You are reading an issue of this week’s issue of New Cannabis Ventures’ weekly newsletter, which we’ve been publishing since October 2015. The newsletter contains unique insights to help our readers stay on top of things, as well as links to the week’s most important news.
Cannabis markets across North America are booming. This week we released updates from BDSA on several mature and newer markets for January, as well as data from Illinois for the month of February. Growth has been strong across the board, with California accelerating 28.6% year over year and very strong gains in the most mature markets of Colorado and Oregon, rising 35.5% and 48.2% respectively compared to the previous year. On Friday evening, data from Florida showed that the number of medical patients has exceeded 500,000, or 2.3% of the total population. Last week the year-over-year growth was 55%.
Florida’s growth was aided by the addition of telemedicine last year and possibly the recent introduction of food. Another factor can be population growth during the pandemic. The state does not report any income. Instead, weekly data is exchanged on units dispensed, which have grown much faster than the number of patients. Since the start of the year, medical cannabis units dispensed have increased 84% compared to the same period last year, while flower sales increased 139%. This is a fourth quarter gain for medical cannabis products, up 75% year over year. Flower sales only rose in late 2019, and that growth has slowed from 189% but is still extremely strong.
When we think about how the rest of 2021 could play across America, we’re pretty optimistic that robust top-line growth will continue. Of course, every market is unique and countries will grow at different rates. We have some concerns that the mid-year consumption rate per capita may decline slightly from last year due to increased demand during the pandemic and one-off stimulus reviews, but multiple factors are likely to largely offset a possible slowdown in the same individual consumption.
We believe that one of the biggest drivers of growth in the legal cannabis market is the shift away from the illegal market. The pandemic proved very helpful on that front as states that had not previously allowed roadside delivery or collection did so, which changed the market significantly. Consumers can now order cannabis online just like other goods, which is not possible in the illegal market. The very solid growth in mature western states, especially for flowers, is a sign that the legal market continues to convert illegal market consumers.
Opening up new markets is another growth driver, and this year Arizona has already been rapidly allowing adult sales. New Jersey is expanding its medical program and will begin using it for adults later this year. Virginia, which only started selling to patients in late 2020, will continue to expand its medical program and add flowers, which should fuel demand.
Growth in markets that are already legal for adult use can often be restricted initially because of insufficient supply and / or insufficient distribution points. Newly admitted markets such as California, Illinois, and Michigan, all of which have been restricted, can see strong growth over time as the infrastructure continues to come online. This can also be the case in medical markets such as Pennsylvania.
For publicly traded companies, the recent surge in mergers and acquisitions suggests growth even faster than the organic growth rates that the entire legal cannabis industry will generate. The deals that have been made appear very positive for the acquiring companies and we continue to expect significant acquisitions in this highly fragmented industry.
The legal cannabis industry is in its infancy. New markets open up and existing markets continue to grow as supply and distribution increase. Even in the most mature markets, there is ample evidence that legal operators are also involved in the illegal market. Make sure the industry continues to grow strongly on balance in 2021.
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With best regards,
Alan & Joel
Alan is based in Houston and leverages his experience as the founder of the online community 420 Investor, the first and largest due diligence platform focused on publicly traded stocks in the cannabis industry. With his extensive network in the cannabis community, Alan continues to seek new ways to connect the industry and fuel its sustainable growth. At New Cannabis Ventures he is responsible for content development and strategic alliances. Before focusing on the cannabis industry in early 2013, Alan worked as an independent research analyst in 1986 after having worked in research and portfolio management for over two decades. Alan is a prolific writer with over 650 articles published since 2007 on Seeking Alpha where he has 70,000 followers. He is a frequent speaker at industry conferences and a frequent source for the media, including the NY Times, the Wall Street Journal, Fox Business, and Bloomberg TV. Contact Alan: Twitter | Facebook | LinkedIn | E-mail
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