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Wall Street Analyst: U.S. Cannabis Will Be a $47 Billion Market

Wall Street

Canada, Canadian companies, and U.S. businesses utilizing Canada’s financial markets are making most of the major cannabis financial headlines these days as the Great White North marches toward legalizing on October 17th, and rightfully so. With several major businesses investing in the industry, Prime Minister Trudeau’s Liberal Party fulfilling its campaign promise to end prohibition has brought mainstream legitimacy to the marijuana market in a way that most could only dream of just a few years ago.

The United States, on our own front, has been making progress state by state, with federal legalization proposals picking up momentum recently and should follow Canada’s example within the next few years, and surely within the next decade. If so, one Wall Street Analyst predicts that the legal cannabis market in the U.S. would reach $47 billion a year, as Business Insider reported:

In a lengthy note to clients on Wednesday, RBC Capital Markets estimates that legal sales of marijuana in the US are quickly catching up to beer and wine, and could be worth $47 billion within the next decade.

“In this US, the legal cannabis category is set to grow at a 17% CAGR over the next decade to as much as $47 billion in annual sales (this compares to the current diaper category at $4 billion in sales),” analyst Nik Modi wrote.

“Driving the growth is recreational use of the product, particularly concentrates and edibles. Estimates already suggest that the US category alone is $50 billion, which compares to spirits $58 billion, wine $65 billion, and beer $117 billion.” RBC’s $50 billion estimate includes both legal and illegal sales, and it’s not clear what the percentage is of each.

As Business Insider also reported, RBC praised Constellation Brands’ investment in Canopy Growth as displaying excellent foresight by investing in a future major revenue stream. Investors big and small should consider RBC’s advice and follow Constellation Brands lead as the cannabis industry is poised to grow by leaps and bounds over the coming years.

The $47 billion could turn out to be a conservative estimate, so long as overregulation doesn’t stifle the marijuana market as most states have exceeded initial revenue projections. It is difficult to gauge exactly how many cannabis consumers there will be once the stigma of prohibition fades away, increased tourism, and the revenue potential of exporting cannabis as other nations legalize cannabis commerce as well. The future is uncertain, but the momentum to legalize cannabis looks to be only getting stronger state by state, nation by nation.

If you want the latest about the domestic and international cannabis markets and to network with top investors and entrepreneurs from around the world, the International Cannabis Business Conference in Portland, Oregon, this September 27th-28th is the place to be. Secure your tickets by September 12th to save $200.

Photo courtesy of Wiki Commons.


Business Insider, Canopy Growth, Constellation Brands, Nik Modi, RBC Markets