BDSA CEO Dissects Cannabis Market: Strong Growth Expected As More States Go Legal

According to Roy Bingham, co-founder and CEO of BDSA, a leading market research firm focused on legal cannabis markets, the US cannabis industry is experiencing strong growth.

Bingham says that consumer purchases of cannabis in legal U.S. markets are projected to reach almost $30 billion this year, indicating a 12% increase compared to the previous year's growth rate of 2.8%.

When compared to the consumer packaged goods (CPG) industry, Bingham notes that most mature CPG sectors typically achieve around 3% growth. However, due to inflation and nominal price increases, the cannabis market is seeing higher growth rates.

Highlights Of BDSA's New Market Forecast

• New Jersey is expected to surpass $1,000,000,000 in market value this year.
• Michigan is experiencing strong growth and already has a significant market size of 2.7 billion.
• Illinois is a nearly mature market that continues to grow, with an expected growth rate of 8%.
• Florida, despite being limited to medical-only cannabis, is projected to grow rapidly by approximately 19% this year, reaching $2.6 billion.
• Massachusetts is still experiencing growth, albeit at a slow rate of about 4%.

Sources Of Growth

Bingham identifies several key factors that contributed to last year's challenging market conditions, including price reductions in established and mature markets, as well as limited growth in consumer demand.

However, the current landscape is witnessing a shift as new and emerging markets, particularly those adopting adult-use legalization, are experiencing rapid growth. Bingham points to Missouri as a standout, with an expected growth of $1 billion, representing a staggering 260% increase.

New York, New Jersey and Michigan are also performing well, with anticipated market values surpassing $1 billion.

While some states like Illinois and Florida continue to exhibit growth, albeit at varying rates, others such as California and Colorado are experiencing declines in market size. However, these declines are offset by the overall positive trajectory of the cannabis industry, leading to a projected 12% growth in 2023.

BDSA predicts a compound growth rate of 11% until 2027, suggesting that the market could reach $45 billion by then, a 50% increase from its current size.

“I would highlight Missouri, which we expect to grow by $1,000,000,000 this year, which is a massive, 260% growth. New York, of course, is not as rapid growth as most of us had expected because of slow legislative processes, but still going to add $460 million,” Bingham said.

What's Going On In Missouri?

Bingham discussed the sales trends and market projections for Missouri, highlighting the significant growth in both adult use and medical sales.

Adult use sales in Missouri reached $277 million between February and April, while the medical market was valued at $386 million in 2022, showing strong growth from the previous year.

BDSA predicts that the combined market, with the integration of adult use, will reach $1.4 billion in total sales in 2023, with adult use dominating the market. The firm anticipates the medical market to stabilize at around $300-$400 million, while adult use sales are expected to contribute approximately $1 billion to the total.

Consumption Trends

Regarding consumption, Bingham explained that similar trends can be observed across emerging markets.

“Typically, when a market is launched, flower products initially dominate, accounting for around 50% of the market. Concentrates then experience a significant surge in popularity, eventually reaching 30-35% of the market, while edibles grow to about 15%. Over time, flower sales gradually decline, and pre-rolls maintain steady growth, representing about 10-15% of the market,” Bingham said. 

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