According to Oregon-based Whitney Economics, the legal U.S. cannabis industry has recorded 11 consecutive years of growth. However, its pace continued to slow compared to pre-pandemic expansion levels.
The final retail sales for this year are estimated to be between $30,2 billion and $30.7billion, which represents a 6% growth year over year, according to the February newsletter of the firm.
Whitney analyzed state-level regulatory data and found that the business industry was facing increasing challenges. Nearly 1,000 licenses were less active by 2024 compared to early this year. In addition, the firm found that just 27.3% operators nationwide reported to be profitable.
Whitney Economics’ founder Beau Whitney stated that the rate of failure of businesses will continue to increase until changes are made at the state and federal levels.
According to the analyst, Michigan exceeded expectations, reaching nearly $3.3 billion in sales – about $400 million above forecasts – driven partly by out-of-state purchases from neighboring regions. New York outperformed as well after regulatory changes allowed for the opening of 230 retail dispensaries. Sales reached $859 millions versus $264 in 2023.
The report states that Florida’s growth fell far short of expectations due to an important slowdown on new patient registrations. Whitney Economics projects slower growth rates for Florida by 2025 despite the fact that multistate retailers continue to increase their retail footprint.
Whitney stated that “the deployment of additional stores will only lower the average sale per store.”
While mature markets showed signs stagnation. Arizona experienced negative growth. Colorado, Oregon, Washington, and Washington also saw flat or decreasing demand as the market approached saturation.
Data showed that the number of States experiencing a decline in retail sales year over year increased by 70%. Six states with mature markets recorded revenue declines totaling $457.9 millions, while four newer markets experienced combined decreases of 161.2 million dollars.
Whitney Economics attributes slower growth to the federal government’s inaction regarding cannabis reform. They cite delays with hearing rescheduling, and congressional legislation relating to interstate commerce, banking reforms, and tax reforms.
Whitney stated in the report that “the level of trust between Congress and the cannabis industry has reached an all time low.”
The company warned that without reforms to policy, industry consolidation could continue, favoring large businesses. This would lead to lower taxes, job losses, and continued sales growth despite the fact. This firm warned of the increased burden on minority and women owned businesses.
Next month, in the company’s monthly report, it plans to publish its forecast of retail sales for 2025.