Americans love fast food. Ask McDonald’s, which raked in almost $36 billion in sales in 2015. And oh, you know we love our Starbucks. Americans, in fact, love it to the tune of about $13.3 billion a year. But all that love for McDonald’s and Starbucks combined still doesn’t match the United States’ and Canada’s love of cannabis. Maybe it’s tough to believe how much North America spent on cannabis in 2016. Or maybe it’s not. But the truth is this: sales for recreational, medical, and black market cannabis topped $53.3 billion in 2016.
Black Market Cannabis Still On Top
Given the wave of cannabis legalization that swept the country last November, it’s probably not surprising that cannabis sales are at an all-time high. What many don’t know, however, is that the black market in marijuana isn’t going away anytime soon. Despite the fact that more than a quarter of all of-age adults now live in states with legal recreational pot, the black market shrunk just 3 percent between 2015 and 2016. Specifically, illegal cannabis sales comprised 87 percent of all known cannabis sales last year. In 2015, it was 90 percent, according to the report from Arcview Market Research
Consumers, though, are turning to legal weed more and more. Interestingly, legal cannabis sales increased 30 percent over the same period, totaling $6.7 billion. But while legal cannabis sales are growing rapidly, the black market is shrinking slowly. For now, black market cannabis is still on top, and it may take a while to topple it.
A Unique Situation for Cannabis Investors
The fact that cannabis is now a widely available legal market and an illegal drug at the same time makes for a unique situation for investors. Typically, businesses need to create demand for their product to be successful. But cannabis is different. The need for the product already exists. In fact, the demand has never been greater.
It’s a question of redirecting that demand into legal sales and away from the black market. In fact, one could make the case that all the cash people are putting into the black market is helping drive consumer spending on legal marijuana.
Alternative Ingestion Methods Set Legal Weed Apart
A major factor driving that runaway growth has to do with the tremendous variety of products available on the legal weed market. Go to a weed dealer to purchase illicit cannabis, and chances are you’re just buying flower. You also don’t have much choice when it comes to the potency, flavors, or cannabinoid profile of the weed you buy.
The opposite is true in legal dispensaries across the country. Edibles, topical creams, infused beverages, oils, concentrates, micro-doses. The list of alternatives is seemingly endless and only becoming more popular.
In Colorado, for example, sales on alternative forms of cannabis have risen a full 45 percent since recreational marijuana was first legalized in the state in 2012. Dayton predicts that these alternative products are primarily responsible for bringing people out of the black market and into legal dispensaries.