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Cannabis analytics firm New Frontier Data sees brighter days for the U.S. pot industry, projecting $71B of legal marijuana sales in 2030 if the current trend in state-level legalization continues even without legal immunity at the federal level.
While 21 U.S. states and the District of Columbia have already legalized weed, cannabis companies struggle with operational inefficiencies as their supplies must remain within state boundaries with no federal protection.
Even banking access is limited: SAFE Banking Act which aims to allow cannabis companies to do business with U.S. financial institutions, has been stuck in Congress since 2019, having cleared the House multiple times without any success in the Senate.
Just last week, a group of bipartisan U.S. Senate and House lawmakers reintroduced the proposed legislation sending the shares of the U.S. Multi-State Operators (MSOs) and Canadian Licensed Producers (LPs) higher.
While its $71B projection for 2030 U.S. cannabis sales assumes the current pace of state-level legalization, even if that momentum wanes, New Frontier Data expects the market to reach $58B.
“As more established markets across the country stabilize, the U.S. cannabis industry will be buoyed by new markets coming online,” Gary Allen, Chief Executive of New Frontier Data, noted releasing the firm’s latest industry report for 2023.
Allen sees “strong momentum” for adult-use cannabis legalization in nine U.S. markets and likely legalization for medical use in nine others before 2030. “Even if the pace of new markets slows from its current pace, New Frontier Data estimates a healthy nine percent compound annual growth rate through 2030,” he added.
Other highlights of the report indicate potential headwinds in the U.S. cannabis market.
According to New Frontier Data, the average U.S. consumer price per ounce of flower has dropped 10% to $294.15 from $325.46 in 2010, and for the first time, the oldest legal adult-use state cannabis markets contracted in 2022.
“Inflation, high taxes and competing illicit markets are compounding price pressures in mature legal markets, and the potential for a recession will negatively impact cannabis consumer spending in the medium term,” Allen noted.
However, New Frontier Data forecasts legal cannabis sales to hit $35B this year, up from $30B in 2022, and U.S. adult users in both legal and unregulated markets to reach 69M by 2030, up from an estimated 54M this year.
If all 18 states bring in cannabis reforms over the next eight years, the proportion of Americans living in states with some form of legal access to weed will reach 94%, up from 73% currently, according to the firm.
U.S. MSOs: MedMen Enterprises (OTCQB:MMNFF), Curaleaf Holdings (OTCPK:CURLF), Acreage Holdings (OTCQX:ACRHF), Cresco Labs (OTCQX:CRLBF), Green Thumb Industries (OTCQX:GTBIF), Trulieve Cannabis (OTCQX:TCNNF), Ayr Wellness (OTCQX:AYRWF), Columbia Care (OTCQX:CCHWF), TerrAscend (OTCQX:TRSSF), Clever Leaves Holdings (CLVR)
Canadian LPs: Canopy Growth (CGC), Tilray (TLRY), Cronos (CRON), Aurora Cannabis (ACB), Sundial Growers (SNDL), OrganiGram Holdings (OGI), HEXO Corp (HEXO)
Cannabis-related ETFs: AdvisorShares Pure Cannabis ETF (YOLO), Global X Cannabis ETF (POTX), ETFMG Alternative Harvest ETF(MJ). Amplify Seymour Cannabis ETF (CNBS), AdvisorShares Pure US Cannabis ETF (MSOS)