It’s not a trick question — the industry is of course cannabis, and new numbers have just been released that underscore the explosive growth most have been expecting. According to the newly-published MJBizFactbook, the total U.S. economic impact from cannabis sales in 2021 is expected to reach $92 billion — up more than 30 percent from last year. That’s practically a match for the amount of damage caused last year by hurricanes, wildfires, and other climate-related disasters, and we’ll leave it to readers to pose any suitable metaphors.
What’s more, the MJBizFactbook study projects cannabis to generate upwards of $160 billion in sales by 2025. They measure total economic impact through a multiplier methodology: for every $1 consumers and medical cannabis patients spend at retail locations, they project that an additional $2.50 will be injected into the economy, mostly at the local level.
This additional sum consists of the money cannabis industry employees pay for daily needs including housing, food, and transportation. The taxes paid by consumers, patients, employees, and the businesses themselves. Plus the boost that the local real estate marketplace receives as cannabis companies enter a new area and/or expand their presence with technology investments. (Because of the unique structure of the cannabis industry, encompassing agricultural, manufacturing and retail activity, these numbers are qualified as best-guess estimates.)
How does this break down by market? For the largest cannabis market in the U.S., California, the industry is expected to contribute $20 billion into the state’s economy this year. While no other state matches that figure at present, Colorado, Illinois, Oregon, and Washington come close, and as New York and New Jersey develop their cannabis industries, they are also expected to post significantly high figures. Which state is the lowest? At present, that would be Iowa —of course there are still eleven states where all forms of cannabis remain illegal.
Interestingly, the state rankings change when the Factbook considers per capita figures. From the population estimates recently released from the 2020 Census, Nevada’s cannabis industry will deliver approximately $1,917 of economic impact per person in 2021. Alaska, Colorado, and Oregon are right behind with impact estimates of $1,500 per person. Whichever of the two ranking methodologies may be right for your own business plans, it is unmistakable that cannabis is making a major contribution to the 2021 U.S. economic picture.