expect to see the total addressable market in cannabis continue to increase.

Headset has compiled an analysis and forecast for all 50 US states to measure the total potential market in the coming years. By 2025, Headset is predicting that the total annual United States cannabis market has the potential to reach $45.8 billion. Want to drill into projections for all 50 US states to see what each markets' sales are projected to hit in 2025? Fill out the form below and we'll deliver the complete list of US market projections right to your inbox. While you're waiting to receive the data, read on further to learn about a handful of noteworthy market insights we compiled while pulling this together.

A summary of our methodology

In order to forecast for each market in all 50 states, we utilized separate methodologies depending on current market status and data availability.

For markets that we are currently offering Insights Premium data, we leveraged the per capita spends based on individual market data. We then applied growth rates (CAGRs) based on historical growth in each individual market. Assumed growth rates in per capita spend varied between 2% and 8% per year (which were compounded over the next four years). Additionally, we applied growth (or contraction) based on 21+ population estimates in 2025.

For markets that are less mature, we needed to apply a different methodology due to the limited access to current and historical sales trends. In order to forecast these markets, we accounted for three unique factors for each state.

  1. First, we leveraged census data to account for current population totals and demographic breakdowns as well as forecasted totals for 2025 estimates.
  2. Then we calculated an assumed per capita spend for both medical and adult-use markets based on comparable operating markets, CPI data for alcohol sales, and assumed medical percent participation of total 21+ populations in each market.
  3. And last, we compiled estimations for the likelihood of legalization for medical and adult-use markets in every state that does not have current operating cannabis markets. In order to account for the probability that each state will advance cannabis legislation (medical and adult-use), we took into account the current state of cannabis laws, any active campaigns or bills for cannabis advancement as well as any known limitations to enacting medical and adult-use cannabis. In building this model, we are able to attribute a weight to the likelihood that we will see active cannabis sales in the medical and adult-use markets. We also have taken into account the estimated turn-around for the timeline it would take for a market to get up-and-running through comparing similar markets that have completed or are actively working on legalization.

With this data, we created a 2025 forecast by applying the population estimates with the forecasted per capita sales to find both a medical and adult-use forecast in each state. We then reduced the forecasted total by the likelihoods that recreational cannabis was legal.

For example, in Hawaii we assumed:

  • Adult-use: a per capita sales (a year after legalized sales have begun) to be $216.50. With a population (of 21+) of 1.1M and a 10% chance of legalization allowing for at least a year of licensed sales. Thus our forecast for HI adult-use sales are: $216.50*1.1M*10% = $23M
  • Medical: a per capita sales of $3.5k, 1.1M population, and 2.6% of the 21+ population was medical consumers. Finally, HI is already selling legal medical cannabis so our % likelihood of medical sales was 100%.  Thus our forecast for HI medical sales are: $3.5k*1.1M*2.6%*100% = $100M
  • Total Sales: $23M + $100M = $123M

Some notable US cannabis markets

In looking at our 2025 forecasts, we saw that some states are deserving of a little more exploration as we expected them to actualize on most of their potential within the next four years. We break down these projections a little further below.

Forecast for Florida cannabis sales

Forecast for Florida cannabis sales in 2025

With an estimated 2025 21+ population of 16 million, we expect to see a large contribution from the Florida cannabis market in 2025. Although Florida only has a handful of operators currently in the medical market, this has not caused the market to wait. In 2021, this market is estimated to process around $1.3 billion in sales just in the medical market alone. By 2025, we believe there is about a 50% chance that we will see an active adult-use market (though mostly limited to currently operating entities). Factoring in our estimations for the increased access to new consumers in this market, we predict the Florida market to produce roughly $3.2 billion in sales in 2025. This places Florida as the second largest cannabis market in the United States behind California.

Forecast for New York cannabis sales

Forecast for New York cannabis sales in 2025

With the earliest adult-use licenses expected to be issued in 2023, New York is undeniably one of the most exciting cannabis markets on the horizon. Representing a booming 21+ population expected to exceed 15 million in 2025, New York is home to one of the most advanced illicit cannabis industries in the world. Historically, the medical cannabis market in New York has had relatively high barriers to entry for operators as well as consumers. Although legislation has allowed for the medical cannabis market since 2014, the New York market has been handicapped by limited license counts and strict product regulations. In October of 2021, consumers and operators celebrated the addition of Flower to the medical cannabis market as the state is actively building out the foundation for the adult-use market. The potential of New York's cannabis market is something we are extremely excited about, landing it as our third largest expected market in 2025, anticipating just over $2.8 billion in combined annual sales.

Forecast for New Jersey cannabis sales

Forecast for cannabis sales in New Jersey in 2025

Alongside the exciting progress in New York, we can't overlook the opportunity for growth in the New Jersey cannabis market. With medical operators waiting at the chance to convert their medical operations to adult-use around March of 2022, we are anticipating electrifying growth in the coming years for the Garden State. Regulators are working rapidly to establish a foundation and mobilize this market expected to garner a 21+ population of nearly 7 million in 2025. New Jersey's limited licenses are almost entirely owned by MSOs, with 2021 being an incredibly active year for acquisitions of prior independent operators in the market. Given the established foundational medical market, we expect to see a quick turnaround for collocated operators once licenses are awarded in the coming months. In 2025, we are anticipating that New Jersey's combined cannabis market will be able to support annual sales of $1.6 billion.

Forecast for Virginia cannabis sales

Forecast for cannabis sales in Virginia for 2025

Although current regulations allow for adult-use sales to begin in 2024, we do see a possibility for this timeline to be slightly expedited. With an untapped market of a 21+ population nearly as large as New Jersey, we expect to see Virginia expand its capabilities to serve both medical and adult-use cannabis consumers. Despite having a less robust medical market than New Jersey as a foundation for adult-use, the momentum for advancement of the cannabis market in Virginia is indisputable. After only one year of enacting the medical cannabis market, voters were quick to show their support by passing adult-use cannabis in July of 2021. The Mid-Atlantic boasts strong opportunity for cannabis operators to serve consumers and we see Virginia taking the lead. We are anticipating the potential of the Virginia cannabis market to reach $1.3 billion in spending power by 2025.

Forecast for Ohio cannabis sales

Forecast for Ohio cannabis sales in 205

Ohio has established itself as one of the most exciting emerging cannabis markets in 2021 and we only expect the opportunities in this market to accelerate. By 2025, census data is predicting that Ohio will present a massive addressable market of 8.8 million potential adult-use consumers over 21+. It is no wonder that we are seeing an ever increasing call for cannabis legalization in the Buckeye state. Ohio is a hopeful contender for legalization in 2022 with several active campaigns amassing signatures in support. Ohio's current medical market is steadily growing with potential to reach half a billion in sales by the end of 2021 despite being a limited license market. The medical cannabis in Ohio seems to be bursting at the seams with demand as regulators are seeking to expand both licensing limitations as well as access for patients in the state. By 2025, we are hoping to see the Ohio market actualize a majority of its potential and post annual combined sales over $1.6 billion, slightly more than New Jersey given its extensive population and expanded licensing.

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Team Headset
January 4, 2022
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