The COVID-19 pandemic was catastrophic to some industries, but it didn’t slow growth in the legal US cannabis market, according to a new report by BDSA. The Colorado-based cannabis research firm showed 46% growth in marijuana sales from $12.1 billion in 2019 to a record $17.5 billion in 2020. Thanks in part to the outset of new “Cannabis 2.0” laws going into effect late in 2019, sales in Canada grew +61% year-over-year to $2.6 billion.
With the Democrats taking control of the White House and Congress in the November elections, chatter is growing louder about the potential for federal legalization of marijuana, which could blow the lid off the market. In a recent press release, Allied Corp. (OTCQB: ALID) provided a succinct overview of active action on Capitol Hill today that could catalyze the market by ending cannabis prohibition.
Many consumers are already transitioning to approved retail locations instead of the black market, which remains the biggest obstacle to legal businesses because of significantly lower prices. For instance, in Q4 2019, the price of a gram a legal marijuana in Canada was CAD$10.30 compared to CAD$5.73 from illicit sources. A -40-50% savings could be typical in the US, according to a recent Bangor Daily News article that showed the average price for standard-grade recreational marijuana of $440 per ounce (28.3 grams = $15.54/gram) versus $230 ($8.10/gram) on the black market.
Most legal supply chains have squeezed margins exponentially to try and lure in more consumers with the promise of high-quality product with proven safety profiles. During Q2 of Fiscal 2021 ended December 31, 2020, Aurora Cannabis (TSX: ACB)(NYSE: ACB) reported an average net selling price of dried cannabis at CA$4.00 per gram,