New York, NY – November 10, 2016 – Anderson Economic Group experts produced the most comprehensive state analysis of the market for legalized cannabis products in November 2015. This sober analysis was unusually accurate in both assessing the likely market in states where recreational cannabis products are legal, and in predicting that states (such as Ohio) would not rush to legalize cannabis.
Just in advance of the report’s second edition – to be released next week – AEG experts have scrutinized the results of ballot initiatives in nine states to determine what it all means. In particular, we analyzed California, Massachusetts, and Nevada, each of whose electorate voted on Tuesday to legalize recreational use of cannabis products. It was a watershed day for the burgeoning industry, as more than one in five Americans will soon live in a state with full legal status and related tax and regulatory regimes.
So, how big is the market is California? What is the value for businesses in the distribution industry in Massachusetts? What does this mean for state tax revenues in Nevada? We’ve got the answers.
AEG economists and business valuation professionals have developed sophisticated approaches to estimating market demand within certain consumer segments and specific geographic areas. We apply the same fundamental approach in this study of the demand for cannabis products. We are not advocates; rather, we apply the same sober, economic analysis that we have in the automotive and alcoholic beverage industries, among others.
The potential state market demand in California for legal recreational use of marijuana in 2017 is $3.525 billion. The indicative value for businesses in the distribution industry in Massachusetts is $1.072 billion next year. Potential state sales and excise tax revenue in Nevada is $80.8 million in 2017.
These totals just scratch the surface of what will be released in AEG’s The Market for Legal Cannabis Products in the 50 United States: Second Edition, which details the market in all 50 United States in unprecedented depth. Subscribers receive updated state reports released periodically at: www.AndersonEconomicGroup.com/CannabisReport
And don’t just take our word for it. Look at our track record from last year’s edition:
An Evaluation of Last-year’s Forecasts
Our first report gave a two-year political momentum assessment for each state, as well as an assessment of the demand for legalized products. Some of these can be tested against actual events over the past year.
- We expected that Ohio citizens would not jump at the chance to change their laws. In November 2015, they overwhelmingly rejected such a proposal.
- In New York, we similarly took a cautious approach. New York’s legislature acted in a go-slow manner, again quite consistent with our expectation.
- In Michigan, voters in early 2015 were anticipating multiple conflicting legalization ballot issues. By the end of the year, none materialized. We anticipated this correctly.
- In all, we correctly predicted legality – in terms of whether a given state would maintain or change its status quo, and our projection of what that such a change would be – in 42 of the 46 states where cannabis products were not fully legal until the time of the November 2016 election.
For market demand, our record was nearly as good, underestimating sales in Colorado and overestimating them marginally in Washington. We have calibrated our dynamic model, based on actual data for 2016, to produce a one-of-a-kind report on the Cannabis market throughout the United States.