Also, pandemic-frazzled Americans are simply getting stoned more often.
“It’s understandable that people may be more hesitant to get their products from sources that are unregulated,” said Kris Krane, CEO of 4Front Ventures, which operates dispensaries in multiple states. “They may not want to go to their dealer’s house, or they may not want to have their dealer come into their house, at a time when people are social distancing and not supposed to be interacting with people that they don’t know.”
In addition, cities that never allowed pot shops in their towns, even in states where marijuana is legal, are rethinking the local bans in search of fresh tax revenue. And more people than ever are registered as medical marijuana patients: Florida added nearly 5,000 patients a week in June, and more than 50,000 since March.
The data is murky — credible sales figures on illegal marijuana transactions are inherently difficult to come by — and it’s likely that those sales are also booming as anxious Americans smoke more weed while hunkered down. But many close industry watchers believe the current circumstances are pushing more Americans into state-legal markets. Revenues are expected to hit $17 billion this year, according to New Frontier Data — a 25 percent spike over 2019.
Mitch Baruchowitz, managing partner at cannabis investment firm Merida Capital Partners, argued in a paper in May that the pandemic is “cannibalizing” the illegal market. He hasn’t seen anything in the ensuing months to change that assessment.
“The vast majority of the current growth in the cannabis space is being driven by consumers transitioning from the black market to the legal market,” Baruchowitz wrote.
The boom in sales is driven in large part by new legal markets, particularly the start of recreational sales in Illinois and Michigan. But even some states with relatively mature markets have seen big spikes in sales. In Oregon, for example, monthly revenues jumped from just below $70 million during the first two months of this year to more than $100 million in May and June.
Trulieve, Florida’s biggest retailer, doubled its fleet of delivery drivers across the state to keep up with demand.
“Obviously we all understand because we’re living it, that there is an increased anxiety level, which can trigger increased consumption,” said Kim Rivers, the company’s CEO.
The California problem
Even with this year’s rapid growth, however, the legal marijuana market is still dwarfed by illegal sales, which New Frontier estimates at $63 billion for this year.
Nowhere is the underground weed market a bigger problem than in California, where it’s estimated that 80 percent of marijuana sales…