Newsroom

AEG AndCan Index—U.S. Demand for Cannabis Products Rose Slightly in November

  • The demand for legal cannabis products in the U.S. increased by 0.2% in November.
  • Cannabis product demand is up nearly 10% over a one-year period.
  • The AndCan Index is constructed using calculations for all 50 states.


FOR IMMEDIATE RELEASE


NEW YORK, NYFebruary 1, 2018—The demand for legal cannabis products in the United States increased by 0.2% in November 2017, according to the monthly AndCan Index, which closely monitors demand across every U.S. state.

“This marks the second consecutive month of near-flat results, following five months of sustained growth,” 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. “However, with California, Massachusetts, and Maine having implemented fully legal status at the start of this year, these figures are poised for further growth,” Schwartz said.

AndCan Index data shows that since the start of 2015, the demand for legal cannabis products has grown by 23.2% nationwide—and in the one year following the November 2016 general election, when four states voted to legalize recreational use of marijuana, overall U.S. demand increased by 9.8%.

With Vermont’s legislature voting in January to legalize marijuana recreationally beginning this July, one-fifth of all Americans will live in a state with a fully legal regime. “Vermont’s vote marked what’s likely to be a watershed moment,” said Schwartz, “all previous legalizations of this magnitude occurred through ballot initiatives, not legislatures.”

The AndCan Index was launched in June 2017. It builds from three years of comprehensive coverage of the U.S. cannabis market and assessments of demand by Anderson Economic Group; a rigorous methodology that has been presented in technical papers at two conferences of professional economists; and more than two decades of business consulting experience worldwide. Comments from other economists from these conferences, as well as additional research by Anderson Economic Group consultants, have been incorporated into the AndCan Index.

 
Trending upwards: November’s slight uptick in U.S. cannabis market demand came after a rare decline in October.


How the AndCan Index is constructed 


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, Nevada, 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 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 (with detailed, forward-looking market assessments compiled in November 2016). 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

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