EAST LANSING – A new report predicts California would be the state with the largest potential market for legalized Cannabis Products in the United States, while Wyoming would be the smallest. Michigan, Illinois, and Ohio rank among the top 10 largest potential markets.
Supported Intelligence, an East Lansing-based software startup, recently partnered with Anderson Economic Group to produce the report, titled “The Market for Legal Cannabis Products in the 50 United States.”
“We are excited to release the only report that provides a thorough, consumer-demand based estimate of the market for legal marijuana sales in each individual state,” said report contributor Jeff Johnson, COO of Supported Intelligence. “This was no small task, but we believe our state- by-state approach provides readers with the best picture of the market for state-sanctioned cannabis products in the United States.”
Using a consumer demand approach, the report estimates the market demand in each state for legal cannabis products, including recreational marijuana and related products in the United States. The model produced a conservative estimate that assumed that the majority of people who do not use marijuana would continue not to use it after legalization.
This report does not advocate for or against legalization, but assesses current laws in each state related to cannabis, and the potential demand of the legalized products. It also describes the momentum to legalize cannabis in each state, in part, to determine the likelihood, by state, of cannabis products being legalized by 2017. For example, as part of the political momentum analysis, the report correctly indicated that Ohio voters would not support legalization in their recent election.
Other key findings assuming legalization in all states:
• California is the state with the largest potential market while Wyoming has the smallest. • Michigan, Illinois, and Ohio rank among the top 10 largest potential markets.
• Alcohol sales could decline by as much as $221.4 million as a result of market cannibalization.
• Total excise tax revenue that could be collected across the United States for legalized marijuana sales is estimated to be approximately $3.1 billion collected from a total U.S. legalized marijuana market of approximately $14.8 billion. This is conservative compared to other published market estimates ranging up to $113 billion.
Supported Intelligence worked with AEG experts to create the consumer demand model, which uses key parameters from each of the 50 states to generate state-specific estimates of the total market size, potential tax revenues, and cannibalization of alcoholic beverages sales. SI developers created custom software to process the parameters and to generate a multipage report of the results for each state. SI also relied on its innovative Rapid Recursive® Toolbox to create a recursive model of business value in order to estimate the value of each state’s possible distribution industry.
With dramatic changes in both public opinion and the legal landscape regarding marijuana, it is clear that future consumption of marijuana in the U.S. will be under a much different legal regime than in the past. AEG’s report provides an analysis backed by consistent and sober methodology for those who are investing in this emerging industry; attempting to estimate or design tax and regulatory regimes for it; selling potentially competing products, such as alcohol beverages, tobacco, and other medical therapies; and with interests in public health and law enforcement.
“American opinions about marijuana are changing and it’s time that voters and investors have a sober and realistic look at the potential market for these products in each state,” said Patrick L. Anderson, CEO of Anderson Economic Group.
This report is the first of its scale and scope, and is available at www.AndersonEconomicGroup.com/Publications/CannabisMarketAnalysis.aspx
Supported Intelligence, LLC is a Michigan-based company, headquartered in East Lansing and formed in 2012. The firm’s primary product, the Rapid Recursive® Toolbox, was developed exclusively in the Midwest between the firm’s offices in East Lansing and Chicago by graduates of Michigan State University, Northwestern University, and the University of Michigan. More information about the Rapid Recursive® Toolbox, including free trial downloads, can be found on the firm’s website, www.SupportedIntelligence.com
