Analyst: California cannabis market isn’t slowed by COVID and should reach $6 billion by 2025
The cannabis market in California has continued to thrive amid the COVID-19 pandemic, and legal sales are on track to surpass $6 billion in 2025, accounting for a sixth of all legal cannabis sales in the United States, a leading analyst said Wednesday.
The state market — the largest legal market in the world — has benefited from a bump in demand during the pandemic as customers stock up on products similar to alcohol and tobacco, said Jessica Lukas, vice president of consumer insights for BDS Analytics, a cannabis research firm based in Boulder, Colorado. The firm found that legal spending for weed last year was $3.1 billion in the state and $8.7 billion in the illegal market.
California this year also benefited from a good regulated market, Lukas said. It did not encounter distribution problems seen in other states such as Nevada, which had to shift initially to a delivery-only model amid the pandemic, or supply issues that plagued states such as Illinois, which had only allowed recreational use starting in January, Lukas said. Recreational use of marijuana has been allowed in California since Jan. 1, 2018.
“California, a very strong legal mature marketplace, had a limited impact, or the impact was mitigated,” Lukas said Wednesday during a presentation of the annual Wine & Weed Virtual Symposium.
Cannabis sales spiked 90% on March 16 over the average daily sales when consumers stocked up as shelter-in-place orders went into effect. That strong interest carried through with a 60% increase on April 20 and a 29% increase on June 26, she said. The industry also saw an increase in consumers using retail apps to make their purchases.
“A lot of the top drivers of why people consume kind of fits with a COVID-19 response,” Lukas said. “They're seeking cannabinoid-infused products to help them relax or unwind to provide stress relief.”
The North Coast has been a key driver in the cannabis industry as it is home to the Emerald Triangle — comprised of Mendocino, Humboldt and Trinity counties, regarded as the prime growing region in the country. Meanwhile, Sonoma County has carved out a niche as production hub with such companies as SPARC and CannaCraft.
As the market has grown, there has been an emergence of cannabis products beyond those smoked, such as edibles, drinks and lotions and oils. “This isn't an industry anymore where people are just smoking ... or just consuming an edible. People are seeking different benefits via the different product forms available,” Lukas said.
That has attracted the interest of alcohol beverage producers such as Petaluma-based Lagunitas Brewing Co., which has its own cannabis-derived drink product in conjunction with CannaCraft. In Canada, where it also is legal, Constellation Brands Inc., Molson Coors and Anheuser-Busch InBev all have entered the cannabis drink market looking to capture growth. BDS estimates that the cannabis drink market will be at $1.7 billion in 2024.
The annual symposium, launched in 2016 by the Wine Industry Network to explore ways the legalization of recreational cannabis consumption is impacting California’s wine industry, was staged online this year in response to the coronavirus pandemic.
You can reach Staff Writer Bill Swindell at 707-521-5223 or firstname.lastname@example.org. On Twitter @BillSwindell.