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AndCan Index, October 2017 Release: U.S. Demand for Legal Cannabis Products Rises for Third Month in a Row

  • The demand for legal cannabis products in the U.S. increased by 1.6% in July.
  • Cannabis product demand is up 6% nationwide, year-to-date.
  • Results incorporate first month of Nevada’s fully legal recreational status for marijuana sales.

FOR IMMEDIATE RELEASE

NEW YORK, NY—October 3, 2017—The demand for legal cannabis products in the United States increased by 1.6% in July 2017, according to the monthly AndCan Index, which closely monitors demand across every U.S. state. The increase marked the third consecutive month of growth for the AndCan Index

“This is only the fourth time since the start of 2015 where we’ve seen at least three consecutive months of growth in demand for cannabis products in the U.S.,” said AEG consultant Peter J. Schwartz, who oversees the AndCan Index as well as the firm’s report on The Market for Legal Cannabis Products in the 50 United States.

AndCan Index data shows that since the start of 2015, the demand for legal cannabis products has grown by 16.3% nationwide—and since last November’s election, when four states voted to legalize recreational use of marijuana, overall U.S. demand has increased by 6.8%. Schwartz notes Nevada’s fully legal recreational status for marijuana took effect on July 1.

“By examining every state’s data in the fashion that we have, hot spots emerge—we can determine where, exactly, demand outpaces indicators for demographics, spending, and the like,” said Schwartz in an address to the Cannabis Private Investment Summit in New York City on September 19. “We can pinpoint the markets most poised for growth,” he said. 

The AndCan Index was launched in June 2017. It builds from more than two years of comprehensive coverage of the U.S. cannabis market by Anderson Economic Group, a rigorous methodology that has been presented at two conferences of professional economists, and more than two decades of business consulting experience worldwide.

National industry press, including High Times, has covered AndCan as the first indicator to have "consistently measured the actual demand for marijuana state-by-state."

The AndCan Index originates from tens of thousands of data points, including recreational and medical sales in states where cannabis products sales are legal (where available for Alaska, Colorado, Oregon, and Washington). In addition, it includes calculations for the latent (unobserved) demand in emerging markets across the remainder of the 50 states.

Adjustments are made based on the concentration of cannabis in products that are sold both medically and recreationally—a highly-potent marijuana cigarette is indicative of greater demand for cannabis than a low-potency, cannabis-oil-infused beverage, for instance—as well as the market-share of these products, and pricing differences from state-to-state.

In those states where legal sales are not available, we estimated latent demand from survey data on marijuana usage, alcoholic beverage consumption and spending, and demographic data. Estimates are made for each state based on that state’s unique data.

Monthly data on actual purchases in states where the products are legal are the primary drivers of month-to-month variation in the AndCan Index. As states change their laws, AndCan captures the transition from latent demand to observed demand without the distortion that would be caused by incorrectly assuming that all taxable sales in newly-legalized states represent growth in consumer demand.

Historical data dates back to the start of 2015. All values are indexed to the period of the November 2016 U.S. general election. The index structure means that any value greater than 100 indicates that the market demand has increased since the baseline period of November 2016.

The AndCan Index is based on months of intense work, plus years of Anderson Economic Group’s experience in assessing the demand of legal cannabis products. The original methodology behind AndCan was presented in a technical paper authored by the firm’s CEO, Patrick Anderson, in May 2015 at the National Association for Forensic Economists International Meeting in Amsterdam. An updated analysis was later presented to economists at the January 2016 Allied Social Sciences Association Conference in San Francisco. Comments from other economists from these conferences, as well as additional research by Anderson Economic Group consultants, have been incorporated into the AndCan Index.

The same market expertise is used in the publication The Market for Legal Cannabis Products in the 50 United States—AEG’s 265 page, state-by-state analysis, now in its second edition. This publication is the leading source on the economics of the cannabis industry. It covers actual and potential market size, indicative business value, tax revenue, alcohol beverage cannibalization, legal status, and political momentum.

The report is available for purchase at www.andersoneconomicgroup.com/CannabisReport.aspx

The next summary of AndCan Index results is due to be released on November 1.

Editorial note: Beginning in July 2017, Colorado began exempting retail sales of certain marijuana-related products from state sales tax. This change has been accounted for within AndCan Index modeling.

About Anderson Economic Group

Since its founding in 1996, Anderson Economic Group has become one of the nation’s premier boutique consulting firms, specializing in business valuation, expert testimony, and public policy. AEG has assisted governments, universities, large corporations, and businesses across the U.S. and abroad. All of the firm’s work is based on its core values of Professionalism, Integrity, and Expertise.

AEG is headquartered in East Lansing, Michigan, and has offices in Chicago, New York City, and Istanbul.

CONTACT
Peter J. Schwartz

AEG- New York, 40 Wall Street, 35th Floor 10005
pschwartz@andersoneconomicgroup.com
212.530.4785

 

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