The global legal cannabis market will grow to $58 billion by 2028, with sales in the U.S. rising to $46 billion, according to a new forecast by the cannabis data company BDSA.
According to BDSA, in 2024, legal U.S. cannabis sales will climb to $32.4 billion from $29.5 billion in 2023.
The forecast states that up-and-coming adult use states, in particular, those on the East Coast and in the Midwest, “are forecasted to drive the most significant growth in both the U.S. and globally.”
The report also states that international cannabis sales are forecast to grow at a compound annual growth rate (CAGR) of 24% through 2028.
“The cannabis industry is incredibly dynamic, with each market facing unique regulatory changes and industry pressures. Looking ahead to 2028, emerging adult-use states, particularly those on the East Coast and in the Midwest, are expected to contribute the strongest increase to total U.S. and global sales,” Roy Bingham, co-founder and CEO of BDSA said in a press release.
In the press release, BDSA expressed optimism that potential emerging markets in major states could be a big driver of growth for the industry.
“Emerging markets that are on the verge of legalizing adult-use are forecast to be another top driver of cannabis industry growth. Florida and Pennsylvania, both home to strong medical markets, are forecast to launch adult-use sales in 2025 and see strong growth out to 2028,” BDSA wrote.
The numbers are very close to those given in April 2023 in the MJBizFactbook. That forecast stated that U.S. medical and recreational cannabis sales could reach $56.9 billion by 2028.
In a 2023 report, Grandview Research stated that the global legal cannabis market is expected to grow by a CAGR of 25.5% from 2023 to 2030 and that “rising legalization and increasing awareness regarding health benefits pertaining to cannabis consumption is driving the market growth.”
In December 2023, consulting firm BGM issued cannabis industry predictions for 2024 which estimated that retail cannabis sales in the U.S alone could reach $53.5 billion by 2027.
Rescheduling and keys to growth
While the estimates vary, virtually all analysts agree that changing cannabis policies in the United States - in particular on the federal level - will play a key role in the market. Short of federal legalization, reclassification of cannabis to Schedule III could be the biggest game-changer when it comes to the legal cannabis industry in the United States.
In August 2023, Bloomberg reported that a top official at the Department of Health and Human Services (HHS) called for cannabis to be reclassified as a Schedule III substance, in a letter to DEA Administrator Anne Milgram.
According to the DEA’s classification, Schedule I substances are considered to have strong potential for abuse and no known medical value. In January, the HHS released a 252 page review compiled from research by scientists from the Food and Drug Administration and the National Institute on Drug Abuse, that stated that “there exists some credible scientific support for the medical use of marijuana.”
Reclassification to Schedule III would be a major boon to the cannabis industry, mainly because it would remove the 280E tax code which prohibits cannabis companies from deducting business expenses in tax returns, because they sell a Schedule I substance.
During the State of the Union last week, President Joe Biden mentioned reclassification, stating that he would be “directing my Cabinet to review the federal classification of marijuana.”
Biden’s comments caused cannabis stocks to surge the next day, indicating the impact that Schedule III reclassification would have for the industry.
