Only 40% Projected to Leave Black Market by 2020

Washington – New Frontier Data, the global authority in data, analytics and business intelligence in the cannabis industry, releases 2018 Cannabis Industry Trends Report: Market Insights. This report examines trends in the burgeoning cannabis industry across the United States and explores market demand, federal and legislative action, compliant banking and the opioid epidemic. In California, high taxes, local government restrictions and supply disruptions have helped slow consumers’ transition from the illicit market, and only 40 percent are expected to have moved into the legal market by 2020.
“Given local bans on cannabis businesses, exodus from the medical market, and the time needed to reduce the number of illicit operators, New Frontier Data adjusted downward the projected growth rate for California’s market for the next two years. However, we fully expect the market to stabilize and see sustained growth following this initial turbulent period,” said John Kagia, New Frontier Data Chief Knowledge Officer.
California’s well-established illicit market, paired with high taxes, steep compliance costs, and widespread local government bans on cannabis businesses, will significantly slow the pace at which consumers convert to the legal regulated market. In 2018, the legal adult-use market size is $0.8 billion, while the illicit market size is $3.7 billion. By 2025, the legal adult-use market is projected to increase to $4.0 billion while the illicit market decreases to $2.4 billion. The large size of the adult-use market is fueled, in part, by the higher cost of products in the legal market caused by the strict regulations governing production, processing, retailing and marketing products in the state.
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