WWW.IBISWORLD.COM Medical & Recreational Marijuana Stores December 2018 1
Legal matter: Despite conflicting regulations, the industry will continue its sky-high growth
This report was provided to Autobahn Consultants (2134210691) by IBISWorld on 27 October 2019 in accordance with their license agreement with IBISWorld
IBISWorld Industry Report OD4142 Medical & Recreational Marijuana Stores in the US December 2018 Kelsey Oliver
2 About this Industry 17 International Trade 31 Key Statistics 2 Industry Definition 18 Business Locations 31 Industry Data 2 Main Activities 31 Annual Change 2 Similar Industries 20 Competitive Landscape 31 Key Ratios 2 Additional Resources 20 Market Share Concentration 20 Key Success Factors 32 Jargon & Glossary 3 Industry at a Glance 20 Cost Structure Benchmarks 22 Basis of Competition 4 Industry Performance 23 Barriers to Entry 4 Executive Summary 24 Industry Globalization 4 Key External Drivers 6 Current Performance 25 Major Companies 9 Industry Outlook 12 Industry Life Cycle 26 Operating Conditions 26 Capital Intensity 14 Products and Markets 27 Technology and Systems 14 Supply Chain 27 Revenue Volatility 14 Products and Services 28 Regulation and Policy 15 Demand Determinants 29 Industry Assistance 16 Major Markets www.ibisworld.com | 1-800-330-3772 | [email protected] WWW.IBISWORLD.COM Medical & Recreational Marijuana Stores in the US December 2018 2 About this Industry
Industry Definition This industry includes stores that retail currently limited to the states of Alaska, medical marijuana (by prescription only) California, Colorado, Maine, and recreational marijuana. However, the Massachusetts, Nevada, Oregon, legal sale of recreational marijuana is Washington, Michigan and Vermont.
Main Activities The primary activities of this industry are Retail edible cannabis products Retail smokable indica cannabis products Retail smokable sativa cannabis products
The major products and services in this industry are Pre-rolled joints Concentrates Edible cannabis products Flower products All other products
Similar Industries 31222 Cigarette & Tobacco Manufacturing in the US This industry manufactures cigarettes and other tobacco products.
32541a Brand Name Pharmaceutical Manufacturing in the US This industry manufactures pharmaceutical products used to treat illnesses.
32541d Vitamin & Supplement Manufacturing in the US This industry manufactures vitamins and other health supplements.
NN001 Biotechnology in the US This industry manufactures biotechnology products, including medical products.
Additional Resources For additional information on this industry www.mpp.org Marijuana Policy Project www.thecannabisindustry.org National Cannabis Industry Association www.norml.org National Organization for the Reform of Marijuana Laws
Provided to: Autobahn Consultants (2134210691) | 27 October 2019 WWW.IBISWORLD.COM Medical & Recreational Marijuana Stores in the US December 2018 3 Industry at a Glance Medical & Recreational Marijuana Stores in 2018
Key Statistics Revenue Annual Growth 13–18 Annual Growth 18–23 Snapshot $10.3bn 25.0% 18.6% Profit Wages Businesses $2.2bn $1.9bn 10,195
Revenue vs. employment growth Per capita disposable income Market Share There are no major 60 4 players in this 48 industry 2 36 0 24 % change % change -2 12
0 -4 Year 10 12 14 16 18 20 22 24 Year 12 14 16 18 20 22 24 Revenue Employment
p. 25 Products and services segmentation (2018) 2% Key External Drivers All other 5% products Regulation Pre-rolled joints Per capita disposable 13% income Edible cannabis products External competition Number of adults aged 50 and older 57% Flower products
23% Concentrates
p. 4
SOURCE: WWW.IBISWORLD.COM
Industry Structure Life Cycle Stage Growth Regulation Level Heavy Revenue Volatility High Technology Change High Capital Intensity Medium Barriers to Entry High Industry Assistance High Industry Globalization Low Concentration Level Low Competition Level High
FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 31
Provided to: Autobahn Consultants (2134210691) | 27 October 2019 WWW.IBISWORLD.COM Medical & Recreational Marijuana Stores in the US December 2018 4 Industry Performance Executive Summary | Key External Drivers | Current Performance Industry Outlook | Life Cycle Stage
Executive Summary The Medical and Recreational Marijuana aging population and growing acceptance Stores industry, which includes stores of the medical applications of marijuana. that retail medical marijuana (by Chronic illnesses have become more prescription only) and recreational prevalent as the US population continues marijuana, expanded dramatically over to age, driving demand for medical the five years to 2018. The 2016 election marijuana products. Additionally, the cycle, in particular, provided landslide development of edible cannabis products victories for both medical and helped attract consumers that were recreational cannabis retailers. unfamiliar with marijuana products or Consequently, the legalization of averse to smoking. Edible products and marijuana for medical and/or vaporizer pens are projected to be a recreational purposes and the growing growth segment for the industry in the acceptance of medical marijuana coming years, as they are convenient provided operators and investors with alternatives to traditional cannabis consumption. Overall, the industry is expected to experience an annualized The licensing of commercial recreational 25.0% increase to $10.3 billion over the marijuana retailers contributed to industry five years to 2018, including growth of 26.5% in 2018 alone. revenue growth Over the five years to 2023, industry revenue is projected to increase at an unprecedented opportunities. There has annualized rate of 18.6% to $24.1 billion. been no shortage of demand in recent The industry will remain at risk, years, and the cannabis industry has however, until the federal government become one of the fastest-growing in the definitively changes its position on the United States. legality of marijuana. Until then, an More recently, the legalization of uptick in the number of medical recreational marijuana sales in several marijuana patients and a growing states fueled revenue growth. The recreational cannabis legalization licensing of commercial recreational movement will likely reap long-term marijuana retailers contributed to benefits for the industry. Rising demand industry revenue growth of 23.7% in is also forecast to widen profit margins, 2016, as new entrants flooded the as is the success of for-profit recreational recently legalized market. Meanwhile, marijuana businesses in states with large medical marijuana dispensaries consumer markets such as California, continued to benefit from the steadily Colorado and Washington.
Key External Drivers Regulation benefited in recent years from favorable Medical and recreational marijuana has regulation at the state level. With been restricted in the past by attempts to legalization expanding across several impose additional regulations on the states following the 2016 and 2018 industry. In particular, medical marijuana elections, beneficial regulation is expected remains a Schedule I controlled substance to create an opportunity for the industry. under federal law, despite legalization by many states. Although the level of federal Per capita disposable income regulation is expected to remain Household income levels determine unchanged in 2018, the industry has consumers’ ability to purchase marijuana
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Industry Performance
Key External Drivers products. While prescription products of marijuana in the United States continued can be essential for health and therefore continues to be sold illegally. External less susceptible to changes in consumer competition from traditional drug and expenditure, the unconventional nature healthcare providers, as well as from of the industry’s products make it subject black market sources, is expected to to changes in disposable income. As such, remain constant in 2018, posing a an increase in disposable income will potential threat to the industry. boost demand for medical and recreational marijuana in states where it Number of adults aged 50 and older is legally sold. Per capita disposable Individuals aged 50 and older are more income is expected to increase in 2018. likely to require medical marijuana products because a variety of health External competition conditions for which medical marijuana Marijuana products, especially medical is prescribed (e.g. Alzheimer’s disease) marijuana, struggle to compete with are prevalent among members of this age conventional healthcare services and group. As the population ages, demand products due to marijuana’s for industry services will grow, resulting unconventional treatment status. in revenue growth. The number of adults Marijuana products also compete with aged 50 and older is expected to increase black market alternatives, as the majority in 2018.
Per capita disposable income Number of adults aged 50 and older
4 2.5
2 2.0
0 1.5 % change % change -2 1.0
-4 0.5 Year 12 14 16 18 20 22 24 Year 12 14 16 18 20 22 24
SOURCE: WWW.IBISWORLD.COM
Provided to: Autobahn Consultants (2134210691) | 27 October 2019 WWW.IBISWORLD.COM Medical & Recreational Marijuana Stores in the US December 2018 6
Industry Performance
The Medical and Recreational Marijuana Current Stores industry has flourished over the five Industry revenue years to 2018, bolstered by increasing Performance 60 consumer acceptance of alternative treatment via marijuana products, as well 48 as sweeping legislative victories across the United States legalizing marijuana in some 36 form. The industry includes stores that 24
retail medical marijuana (by prescription % change only) and recreational marijuana, although 12 the legal sale of recreational marijuana is currently limited to 10 states. In states that 0 have legalized recreational marijuana, Year 10 12 14 16 18 20 22 24 medical marijuana sales have fallen year over year as adult-use recreational SOURCE: WWW.IBISWORLD.COM purchases outpace medical sales, suggesting that the recreational market is prolific growth of medical applications of disruptive once legalized. industry products over the past five years. A growing body of research suggests More recently, the legalization of the expansive medical applications of recreational marijuana spurred the marijuana. Since 1996, proponents of industry’s astronomical growth. cannabis have pushed individual states to Watershed legalization victories in recognize marijuana as a legitimate recent years, most notably during the treatment or pain reliever for a range of 2016 election cycle, expanded the retail illnesses, including the plant’s non- sale of recreational products to 10 US psychoactive component, CBD, which has states. Consequently, industry revenue proved to be effective in preventing grand is forecast to grow an annualized 25.0% mal seizures. New medical research and to $10.3 billion over the five years to changing public opinion have advanced 2018, including anticipated growth of these efforts and have contributed to the 26.5% in 2018.
Medical marijuana at Medical marijuana has led the industry’s Demographic factors have played a the forefront growth for much of the last decade. significant role in driving demand for According to the US Government medical marijuana. Currently, the median Accountability Office, under state medical age of medical marijuana patients is 41.5 marijuana laws, symptoms and years, and BDS Analytics estimates that conditions that may be treated by nearly 1.9 million Americans are regular cannabis include Alzheimer’s disease, users of medical marijuana. anorexia, HIV/AIDS, glaucoma, cancer, Following the 2018 midterm elections, arthritis, epilepsy, nausea, pain, cachexia, 33 states have legalized medical Crohn’s disease, migraines, multiple marijuana. In general, the use of medical sclerosis and spasticity. Although for marijuana is increasing, particularly many decades all domestic marijuana among people with chronic illnesses and transactions were conducted under pain. At the same time, significant implicit or explicit prohibition, many concerns persist regarding the legitimacy states have recently moved to legalize and efficiency of medical marijuana marijuana for medical purposes. treatment. Organizations such as the
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Industry Performance
Medical marijuana at National Cannabis Industry Association prosecuting individuals and businesses the forefront have worked toward increasing the complying with state laws. In 2014, continued legitimacy of medical marijuana use President Obama signed into law historic through the establishment of industry provisions for medical marijuana, standards. These efforts have helped prohibiting the Department of Justice spur demand. from using federal funding to limit states Proponents of medical marijuana have from implementing their own laws that pushed individual states to recognize authorize the use, distribution, marijuana as a treatment for a range of possession, or cultivation of medical diseases. Medical marijuana laws have marijuana. In addition, in August 2016, been adopted by public referendum, as the federal government loosened the well as by legislation. In late 2009, the regulations concerning studying the US Justice Department instructed federal medical applications of cannabinoids. prosecutors in states with medical These efforts, in turn, have aided marijuana laws not to prioritize operators and facilitated industry growth.
Recreational The legal sale of recreational marijuana of the voter-approved law legalizing marijuana facilitates provided operators with unprecedented recreational cannabis consumption, boom opportunities for expansion, and has recreational marijuana sales began in even disrupted medical marijuana July 2014. Since then, the number of markets in states such as Colorado. states that have legalized recreational Recreational marijuana users typically cannabis has risen to 10. California, smoke to obtain a high which affects the Colorado and Washington account for part of the brain that influences pleasure, 27.0%, 20.0% and 11.0% of the legal memory, sensory and time perception, market, respectively, according to BDS concentration and coordination. At the Analytics. To meet consumer demand for outset of 2014, legal recreational marijuana, some states issued licenses marijuana use became a reality in for the cultivation of recreational Colorado, stimulating demand for marijuana. This development contributed industry products as hundreds of retail to the industry’s boom in 2014, when stores opened throughout the year. While revenue rose an astounding 52.0%, Washington lagged in its implementation according to IBISWorld estimates.
Changing attitudes The development of edible cannabis and rising incomes products (edibles) has also spurred Marijuana’s unique nature spur new products greater consumer acceptance of medical makes it subject to changes and recreational marijuana. Edibles can take the form of food, extracts and oils, in disposable income ranging from marijuana-infused mints and candies to baked goods and The nature of medical marijuana beverages, among many other products. treatment is rather unconventional. Edibles provide a more-convenient and Although expenditure on products familiar product to consumers, thereby essential for health is less susceptible to stimulating consumer demand for fluctuations in consumer spending, marijuana products. medical marijuana’s unique nature
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Industry Performance
Changing attitudes makes it subject to changes in disposable declining unemployment. Greater and rising incomes income. The same is largely true for consumer acceptance of the industry’s spur new products recreational marijuana. Since consumers products and strong demand growth has pay for recreational marijuana out of caused more companies to enter this continued pocket, growth in per capita disposable industry. Over the five years to 2018, the income boosts demand for industry number of industry enterprises is products. Per capita disposable income is anticipated to increase an annualized expected to grow an annualized 2.3% 23.4% to 10,195 while employment is also over the five years to 2018, thanks to expected to have increased an annualized favorable macroeconomic conditions and 25.9% to 116,498 workers.
Regulation weighs on Regulation from all levels of the industry government presents the greatest Regulation from all levels challenge to medical and recreational of government presents the marijuana dispensaries, especially because state and federal governments greatest challenge often have conflicting regulations. The Controlled Substances Act (CSA), deductions for business expenses and passed as a part of the Comprehensive have difficulty securing standard Drug Abuse Prevention and Control Act banking and financial services. of 1970, classifies marijuana as a The continued success observed in Schedule I controlled substance. states that have legalized recreational Schedule I substances are deemed by cannabis provides incentive for other the federal government to have a high states to legalize for-profit marijuana. In potential for abuse; furthermore, 2016, taxes from the retail sale of prescriptions of them are illegal. marijuana totaled more than $500.0 Despite the adoption of some state laws million in Colorado, Washington and during the past two decades permitting Oregon alone, according to BDS the consumption and distribution of Analytics. Therefore, continued success marijuana for medical and recreational in these states may provide an incentive use, the possession and distribution of for other states to legalize for-profit marijuana remains illegal under federal marijuana distribution. The legalization law. Consequently, many businesses of for-profit recreational marijuana operate with the risk of being shut down across numerous states has already had a or experiencing a property seizure positive effect on industry profit margins, without notice. In addition, industry which are projected to rise to 21.4% of operators cannot make standard tax revenue in 2018.
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Industry Performance
The outlook for the Medical and rate of 18.6% to $24.1 billion over the Industry Recreational Marijuana Stores industry five years to 2023. Outlook is largely positive, with the industry In particular, an increase in per capita expected to achieve new highs over the disposable income is projected to drive five years to 2023. Although the demand for industry products. Although industry will continue to benefit from medicinal products are essential for increasingly favorable attitudes toward health and therefore less susceptible to medical marijuana treatments, building fluctuations in consumer expenditure, on the trends of the past five years, the the unconventional nature of the industry will be steered by the growth of industry’s products still make them legal recreational marijuana sales, subject to changes in disposable income. which have already disrupted medical Nevertheless, because consumers pay for sales in legalized states. Sales are industry products out-of-pocket, growth expected to continue to explode in the in disposable income will help boost states that legalized recreational demand. Additionally, medical and marijuana. This includes the industry’s recreational marijuana stores will likely largest market, California, which leads further expand their offerings of edible the country in cannabis expenditure. As marijuana products, which will likely be a a result, IBISWorld forecasts that major growth segment for industry revenue will skyrocket at an annualized operators moving forward.
Recreational The Medical and Recreational Marijuana The industry will be steered marijuana fuels Stores industry is subject to heavy industry expansion regulation from all levels of government, by the growth of legal with state and federal governments at times having conflicting policies. The recreational marijuana Department of Justice, through the Drug sales Enforcement Administration, raids and prosecutes marijuana dispensaries and million and $1.0 billion, respectively, growers in the United States. However, in from the legal sale of recreational 2014, President Obama signed into law marijuana. In addition to strong growth historic provisions for medical in recreational marijuana sales in marijuana, prohibiting the Department Colorado and Washington, the industry is of Justice from using federal funding to expected to benefit from the limit states from implementing their own commencement of recreational laws that authorize the use, distribution, marijuana sales in a rising number of possession or cultivation of medical states. Similar to the previous five years, marijuana. Although the industry largely rising demand will cause more flourished under the Obama companies to enter the industry. Over the administration, its future remains hazy five years to 2023, the number of under the current administration. enterprises is projected to grow at an Nevertheless, the liberalization of annualized rate of 17.9% to 23,265, while regulation regarding the sale of industry employment is forecast to recreational marijuana is expected to fuel increase at an annualized rate of 18.8% to the industry’s growth. In 2014 and 2015, 275,169 workers. operators in Colorado and Washington The overwhelming successes of states generated estimated revenue of $350.0 such as Colorado, Washington and
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Industry Performance
Recreational Oregon will potentially spur more states have also legalized recreational marijuana fuels to legalize recreational marijuana. From marijuana (Alaska, California, Colorado, industry expansion 2014 to 2016, combined retail sales tax in Maine, Massachusetts, Michigan, legal cannabis markets in Colorado, Nevada, Oregon, Vermont and continued Oregon and Washington alone totaled Washington). In the 2018 election cycle, over $771.0 million for recreation, four states had marijuana measures on according to BDS Analytics. As a result, the ballot. These regulatory changes are many more states are expected to follow expected to increase demand for suit, legalizing recreational cannabis to recreational products, benefiting industry generate tax revenue. Thanks to the operators. With sales of recreational legislative victories of the 2016 and 2018 marijuana expected to comprise a larger midterm elections, as well as Vermont’s share of industry revenue over the five 2017 special election, medical marijuana years to 2023, industry-wide profitability is now legal in 33 states, while 10 states is projected to remain high.
Medical cannabis A growing number of doctors and The rising prevalence of demand grows with patients will turn to the unconventional aging population treatment offered by medical marijuana chronic illness will bolster for conditions such as arthritis, migraines and Alzheimer’s disease. In particular, demand for medical the rising number of US adults aged 50 marijuana and older is expected to bolster demand for medical marijuana products. Over the rise in line with the senior population. five years to 2023, IBISWorld anticipates Chronic health ailments such as obesity that this demographic will grow at an and diabetes will likely support annualized rate of 1.3% to 123.9 million. healthcare use, as these patients will By comparison, the total US population is increasingly require checkups. The rising forecast to grow at an annualized rate of prevalence of these chronic diseases is 0.7% during the same period. This trend also expected to boost demand for will lead to a growing number of people medical marijuana. Although doctors with health conditions that can be treated cannot legally prescribe marijuana to with marijuana (e.g. cancer and patients because it remains a Schedule I glaucoma), which increase in incidence substance, they can authorize a patient with age. Additionally, given that the to visit a company or a cooperative that median age of medical marijuana provides medical marijuana. Therefore, patients is currently 41.5, demand will while medical marijuana treatment is likely increase as patients in their 40s not covered by insurance, as the number enter their 50s. of physician visits increases, demand for Moreover, the number of physician medical marijuana is anticipated to visits in the United States is expected to grow accordingly.
Conventional Growing acceptance of medical and value-added, high-quality marijuana healthcare threatens recreational marijuana will produce products will also drive industry growth. the industry numerous business opportunities over At the same time, medical marijuana the coming years. Development of dispensaries endure significant risks and
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Industry Performance
Conventional hurdles. Over the next five years, pose a threat to the industry due to the healthcare threatens conventional healthcare providers will substantial skepticism regarding the the industry continue challenging alternative care legitimacy and effectiveness of presented by medical marijuana marijuana-based medications. continued products. Despite growing acceptance of Consequently, medical marijuana marijuana-based treatment, traditional growers will likely continue to suffer from healthcare providers will continue to inadequate capital investments.
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Industry Performance Life Cycle Stage Industry value added is growing much faster than GDP Consumer acceptance of industry products is rapidly expanding The legalization of recreational marijuana in some states has spurred new demand New products are consistently introduced
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Industry Performance
Industry Life Cycle The Medical and Recreational Marijuana significant room for industry growth in Stores industry is in the growth stage of the years ahead. its life cycle. Over the 10 years to 2023, Organizations such as the National This industry its industry value-added, which measures Cannabis Industry Association have is Growing the industry’s contribution to the worked toward increasing the legitimacy economy, is expected to grow at an of medical marijuana use by creating annualized rate of 23.9%. This rate is industry standards, helping spur markedly faster than the 2.2% projected demand. The aging US population will growth for US GDP, indicating the also promote demand for products industry will make up a larger share of offered by this industry. Moreover, the the economy in the years ahead. The industry’s growth has been spurred by industry is growing due to widening the growing legalization of recreational acceptance of its safety and legitimacy, marijuana sales. Beginning in 2014, which is causing more people to use its recreational marijuana stores began products. Although an increasing opening in Colorado and Washington, percentage of Americans have been using making them the fastest-growing markets medical marijuana products to alleviate in the United States. Currently, 33 states pain and to treat other health conditions permit medical marijuana in some form. over the past five years, a large share of Moreover, the legalization of recreational the population still does not use them. marijuana in nine states is expected to This factor suggests that there is provide growth opportunities.
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Supply Chain KEY BUYING INDUSTRIES 99 Consumers in the US Consumers are members of medical marijuana collectives and the primary market for medical and recreational marijuana.
KEY SELLING INDUSTRIES 22112 Electric Power Transmission in the US This industry transmits and distributes electricity from power generators to medical and recreational marijuana stores. 33341 Heating & Air Conditioning Equipment Manufacturing in the US This industry provides temperature control equipment, which is important for the storage of cannabis. 33511 Lighting & Bulb Manufacturing in the US Specialized lighting may be needed for storage. 33522 Major Household Appliance Manufacturing in the US Refrigeration equipment is used in dispensaries.
Products and Services Products and services segmentation (2018) 2% All other products 5% 13% Pre-rolled joints Edible cannabis products
57% 23% Flower products Concentrates
Total $10.3bn SOURCE: WWW.IBISWORLD.COM
Edible cannabis products estimated 13.0% of total retail sales, but Edible marijuana products (edibles), or are expected to consume a larger share of marijuana-infused products, are goods total retail sales over the next five years. that contain cannabis that can be consumed orally. Edibles can take the Flower products form of food, extracts and oils, and range IBISWorld estimates that smokable from marijuana-infused mints and marijuana products (flower or bud candies to baked goods and beverages, products) will comprise 57.0% of along with many other products. Over the industry revenue, though flower sales past five years, edible marijuana products have slowed relative to other have grown rapidly as a share of industry consumables. Certain indica products can revenue. Edibles account for an be used to treat anxiety, chronic pain,
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Products & Markets
Products and Services insomnia and muscle spasms. In general, compressing cannabis plant resin; continued indica provides more physical relaxation butane hash oil (BHO), or a potent than the sativa strain, and many concentrate consumed for dabbing and consumers use indica as a sleep aid. other vaporization methods; CO2 oil, Common indica strains include White used in portable vaporizer pens; Rick Berry, Blueberry and Northern Lights. Simpson Oil (RSO) or Phoenix Tears, Sativa cannabis products are used as a which is orally administered or applied stimulant to improve appetite, relieve directly to the skin; and tinctures, a depression, migraines pain and nausea. liquid form of concentrate. Concentrates Sativa is also more popular for patients represent a rapidly growing product during the day or at parties because it can segment, and is estimated to account for increase alertness. Popular strains 23.0% of revenue. include Haze and Trainwreck. Pre-rolled cigarettes Concentrates In 2018, pre-rolled marijuana cigarettes Cannabis concentrates includes any (“joints”) accounted for 5.0% of revenue. product created by an extraction Pre-rolled joints are especially popular process. Concentrates include: kief, a with new marijuana smokers and are dry sift or pollen of the cannabis flower; expected to increase as a share of revenue hash, a concentrate made from over the coming years.
Demand Government regulation President Obama’s December 2014 Determinants Demand for industry products is signing of an omnibus spending bill primarily determined by government included a directive preventing the regulation. The federal government Department of Justice from using federal regulates cannabis as a Schedule I funding to impede states from controlled substance and considers all implementing their own laws authorizing marijuana cultivation, sale and the use, distribution, possession, or consumption illegal. In states that lack cultivation of medical marijuana. The laws legalizing the medical or next five years are likely to contain the recreational use of cannabis, marijuana legalization of medical and recreational use is explicitly prohibited. marijuana in a score of other states. However, a total of 33 states have some level of legalization of medical marijuana. Income and demographics Following legislative victories between Household income is a primary 2016 and 2018, a total of 10 states have determinant of consumers’ ability to legalized recreational and medical acquire cannabis products. The marijuana (Alaska, California, Colorado, legalization of medical marijuana, as well Maine, Massachusetts, Michigan, Nevada, as recreational marijuana in some states, Oregon, Vermont and Washington). has created a market for high-quality These regulatory changes are expected to cannabis, which can be expensive. increase demand for recreational Furthermore, because medical marijuana products, benefiting industry operators. is typically not covered under health Nonetheless, federal policy continues insurance plans, demand is largely to limit consumer demand in states dependent on patients’ income levels. where medical marijuana is legal because Population demographics, particularly of pervasive fears of violating federal law. age, also dictate demand trends for
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Products & Markets
Demand medical marijuana. Although adults aged medical marijuana patient is 41.5 years of Determinants 50 and older are more likely to develop age. Changing societal norms have made continued health conditions such as cancer, marijuana use much more acceptable Alzheimer’s, chronic pain, glaucoma and today. According to a poll conducted by other diseases that can be treated with Gallup, an estimated 80.0% of Americans medical marijuana, obtaining a medical approve of legal access to medical marijuana card is not difficult in many marijuana, while 60.0% approve of full states. As a result, the average age of a adult use legalization.
Major Markets Major market segmentation (2018) 1.1% Medical marijuana 5.6% patients Medical marijuana with patients with seizures 1.7% 7.0% severe nausea Medical marijuana patients with other symptoms Medical marijuana patients with muscle spasms 1.8% Medical marijuana patients with cancer 52.2% Medical marijuana 30.6% patients with severe pain Recreational marijuana customers
Total $10.3bn SOURCE: WWW.IBISWORLD.COM
The market for medical and recreational of 31-40; 23.0% of customers are marijuana is heavily dependent on state between the ages of 41-50; and 27.0% of regulation of cannabis. Medical customers are more than 50 years old. marijuana is used to treat many ailments, The customer market is heavily skewed but it is most commonly used to relieve toward males, which account for 66.0% pain. By contrast, the sale of recreational of all medical marijuana sales, while cannabis is currently limited to the states females account for the remaining 44.0% that have passed legalization laws for of industry revenue. adult full use. Although the sale of recreational marijuana only began truly Medical marijuana customers ramping up in 2014, it will grow to Medical marijuana is expected to account command nearly a third of the customer for 69.4% of total industry revenue. market for legal marijuana by 2018. Severe pain is the most commonly cited The industry’s customer markets can reason for medical marijuana use. Severe be segmented across a variety of factors, pain can result from a variety of chronic including sex, age and ailments for which diseases and injuries. Medical marijuana medical marijuana is prescribed. The can help alleviate severe pain and help median age of a medical marijuana patients relax and rest. On average, customer is 41.5 years of age. 24.0% of 52.2% of medical marijuana users used customers are between the ages of 18-30; medical marijuana because of severe 26.0% of customers are between the ages pain. Over the past five years, this market
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Products & Markets
Major Markets has remained relatively stable, as many demand from other patients has continued health problems can cause severe pain. remained stable, as the incidence of these Muscle spasms can be caused by diseases has not significantly changed. multiple sclerosis, Lou Gehrig’s disease, cerebral palsy, quadriplegia, cranial and Recreational marijuana customers spinal nerve injuries and Tourette’s Recreational marijuana accounts for syndrome, among others. Since medical 30.6% of total industry revenue in terms marijuana is purported to help patients of marijuana sales. Recreational relax and sleep better, it is estimated that marijuana users typically smoke in 7.0% of industry customers used medical hand-rolled joints or in pipes or water marijuana because of muscle spasms. pipes (“bongs”). They also smoke The wide variety of diseases that cause marijuana in “blunts”, which are cigars muscle spasms has kept demand stable that have been emptied of tobacco and from this market over the past five years. refilled with a mixture of marijuana and A variety of diseases can cause nausea tobacco. Recreational marijuana users and migraines, including digestive typically smoke to obtain a high, which disorders. Medical marijuana can provide affects the part of the brain that influences relief and muscle relaxation, which helps pleasure, memory, thinking, alleviate nausea. IBISWorld estimates concentration, sensory and time that 5.6% of industry customers used perception and coordinated movement. medical marijuana because of severe Currently, legal recreational marijuana use nausea. This market has not significantly is limited to the states of Alaska, California, changed over the past five years. All other Colorado, Maine, Massachusetts, Oregon, conditions account for a combined 1.7% Vermont and Washington. However, of revenue. recreational users’ share of the market is Medical marijuana is used to help set to expand rapidly over the next five provide pain relief in a variety of more years as additional states permit the specific diseases and conditions, such as purchase of cannabis for recreational use patients suffering from cancer and and pass legislation authorizing its sale. seizures. Cancer treatment can be Moreover, the expansion of recreational painful, and medical marijuana can help marijuana to the industry’s largest market, patients relax and rest to accelerate the California, will likely increase this segment recovery process. Over the past five years, of revenue.
International Trade Medical and Recreational Marijuana Cannabis is only legal and regulated by Stores industry does not participate in participating states and cannot be international trade. Medical marijuana, transported across state lines at a as well as recreational marijuana in the wholesale level. Some states, however, case of Colorado and Washington, cannot such as Arizona, permit patients from be imported or exported because it is a other states to bring medical marijuana controlled substance at the federal level. across state lines.
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Products & Markets
Business Locations 2018
est AK 1.2 e a d
ME reat M d 0.1 akes t a t c 1 2 NY 3 WA ND 0.2 4 MT 0.0 5 12.5 0.3 MN 0.1 WI ock 0.0 MI PA 6 SDP a s 1.3 0.0 OR 0.0 7 0.8 Mou ta s ID IA OH 9 8 0.0 WY 0.0 0.0 0.0 IN VA NE IL 0.0 WV 0.0 0.7 0.0 0.0 KY est NV 0.0 1.1 NC UT MO 0.0 0.0 CO KS 0.0 35.3 0.0 TN 0.0 SC CA 0.0 42.1 OK AR out east 0.0 0.0 GA AL 0.0 AZ MS 0.1 0.0 NM 0.0 0.1 out est LA TX 0.0 FL 0.0 0.3
est Establishments (%) HI Less than 3% 0.1 Additional States (as marked on map) 3% to less than 10% 1 VT 2 NH 3 MA 4 RI 10% to less than 20% 0.1 0.0 2.8 0.0 20% or more 5 CT 6 NJ 7 DE 8 MD 9 DC 0.1 0.1 0.0 0.1 0.1
SOURCE: WWW.IBISWORLD.COM
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Products & Markets
The vast majority of industry Business Locations Distribution of establishments vs. population establishments are concentrated in the West and Rocky Mountains, where there 60 has been extensive marijuana legislation over the past decade. Together, 50
California, California and Washington 40 alone are home to an estimated 89.8% of
industry establishments and the majority % 30 of industry revenue. California, Colorado 20 and Washington account for 27.0%, 20.0% and 11.0% of the legal market, 10 respectively, according to BDS Analytics. 0 The Medical and Recreational West Marijuana Stores industry is highly Plains Southeast concentrated in the West and Rocky Southwest Great Lakes Mid-Atlantic Mountains, where there has been New England
extensive marijuana legislation over the Establishments Rocky Mountains past two decades. California, which was Population the first state to enact medical marijuana SOURCE: WWW.IBISWORLD.COM legislation in 1996, accounts for a large number of medical dispensaries. In While the state only permits nonprofit addition, the location of medical collectives to provide for its members, its marijuana stores is also tied to high population and long history of population; California is the most legalization are ultimately responsible for populous state in the United States. the high concentration of establishments.
Provided to: Autobahn Consultants (2134210691) | 27 October 2019 WWW.IBISWORLD.COM Medical & Recreational Marijuana Stores in the US December 2018 20 Competitive Landscape Market Share Concentration | Key Success Factors | Cost Structure Benchmarks Basis of Competition | Barriers to Entry | Industry Globalization
Market Share The Medical and Recreational Marijuana IBISWorld anticipates that industry Concentration Stores industry has a low level of market concentration will remain low over the share concentration. IBISWorld next five years, although this outlook estimates that in 2018, the four largest would materially change should the Level operators are expected to account for less federal government reevaluate its Concentration in than 20.0% of industry revenue. By law, classification of cannabis as a Schedule this industry is Low in the majority of states where medical I substance. Nonetheless, the marijuana is legal, industry operators legalization of marijuana for must be a part of nonprofit marijuana recreational use in US states is expected collectives (also known as dispensaries) to increase operators’ opportunities to to sell marijuana. expand on a for-profit basis.
Key Success Factors Ability to attract community support Fast adjustments to changing regulations Medical and recreational marijuana Regulations are constantly changing. stores that lack community support may Growers must comply with the latest IBISWorld identifies attract federal raids due to complaints legislation or endure fines and arrest, and 250 Key Success from neighbors. they must be able to adjust to changing Factors for a regulation quickly and smoothly. business. The most Understanding government important for this policies and their implications Marketing of differentiated products Marijuana legislation is complicated at all Dispensaries must properly promote industry are: levels of the government. Successful their products given the differentiated operators must be able to navigate the nature of edible cannabis products. regulatory landscape at both the state Promotional efforts are essential to and federal level. attracting new customers.
Cost Structure Profit storage equipment, medical marijuana Benchmarks Profit, measured as earnings before accessories and other products that do not interest and taxes, varies greatly across contain marijuana. In particular, medical the industry because of the myriad laws marijuana stores need to purchase governing medical and recreational specialty lighting, airtight containers and marijuana from state to state. More cases, air conditioning and other recently, industry-wide margins have equipment needed to store marijuana. grown on account of the legalization of Additionally, stores retail pipes, recreational marijuana across various US vaporizers, lighters and other products states, as well as the expanding medical used to consume medical marijuana. marijuana market in 31 states. Industry Lastly, industry operators may purchase profit margins are expected to total 21.4% and retail edible products that include in 2018. medical and/or recreational marijuana. Over the past five years, purchase costs Purchases have risen with the legalization of Similar to the retail sector, purchases recreational marijuana across various make up a significant expense for medical states, which have expanded into the and recreational marijuana stores. second- and third-largest industry Purchases are primarily composed of markets, respectively. Since stores that
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Competitive Landscape
Cost Structure retail recreational marijuana typically small local retail businesses that depend Benchmarks purchase products from state-licensed on employees for services, resulting in continued growers, the slow issuance of these high labor costs as a share of revenue. licenses (especially in Washington State) Wages as a share of revenue have constrained the supply of marijuana, declined over the past five years, as the especially in 2014. As a result of the industry scaled up and medical and supply shortage, among others in states recreational marijuana sales boomed. with medical marijuana, purchase costs This has been especially evident in have risen over the past five years. In Colorado, which has an extensive 2018, purchases are anticipated to landscape of for-profit medical and account for 43.1% of industry revenue. recreational marijuana stores.
Wages Other costs Wages are estimated to represent 18.0% Depreciation accounts for 3.2% of of industry revenue in 2018. Although the revenue in 2018, while rent and utilities industry is largely donation based, represent 4.6% of industry revenue. meaning stores do not get paid for the These costs are associated with marijuana they provide, marijuana stores investments in storefronts, warehouses are permitted to receive donations to and other capital expenses. Some medical cover labor and material costs. and recreational marijuana stores may Consequently, industry operators use purchase and develop on-site edible labor heavily for day-to-day operations. product manufacturing capabilities, Additionally, most marijuana stores are which contribute to higher depreciation
Sector vs. Industry Costs
Average Costs of all Industries in Industry Costs sector (2018) (2018) 100 3.2 n P r o fi t 8.9 n Wages 21.4 n Purchases 80 n Depreciation n Marketing 18.0 n Rent & Utilities n Other 60 67.7
40 43.1 Percentage of revenue Percentage
20 0.9 1.7 3.2 4.4 1.9 4.6 13.1 7.8 0 SOURCE: WWW.IBISWORLD.COM
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Competitive Landscape
Cost Structure costs. Other costs include liability are still hesitant to carry marijuana ads; Benchmarks insurance and legal costs. Marketing these costs are estimated to account for continued costs are low because major advertisers 1.9% of total revenue in 2018.
Basis of Competition The legalization of recreational cannabis Although smokable indica cannabis in eight states, coupled with the high products and smokable sativa cannabis potential for differentiation in the edible products lack significant differentiation, Level & Trend cannabis products segment, creates there is a great degree of differentiation Competition in opportunities for larger operators to in the edible cannabis products segment. this industry is come into existence. In the absence of Edibles can take the form of food, High and the trend legislation at the federal level governing extracts and oils, and range from is Increasing the sale of medical and recreational marijuana-infused mints, candies, baked marijuana, the nature of competition is goods and beverages, among many other heavily dependent on the nature of state products. In fact, a whole field of law. As a result, operators experience cannabis-infused culinary cooking has substantially different conditions from emerged in recent years with the state to state. legalization of medical marijuana. It is important that industry operators have Internal competition access to the newest products and are Industry competition is largely waged on able to source popular items at products’ price and quality. Marijuana can competitive prices. have diverse properties and qualities, and only dispensaries that can consistently External completion provide high-quality marijuana will attract Industry operators experience demand from consumers. Additionally, competition from pharmaceutical dispensaries must be able to provide companies that manufacture drugs to competitive prices. Customers can treat chronic pain, cancer, HIV and other purchase marijuana from a wide range of illnesses that medical marijuana helps dispensaries, marking it easy to only relieve. Medical marijuana users acquire products from the lowest-priced typically only turn to marijuana after dispensaries. As a result, it is important other treatment has failed, though, that dispensaries use promotional efforts resulting in limited external competition to attract new customers. from drug manufacturers.
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Competitive Landscape
Barriers to Entry Federal regulation Prospective medical marijuana store Barriers to Entry checklist operators, and recreation marijuana store Competition High Level & Trend operators must navigate a variety of legal Concentration Low Barriers to Entry issues before beginning operation. The Life Cycle Stage Growth in this industry classification of marijuana as a Schedule I Capital Intensity Medium are High and controlled substance and the possibility Technology Change High Decreasing of federal prosecution poses a significant Regulation and Policy Heavy barrier to entry, as the Drug Enforcement Industry Assistance High
Administration has the requisite power to close dispensaries and seize their SOURCE: WWW.IBISWORLD.COM cannabis products. Recent favorable policy stances from the federal regulation varies by state, operators must government on this matter caused a obtain the required licenses and permits. large number of operators to enter the industry during the current period. The Capital requirements omnibus spending bill signed by Although marijuana stores incur limited President Obama in December 2014 capital costs because of the low-tech included historic provisions for medical nature of the industry, operators are marijuana. The bill included a rider to impeded by their relative inability to defund Department of Justice obtain financing from traditional sources. operations against medical marijuana, To open a dispensary, operators must prohibiting federal agencies from using acquire a location, hire employees, funding to “prevent [medical marijuana purchase inventory and buy advertising, states] from implementing their own among other things. However, because State laws that authorize the use, the cultivation, distribution and use of distribution, possession, or cultivation cannabis remain illegal at the federal of medical marijuana.” level, traditional financial institutions have been hesitant to provide financing State regulation to new entrants. As a result, new State regulations have mixed effects. In operators have been forced to rely on general, the passage of new legislation personal savings and loans from family has largely benefited industry operators members and friends to enter the by legalizing medical marijuana. During industry, limiting entry. However, in the current five-year period, barriers to 2014, the Obama administration entry have decreased as 33 states have effectively gave the green light to passed legislation legalizing some level of financial institutions to provide access to medical marijuana sales, with 10 states capital for industry operators in states have legalized recreational cannabis. where medical and recreational cannabis While states provide a legal avenue for are legal. Consequently, obtaining access operators to open dispensaries, to capital is anticipated to become regulations are extensive and costly for somewhat easier for potential operators prospective operators. Although over the next five years.
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Competitive Landscape
Industry Legal cannabis, whether intended for Canada has legalized recreational Globalization medical or recreation use, is not traded marijuana. Other countries in the South internationally, resulting in a very low America have also legalized the sale of Level & Trend level of globalization. Outside of the US, recreational marijuana. Globalization in this industry is Low and the trend is Steady
Provided to: Autobahn Consultants (2134210691) | 27 October 2019 WWW.IBISWORLD.COM Medical & Recreational Marijuana Stores in the US December 2018 25 Major Companies There are no Major Players in this industry | Other Companies
Other Companies The Medical and Recreational Marijuana one operator from effectively operating Stores industry does not have any major across states. players. The majority of industry However, the legalization of marijuana operators are independent, self- for recreational use in various new locales employed medical and/or recreational has the potential to alter the industry marijuana stores, resulting in very low landscape moving forward, bringing a flood market share concentration. Since the of private equity and the potential for chain cultivation, distribution and sale of enterprises to become more common. Still, cannabis remains illegal at the federal the ability of any company to gain a level, establishments in states that substantial share of the industry’s market permit medical marijuana are governed share will ultimately hinge upon the legal by a patchwork of laws, impeding any status of marijuana at the federal level.
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Capital Intensity The Medical and Recreational Marijuana Stores industry has a medium level of Capital Intensity capital intensity. IBISWorld estimates Capital units per labor unit Level that for every $1.00 spent on labor in 0.5 The level of capital 2018, industry operators allocated $0.18 intensity is Medium toward the purchase of capital. This 0.4 figure has remained relatively 0.3 unchanged over the five years to 2018, a trend that is expected to hold moving 0.2 forward. By comparison, for every $1.00 0.1 spent on labor in 2013, industry 0.0 operators allocated $0.17 toward the Economy Retail Trade Medical & purchase of capital. Recreational Marijuana Stores The provision of industry services is Dotted line shows a high level of capital intensity relatively low-tech. Since industry SOURCE: WWW.IBISWORLD.COM operators are involved in the retail business, they must invest in typical cannabis. More specific to industry equipment such as computers and services, operators must invest in software, as well as registers, to sell temperature and humidity control
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Operating Conditions
Capital Intensity systems to ensure that they are able to alarm systems. Since marijuana continued maintain the quality of their stock. dispensaries have been plagued by Perhaps most importantly, industry robberies, it is necessary that industry operators must invest heavily in security operators invest in equipment to ensure equipment, such as video cameras and the safety of their products.
Technology and While the Medical and Recreational available data provided by the University Systems Marijuana Stores industry relies only of Mississippi’s Potency Monitoring minimally on capital equipment, Project, marijuana that was analyzed in Level cannabis products have changed 2007 had a THC level of 9.6%, the dramatically in recent decades. Since the highest level since analysts began The level of legalization of medicinal cannabis, the tracking this data in 1976. technology industry’s fast-growing edible cannabis change is High products segment has experienced a Cannabis products significant amount of innovation. The legalization of medical marijuana across numerous states, as well as the Cannabis quality legalization of recreational marijuana in Over the past 30 years, cannabis quality Colorado and Washington State, has also has improved as a result of better spurred changes in the kind of cannabis cultivation practices. Improvement in products available for sale, fueling quality is measured by the level of demand for industry goods in turn. tetrahydrocannabinol (THC), which is Edible cannabis products, the industry’s the principal psychoactive constituent in fastest growing segment, comprises cannabis plants. Improved cultivation marijuana-infused mints, candies, baked techniques range from the use of more goods and beverages, among numerous nutrient rich soils to more efficient other products. With countless new drying techniques, which have enabled edible marijuana products coming onto growers to harvest both larger and the market, the nature of industry stronger yields. According to the latest products is changing rapidly.
Revenue Volatility The Medical and Recreational Marijuana driver of revenue fluctuations. The Stores industry has a high level of legalization of medical marijuana use in revenue volatility. Industry revenue has some form across numerous states has Level continually risen and is expected to grow caused industry revenue to jump in The level of consecutively over the five years to 2018. individual years. In 2014, for example, volatility is High IBISWorld expects that in 2018 alone, revenue rose an astronomical 52.0% on industry revenue will grow 26.5%. account of the legalization of cannabis Demand for industry products is rapidly sales for recreational use in Colorado and expanding due to the growing acceptance Washington, in addition to the wider use of medical marijuana in treating or of medical marijuana across other states. alleviating symptoms in a variety of IBISWorld expects that revenue volatility medical conditions, including cancer, will increase over the five years to 2023 epilepsy and the Alzheimer’s Disease. as other states across the United States However, changes in the regulatory legalize the sale of medical and landscape serve as the most important recreational marijuana in some form.
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Operating Conditions
Revenue Volatility continued
Regulation and Policy The Medical and Recreational Marijuana Administration (DEA), raids and Stores industry is subject to very heavy prosecutes marijuana dispensaries and regulation from governments at all levels. growers in the United States. Over the past Level & Trend However, there is a great degree of five years, regulation trends were initially The level of regulatory divergence at the state and promising for industry operators. During Regulation is Heavy federal levels. his 2008 presidential campaign, then- and the trend Senator Obama promised to put an end to is Increasing Federal level the practice of raiding dispensaries by the At the federal level, cannabis is classified federal government. In 2009, Attorney as a Schedule I controlled substance under General Eric Holder announced that the the Controlled Substances Act (CSA), DOJ will comply with the President’s passed as part of the Comprehensive Drug statements during the campaign. The Abuse Prevention and Control Act of 1970. “Ogden memo,” released by Deputy As defined by the CSA, Schedule I Attorney General David Ogden later that substances are those deemed to have a year, reiterated this position by instructing high potential for abuse, no currently federal law enforcement organizations to accepted medical use in treatment and refrain from using federal resources to lack safe usage. Under federal law, prosecute cannabis dispensaries and Schedule I substances may not be growers that were in compliance with manufactured, distributed or dispensed. existing state laws providing for the The scheduling of drugs is medical use of marijuana. administered by the Department of However, beginning in 2011, the DEA Health and Human Services (DHHS). and the DOJ once again ramped up their The DHHS operates the National prosecution of cannabis growers and Institute on Drug Abuse (NIDA), which dispensaries. This introduced greater conducts research on the efficacy of uncertainty for industry operators, marijuana for medical uses. The DHHS resulting in higher operating costs from has the final say on all drug scheduling. legal fees and risk mitigation. In response The Department of Justice (DOJ), to changing public sentiment, however, through the Drug Enforcement the US House of Representatives voted in
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Operating Conditions
Regulation and Policy 2014 to restrict the DEA from using oldest and one of the most extensive continued funds to target medical marijuana regulatory frameworks governing medical growers and dispensaries. Although this marijuana. In 1996, the passage of the amendment to the DEA appropriations Compassionate Use Act (Proposition 215) bill would need to be passed by the legalized the use of medical marijuana Senate to become binding, its and prohibited physicians from being confirmation would materially alter the punished for recommending medical outlook for industry operators. The marijuana to patients. California Senate omnibus spending bill signed by Bill 420, passed in 2003, further clarified President Obama in December 2014 the state’s position on medical marijuana, included a rider to defund DOJ legalizing organization of nonprofit operations against medical marijuana, marijuana collectives where members prohibiting federal agencies from using can cultivate and provide marijuana to funding to “prevent [medical marijuana each other. states] from implementing their own In addition to California, the state of State laws that authorize the use, Colorado has some of the most extensive distribution, possession, or cultivation of medical marijuana laws. The use of medical marijuana.” medical marijuana has been legal since the passage of Amendment 20 in 2000. State regulation In 2012, the state further loosened Currently, 31 states have some regulation marijuana restrictions by passing that permitted the use of medical Amendment 64, which legalized marijuana. Nine states (Alaska, marijuana for recreational use. With the California, Colorado, Maine, growth of the edible cannabis products Massachusetts, Nevada, Oregon, segment, the state has moved to enact Vermont and Washington) have new regulations. Several high-profile permitted the legal sale of cannabis for incidents involving edible cannabis recreational use. However, because products have spurred new rules, signed federal law supersedes state law, the into law in May 2014, concerning the cultivation, sale and use of medical or packaging of edible marijuana products, recreational marijuana remain illegal in including improved information the United States. California has the regarding serving sizes.
Industry Assistance Government regulation Industry associations Although the existence of the Medical and This industry benefits from relatively Recreational Marijuana Stores industry is widespread support from industry Level & Trend considered illegal at the federal level, the associations. The National Cannabis The level of Industry passage of regulation concerning the Industry Association is a trade Assistance is High medical and recreational use of marijuana association representing industry and the trend across over half of US states has operators. The organization lobbies is Increasing facilitated the existence and expansion of lawmakers in Washington, DC for the industry. While the industry does not more favorable marijuana legislation. benefit from any government subsidies, These include legislation on banking the expected continuation of new laws that permits marijuana businesses to legalizing the medical and recreational work with financial institutions. use of marijuana will continue to benefit Currently, banks are hesitant to the industry. provide services to marijuana
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Operating Conditions
Industry Assistance businesses due to the illegality of supports the right of adults to use continued marijuana at the federal level. marijuana responsibly, and champions The National Organization for the state and federal reforms that are Reform of Marijuana Laws (NORML) favorable to marijuana users. NORML works to repeal marijuana prohibition at primarily lobbies Congress and state the federal level. The organization legislatures to enact marijuana reforms.
Provided to: Autobahn Consultants (2134210691) | 27 October 2019 WWW.IBISWORLD.COM Medical & Recreational Marijuana Stores in the US December 2018 31 Key Statistics
Industry Data Industry Total recreation Revenue Value Added Establish- Wages Domestic expenditure ($m) ($m) ments Enterprises Employment Exports Imports ($m) Demand ($b) 2009 1,563.7 543.2 2,176 1,990 20,234 -- -- 245.9 N/A 376.0 2010 1,851.0 637.4 2,419 2,213 22,438 -- -- 291.9 N/A 381.0 2011 2,163.8 758.3 2,769 2,523 25,684 -- -- 349.0 N/A 389.6 2012 2,692.2 951.3 3,245 2,968 31,078 -- -- 441.0 N/A 397.4 2013 3,371.8 1,193.5 3,894 3,561 36,896 -- -- 555.2 N/A 404.1 2014 5,123.9 2,119.4 4,867 4,451 50,867 -- -- 858.8 N/A 413.5 2015 5,636.3 2,240.3 5,293 4,835 74,222 -- -- 966.5 N/A 423.5 2016 6,969.5 3,007.8 8,319 7,379 81,344 -- -- 1,241.0 N/A 432.4 2017 8,132.5 3,496.3 9,410 8,328 94,453 -- -- 1,463.1 N/A 442.7 2018 10,285.8 4,376.4 11,549 10,195 116,498 -- -- 1,852.5 N/A 450.4 2019 12,582.8 5,347.0 13,396 11,781 140,123 -- -- 2,277.2 N/A 456.5 2020 15,072.4 6,396.0 16,321 14,360 167,990 -- -- 2,774.7 N/A 463.4 2021 17,815.8 7,552.8 18,795 16,504 198,210 -- -- 3,325.5 N/A 471.8 2022 20,742.3 8,776.8 22,946 20,199 234,598 -- -- 3,977.8 N/A 478.5 2023 24,126.6 10,180.4 26,450 23,265 275,169 -- -- 4,722.8 N/A 485.4
Annual Change Industry Establish- Domestic Total recreation Revenue Value Added ments Enterprises Employment Exports Imports Wages Demand expenditure (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) 2010 18.4 17.3 11.2 11.2 10.9 N/A N/A 18.7 N/A 1.3 2011 16.9 19.0 14.5 14.0 14.5 N/A N/A 19.6 N/A 2.3 2012 24.4 25.5 17.2 17.6 21.0 N/A N/A 26.4 N/A 2.0 2013 25.2 25.5 20.0 20.0 18.7 N/A N/A 25.9 N/A 1.7 2014 52.0 77.6 25.0 25.0 37.9 N/A N/A 54.7 N/A 2.3 2015 10.0 5.7 8.8 8.6 45.9 N/A N/A 12.5 N/A 2.4 2016 23.7 34.3 57.2 52.6 9.6 N/A N/A 28.4 N/A 2.1 2017 16.7 16.2 13.1 12.9 16.1 N/A N/A 17.9 N/A 2.4 2018 26.5 25.2 22.7 22.4 23.3 N/A N/A 26.6 N/A 1.7 2019 22.3 22.2 16.0 15.6 20.3 N/A N/A 22.9 N/A 1.4 2020 19.8 19.6 21.8 21.9 19.9 N/A N/A 21.8 N/A 1.5 2021 18.2 18.1 15.2 14.9 18.0 N/A N/A 19.9 N/A 1.8 2022 16.4 16.2 22.1 22.4 18.4 N/A N/A 19.6 N/A 1.4 2023 16.3 16.0 15.3 15.2 17.3 N/A N/A 18.7 N/A 1.5
Key Ratios Imports/ Exports/ Revenue per Share of the IVA/Revenue Demand Revenue Employee Wages/Revenue Employees Average Wage Economy (%) (%) (%) ($’000) (%) per Est. ($) (%) 2009 34.74 N/A N/A 77.28 15.73 9.30 12,152.81 0.00 2010 34.44 N/A N/A 82.49 15.77 9.28 13,009.18 0.00 2011 35.04 N/A N/A 84.25 16.13 9.28 13,588.23 0.00 2012 35.34 N/A N/A 86.63 16.38 9.58 14,190.10 0.01 2013 35.40 N/A N/A 91.39 16.47 9.48 15,047.70 0.01 2014 41.36 N/A N/A 100.73 16.76 10.45 16,883.24 0.01 2015 39.75 N/A N/A 75.94 17.15 14.02 13,021.75 0.01 2016 43.16 N/A N/A 85.68 17.81 9.78 15,256.20 0.02 2017 42.99 N/A N/A 86.10 17.99 10.04 15,490.24 0.02 2018 42.55 N/A N/A 88.29 18.01 10.09 15,901.56 0.02 2019 42.49 N/A N/A 89.80 18.10 10.46 16,251.44 0.03 2020 42.44 N/A N/A 89.72 18.41 10.29 16,517.05 0.03 2021 42.39 N/A N/A 89.88 18.67 10.55 16,777.66 0.04 2022 42.31 N/A N/A 88.42 19.18 10.22 16,955.81 0.04 2023 42.20 N/A N/A 87.68 19.58 10.40 17,163.27 0.05
Figures are in inflation-adjusted 2018 dollars. SOURCE: WWW.IBISWORLD.COM Provided to: Autobahn Consultants (2134210691) | 27 October 2019 WWW.IBISWORLD.COM Medical & Recreational Marijuana Stores in the US December 2018 32
Jargon & Glossary
Industry Jargon CANNABIS The plant from which medical marijuana is EDIBLES Edible cannabis products, often in the form of harvested. baked goods or candies. DISPENARY Designated medical marijuana retail stores.
IBISWorld Glossary BARRIERS TO ENTRY High barriers to entry mean that INDUSTRY REVENUE The total sales of industry goods new companies struggle to enter an industry, while low and services (exclusive of excise and sales tax); subsidies barriers mean it is easy for new companies to enter an on production; all other operating income from outside industry. the firm (such as commission income, repair and service CAPITAL INTENSITY Compares the amount of money income, and rent, leasing and hiring income); and spent on capital (plant, machinery and equipment) with capital work done by rental or lease. Receipts from that spent on labor. IBISWorld uses the ratio of interest royalties, dividends and the sale of fixed depreciation to wages as a proxy for capital intensity. tangible assets are excluded. High capital intensity is more than $0.333 of capital to INDUSTRY VALUE ADDED (IVA) The market value of $1 of labor; medium is $0.125 to $0.333 of capital to $1 goods and services produced by the industry minus the of labor; low is less than $0.125 of capital for every $1 of cost of goods and services used in production. IVA is labor. also described as the industry’s contribution to GDP, or CONSTANT PRICES The dollar figures in the Key profit plus wages and depreciation. Statistics table, including forecasts, are adjusted for INTERNATIONAL TRADE The level of international inflation using the current year (i.e. year published) as trade is determined by ratios of exports to revenue and the base year. This removes the impact of changes in imports to domestic demand. For exports/revenue: low is the purchasing power of the dollar, leaving only the less than 5%, medium is 5% to 20%, and high is more “real” growth or decline in industry metrics. The inflation than 20%. Imports/domestic demand: low is less than adjustments in IBISWorld’s reports are made using the 5%, medium is 5% to 35%, and high is more than US Bureau of Economic Analysis’ implicit GDP price 35%. deflator. LIFE CYCLE All industries go through periods of growth, DOMESTIC DEMAND Spending on industry goods and maturity and decline. IBISWorld determines an services within the United States, regardless of their industry’s life cycle by considering its growth rate country of origin. It is derived by adding imports to (measured by IVA) compared with GDP; the growth rate industry revenue, and then subtracting exports. of the number of establishments; the amount of change EMPLOYMENT The number of permanent, part-time, the industry’s products are undergoing; the rate of temporary and seasonal employees, working proprietors, technological change; and the level of customer partners, managers and executives within the industry. acceptance of industry products and services. ENTERPRISE A division that is separately managed and NONEMPLOYING ESTABLISHMENT Businesses with keeps management accounts. Each enterprise consists no paid employment or payroll, also known as of one or more establishments that are under common nonemployers. These are mostly set up by self-employed ownership or control. individuals. ESTABLISHMENT The smallest type of accounting unit PROFIT IBISWorld uses earnings before interest and tax within an enterprise, an establishment is a single (EBIT) as an indicator of a company’s profitability. It is physical location where business is conducted or where calculated as revenue minus expenses, excluding services or industrial operations are performed. Multiple interest and tax. establishments under common control make up an VOLATILITY The level of volatility is determined by enterprise. averaging the absolute change in revenue in each of the EXPORTS Total value of industry goods and services sold past five years. Volatility levels: very high is more than by US companies to customers abroad. ±20%; high volatility is ±10% to ±20%; moderate volatility is ±3% to ±10%; and low volatility is less than IMPORTS Total value of industry goods and services ±3%. brought in from foreign countries to be sold in the United States. WAGES The gross total wages and salaries of all employees in the industry. The cost of benefits is also INDUSTRY CONCENTRATION An indicator of the included in this figure. dominance of the top four players in an industry. Concentration is considered high if the top players account for more than 70% of industry revenue. Medium is 40% to 70% of industry revenue. Low is less than 40%.
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