Here's a compelling argument to legalize cannabis countrywide: according to new data released by Arcview Market Research, the estimated value of the industry in 2016 was $53.3-billion. Only $6.9-billion of that figure was for legal, regulated markets - the rest (87 percent) was the value of black-market sales.

“The enormous amount of existing, if illicit, consumer spending sets cannabis apart from most other major consumer-market investment opportunities throughout history,” said Troy Dayton, CEO of Arcview Market Research, in a press release.

“In contrast to comparable markets with fast growth from zero to tens of billions in recent decades such as organic foods, home video, mobile, or the internet, the cannabis industry doesn’t need to create demand for a new product or innovation - it just needs to move demand for an already widely-popular product into legal channels.” 

As more states legalize, the black market will shrink as a percentage of the entire industry. With the four new adult-use markets (California, Massachusetts, Nevada and Maine) soon adopting regulated markets, Arcview expects black market trade to drop from 87 percent to 67 percent of the total market by 2021.

Countrywide, they project legal sales to grow at a compound annual growth rate of 26 percent, from $6.9-billion in 2016 to an estimated $21.6-billion by 2021.

These are heady days indeed, says Tom Adams, Arcview Market Research’s new Editor-in-Chief - comparable to the Internet boom 20 years ago.

“This is the most dynamic market I have analyzed since the early days of the Internet in the 1990s,” said Adams. “Just one example: a huge surge in private equity investment in 2014 and 2015 helped drive the number of brands with concentrates in Colorado stores from 465 to 975 in one year. The largest brand grew its sales 84 percent in the first nine months of 2016, but several competitors posted triple digit growth rates such that it barely held on to its share of the market in a very crowded field."

An executive summary of the report was released at Arcview’s private Investor Forum in Los Angeles January 17. The full report will be released in a few weeks.