According to a report published Wednesday, the cannabis and hemp market research company Whitney Economics has lowered its U.S. retail cannabis market forecast for 2030. This new estimate shows a projected reduction of $21.1 billion in sales.
According to the Oregon-based consulting firm, legal marijuana sales in 2025 will be $34 billion. This represents a 13.1% increase from sales of $30.1 billion that were forecasted for 2024. However, this is down by $1.2 billion compared with their earlier projections.
In a press release, Beau Whitney, the firm’s founder said that “our updated forecast for this cycle shows some significant changes.” The firm’s growth, both short and long term, is less than what we expected.
A few states are exempt from the revision. New York’s and Maryland’s market forecasts increased respectively by $100 and $1.04 billion for 2025.
California’s revenue projections for 2025 have fallen by $606 million. Illinois, Arizona (both $425 and $48 million), Colorado ($183) and Washington ($179) were also among the major states that saw significant revenue reductions.
Whitney identified three main factors that influenced the outlook.
The oversupply of the marijuana market is still a major problem. According to the report, regulators have authorized more cultivation capacity than the entire U.S. demand – both legal and illicit – can absorb. This imbalance drives down prices and hurts state tax revenue, reduces operator profitability, and increases business failures.
Whitney noted that “the U.S. marijuana market is oversupplied” and had too much capacity for cultivation.
In addition, state and local taxation policies also inhibit growth of legal markets. While consumers are willing to pay higher prices for regulated goods, they have a certain limit.
According to Whitney, “Consumers have a high price sensitivity and will pay more for legal cannabis if the price differential between the illegal market isn’t too large.” In the report it was noted that higher taxes on cannabis are resulting in lower rates of legal market participation.
Market share is being further diminished by competition, including hemp-derived cannabinoids. In addition to the proliferation of alternatives, illicit suppliers, and inter-state trade, consumers who are price conscious have more choices outside of traditional, regulated channels.
Whitney Economics’ previous predictions have a high level of reliability. Its 2024 forecast was 95.6% accurate when first published, in the year 2024.
This is a sobering prospect for an industry which once predicted much higher growth rates. Although the legal market has continued to grow, its pace is slowing down because of persistent regulatory issues and market dynamics which favor alternative products to cannabis that’s regulated by the government.
Whitney explained that “lower prices, less participation and more substitutions will lead to lower revenues.” As a result, Whitney said that they were “forced to lower our forecast”.