Home Industry How Big Will California’s Cannabis Industry Get?

How Big Will California’s Cannabis Industry Get?

Voters in California legalized cannabis in November 2016 and the state began allowing regulated adult-use cannabis sales at the beginning of this year.

The Golden State has long been home to a thriving medical cannabis industry, which is now evolving with adult-use cannabis businesses popping up across the state.

California is home to the largest population in the country, and also receives the most tourism out of any state in the nation. That, combined with California’s long history with cannabis culture, makes California the largest cannabis market in the United States.

How large will California’s cannabis industry get? The projections are astounding.

A 6-billion-dollar industry In California by 2025

Currently, California is in the process of issuing adult-use cannabis licenses. As of March 2018, over 2500 cannabis licenses had been issued by the state of California.

It will be a while before California reaches full licensing capacity, so long-term projections can be difficult. Many industry insiders feel that California’s industry will be fully functioning by 2025.

New Frontier Data estimates that by 2025 California’s industry will be responsible for $6.59 billion in cannabis sales (medical and adult-use combined).

To put that figure into perspective, below are the next largest state projections in order:

  • Florida $2.51 billion
  • Washington State $2.14 billion
  • Colorado $1.94 billion

California cannabis industry projections fluctuate

In November 2017 BDS Analytics, in conjunction with ArcView Market Research, estimated that Calfornia’s adult-use sales would reach $577 million in 2018.

By the end of February 2018, BDS Analytics had adjusted its estimate up to 3.7 billion dollars for combined legal California cannabis sales.

2018 is going to be an especially difficult year to accurately project because sales are largely dependent on how many licenses the state can issue in the first year.

Cannabis licenses in California are in high demand, and while the state of California is feverishly working to issue as many as they can, their resources are limited.

How many licenses will California issue?

As of right now, California does not have a cap on cannabis industry licenses. Local governments can cap licenses, but the state does not have any caps in place.

One state that may provide insight into how many licenses California may issue is its neighbor to the north, Oregon, albeit on a micro level.

Oregon also does not have caps on cannabis licenses at the state level and has a long history of progressive cannabis policies and culture. It also, unfortunately, has a number of local bans in place, similar to what is being instituted in California.

The state of Oregon issued its first adult-use cannabis license in May 2016. Roughly two years later, the state had 1779 active licenses.

Oregon has 1/10th the population of California and not nearly that rate of tourism. It’s quite possible that California could have ten times the number of cannabis licenses as Oregon, or more.

California’s industry has a lot of moving parts

California’s cannabis industry policies and rules are evolving, the same as with every other state that has implemented a regulated adult-use cannabis industry.

Even in Washington State and Colorado, the first two states that voted to legalize cannabis (2012), changes and tweaks have occurred every legislative session post-legalization.

The state of California has the oldest medical cannabis industry in the country, but that sector of the cannabis industry is going to shrink as the years go by if other states’ histories are any indication.

All cannabis industry eyes in the United States will continue to be on California in the coming years, and for good reason.

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