Anderson Economic Group Work

Anderson Economic Group releases its latest AndCan Index — Demand for legal cannabis products in the United States is on the rise

  • The AndCan Index is “the most accurate representation of the legal cannabis market.”
  • The demand for legal cannabis products in the U.S. increased by 2.0% in May.
  • Demand is up by 4.5% nationwide since last November’s general election.


NEW YORK, NY—August 1, 2017
—The demand for legal cannabis products in the United States increased by 2.0% in May 2017, according to the monthly AndCan Index, which closely monitors demand across every U.S. state.

“After a surprising, albeit slight, decline in April, the demand for cannabis products increased in May—continuing a steady, upward trajectory that we’ve now seen for more than two years,” 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 15.7% nationwide—and since last November’s election, when California, Maine, Massachusetts, and Nevada voted to legalize recreational use of marijuana, overall U.S. demand has increased by 4.5%. The two-percent increase in May is the largest on record following a month where market demand had declined.

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.
“The result is the most accurate representation of the legal cannabis market available today,” said Schwartz, “For years we’ve seen the momentum in the U.S. market, but only now has it truly been quantified.”













 Sky high: The 2% increase in cannabis product demand in May was the largest on record following a monthly decline.

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 the sale of cannabis products is legal (where available for Alaska, Colorado, Oregon, and Washington). In addition, it includes calculations for the latent (unobserved) demand in emerging markets across the country.

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 270 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

The next AndCan Index, which will capture market demand across the U.S. through the month of June 2017, is due to be released on September 6.

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