U.S. Marijuana Sales Hit a Record in 2020
The coronavirus pandemic was an economic hurdle (or even brick wall) for most North American businesses in 2020. But not for the recreational and medical cannabis industry.
That was the year when people under quarantine sent cannabis sales to record levels. We’re about halfway through 2021, and by all accounts, it’s another blockbuster year for marijuana companies. And that’s just the beginning.
It’s going to be tough for investors who haven’t invested in marijuana stocks yet to stay on the sidelines. Sure, for some, there might be a moral issue of investing in so-called sin or vice stocks, but ignoring an industry that’s projected to expand at a compound annual growth rate (CAGR) of 14.8% could be a mistake. (Source: “2020 and 2021 Cannabis Market Review,” BDSA, last accessed June 4, 2021.)
In 2019, legal marijuana sales in the U.S. hit $12.1 billion. That’s a lofty number for an industry that isn’t even legal at the federal level. But that was nothing compared to the record $17.5 billion in U.S. cannabis sales that were generated in 2020, during the toughest economic climate in nearly 100 years.
How did that happen?
Because of the coronavirus pandemic, much of the U.S. economy was shuttered during the second and third quarters of 2020. Not so for cannabis. More than a dozen states declared marijuana dispensaries to be “essential” businesses. For the legal cannabis industry, that was a godsend.
This, along with the rising number of states legalizing medical and recreational cannabis, helped send marijuana sales up 46% year-over-year in 2020. Global cannabis sales followed a similar trajectory, advancing 45%. (Source: “U.S. Cannabis Sales Hit Record $17.5 Billion as Americans Consume More Marijuana Than Ever Before,” Forbes, March 3, 2021.)
With nearly half of Americans vaccinated and COVID-19 restrictions easing, that record trend is expected to continue in 2021 and beyond.
With restaurants and bars reopening and life beginning to get back to normal, people are going to start going out and making up for lost time. It’s likely going to be a summer of partying and unprecedented marijuana sales—a new Roaring Twenties, if you will.
Admittedly, not everyone is going to want to jump on the party bandwagon. That has led some to speculate that cannabis delivery sales, which exploded during the pandemic, will soften. So far, we haven’t seen that happen, though.
Thanks to the growing acceptance of legal cannabis, many people are happy to hunker down and relax with a joint, edible, or cannabis-infused drink.
Whether they’re waiting for a parcel from Amazon.com, Inc. (NASDAQ:AMZN) or a bag of cannabis from their favorite dispensary, people love the convenience of having what they want delivered to their door, when they want it. In fact, in some parts of the country, cannabis order volumes are up by 25% to 30% year-over-year.
That has led forecasters to predict stellar cannabis sales growth over the coming years. By 2025, legal U.S. marijuana sales are projected to hit $41.0 billion, with global sales reaching $51.1 billion.
The U.S. number doesn’t factor in the states that haven’t legalized medical and/or recreational cannabis yet. Texas, which has the second-highest total addressable market, and states like Georgia and North Carolina, have untapped populations that could send cannabis sales even higher.
Moreover, BDSA predicts that marijuana will be legalized at the federal level in 2022. If so, the summer of 2022 might be another one for the record books.
Year after year, medical and recreational marijuana sales have been reaching record levels. In 2020, a year when the global economy was ravaged by COVID-19, U.S. cannabis sales were on fire, with even mature markets experiencing growth.
All of that has been helping U.S. cannabis companies record revenue and profitability. And that growth is expected to continue for the foreseeable future, which is good news for investors in marijuana stocks.