Pot consumers in the United States and Canada spent a $53.3 billion in legal and illicit marijuana purchases last year, with most transactions still occurring in the black market, according to a new report by an Oakland research group that advocates for investing in state-permitted cannabis businesses.
A 22-page executive summary for the “State of Legal Marijuana Markets” report by ArcView Market Research, estimated that the black market still accounts for 87 percent of marijuana sales, down from the group’s estimate of 90 percent in 2015.
The report, a preview of market research that ArcView sells to subscribers and would-be cannabis investors, including robust estimates that the American and Canadian legal pot markets could boom by 19 to 26 percent a year as legally-permitted marijuana businesses open and the black market diminishes.
In previous reports, ArcView has valued legal California marijuana industry at $2.7 billion, declaring that it could grow by another $1.8 billion from expanded state-permitted sales and production under the recent voter-approved Proposition 64 legalization initiative. The group estimated the current legal marijuana market in the U.S. and Canada at $6.9 billion.
“In contrast to comparable markets with fast growth … such as as organic foods, home video or the internet, the cannabis industry doesn’t need to create demand for a new product or innovation,” ArcView CEO Troy Dayton said in a statement announcing the new report.
The executive summary said there is correlation between a growing legal marijuana market and a diminishing black market. It said in Colorado the estimated black market for marijuana stood at $1 billion before that state opened retail stores for recreational marijuana in 2014. Since then, Colorado’s black market has decreased to $500 billion while the state’s legal market has grown by $675 million, the report said.