Status of Cannabis in the US for 2023. What is the forecast for 2024?

The State of Cannabis in the US: Legalization, Markets, and Trends

To kick off our introduction we feel obliged to add a description of cannabis. We stronly believe it is important to be able to communicate the befits and uses of this plant on a continous basis to inform the public. This way the public acquires a holistic and objective view without relying exclusively to notorious articles or bad press.

Cannabis therefore, also known as marijuana, pot, weed, or dope, is a plant that contains various compounds, such as tetrahydrocannabinol (THC) and cannabidiol (CBD), that can have different effects on the body and brain. Cannabis can be used for medical, recreational, or industrial purposes, depending on the laws and regulations of each state and the federal government. In this article, we will explore the current state of cannabis in the US, including its legalization status, market size, and industry trends as of December 2023.

Legalization Status

Cannabis is still illegal at the federal level in the US, under the Controlled Substances Act of 1970, which classifies it as a Schedule I drug with no legitimate medical use and a high potential for abuse. However, many states have legalized cannabis for medical or recreational use, or both, creating a legal gray area and a patchwork of policies across the country.

As of December 2023, 24 states (plus Guam, the Northern Mariana Islands, the U.S. Virgin Islands, and the District of Columbia) have legalized cannabis for recreational use, and 38 states (plus Puerto Rico and the District of Columbia) have legalized cannabis for medical use. Some states, such as California, Colorado, and Washington, have established regulated markets for the production, distribution, and sale of cannabis, while others, such as Vermont and the District of Columbia, have only allowed personal cultivation and possession. The legal age for cannabis consumption varies from 18 to 21, depending on the state.

The legalization of cannabis has been driven by various factors, such as public support, social justice, economic benefits, and medical evidence. According to a 2022 Gallup poll, 68% of Americans support legalizing cannabis, the highest percentage in the history of the survey. Many advocates argue that cannabis prohibition has disproportionately harmed communities of color, low-income groups, and patients with debilitating conditions, and that legalization can reduce arrests, expunge records, and create opportunities for social equity. Moreover, legalization can generate tax revenue, create jobs, and stimulate economic growth, as well as reduce the black market and its associated violence and crime. Additionally, legalization can facilitate research and innovation, as well as provide access to safe and quality-controlled cannabis products for medical and wellness purposes.

However, legalization also faces challenges and risks, such as federal interference, public health and safety concerns, and market uncertainties. Despite the state-level reforms, cannabis remains illegal at the federal level, creating legal conflicts and barriers for businesses and consumers, such as banking restrictions, tax burdens, and travel limitations. The federal government has generally adopted a hands-off approach, but it can still enforce federal law and crack down on state-legal cannabis activities. In December 2020, a bill to remove cannabis from the Controlled Substances Act was passed by the U.S. House, but it was not voted on by the Senate.
The Biden administration has expressed support for decriminalizing cannabis and expunging records, but not for legalizing it at the federal level.

Furthermore, legalization can pose public health and safety issues, such as impaired driving, underage use, addiction, and adverse effects. Legalization can increase the availability, accessibility, and acceptability of cannabis, which can lead to increased consumption and potential harms, especially among vulnerable populations, such as youth, pregnant women, and people with mental health disorders. Legalization can also create challenges for law enforcement, such as detecting and preventing impaired driving, enforcing age limits, and regulating the potency and quality of cannabis products. Therefore, it needs to be a phased approach that is monitored and controled in order to maximise the benefits that legalization can provide.

Market Size

The cannabis market in the US is one of the largest and most dynamic in the world, with a diverse range of products, consumers, and businesses. According to a report by Grand View Research, the US cannabis market size was valued at USD 20.8 billion in 2020, and is expected to grow at a compound annual growth rate (CAGR) of 14.8% from 2021 to 2028. The market can be segmented by type, application, and component.

By type, the market can be divided into flowers/buds and concentrates. Flowers/buds are the dried and trimmed parts of the cannabis plant that are smoked, vaporized, or used to make edibles and topicals. Concentrates are products that are extracted from the cannabis plant and have higher concentrations of cannabinoids, such as oils, waxes, shatters, and distillates. Flowers/buds accounted for the largest market share in 2020, with a revenue of USD 12.4 billion, while concentrates are expected to grow at the fastest CAGR of 17.8% from 2021 to 2028.

By application, the market can be categorized into medical, recreational, and industrial hemp. Medical cannabis is used to treat various conditions, such as chronic pain, epilepsy, cancer, and multiple sclerosis, under the recommendation of a physician. Recreational cannabis is used for personal enjoyment, relaxation, or socialization, without a medical necessity. Industrial hemp is a variety of cannabis that contains less than 0.3% THC and is used for various purposes, such as fiber, food, fuel, and cosmetics. Recreational cannabis dominated the market in 2020, with a revenue of USD 13.4 billion, while medical cannabis is projected to grow at the highest CAGR of 15.9% from 2021 to 20285.

By component, the market can be classified into THC-dominant, balanced THC & CBD, and CBD-dominant. THC is the main psychoactive compound in cannabis that causes the “high” sensation, while CBD is a non-psychoactive compound that has anti-inflammatory, anti-anxiety, and anti-seizure properties. THC-dominant products have higher levels of THC than CBD, balanced THC & CBD products have equal or similar levels of both compounds, and CBD-dominant products have higher levels of CBD than THC. THC-dominant products accounted for the largest market share in 2020, with a revenue of USD 15.9 billion, while CBD-dominant products are anticipated to grow at the fastest CAGR of 16.1% from 2021 to 2028.

Industry Trends

The cannabis industry in the US is constantly evolving and innovating, driven by consumer demand, technological advancement, and regulatory changes. Some of the key trends that are expected to shape the industry in 2024 are:

Social equity and social justice: The cannabis industry is increasingly recognizing the need to address the historical and ongoing harms of cannabis prohibition and criminalization, especially on communities of color and low-income groups. Many states and cities are implementing social equity programs that aim to provide opportunities and benefits for those who have been disproportionately impacted by the war on drugs, such as expunging records, granting licenses, providing funding, and offering training and mentorship. For example, Illinois, Massachusetts, and New York have allocated a portion of their cannabis tax revenue to fund social equity initiatives, such as community reinvestment, education, and health. The cannabis industry is also embracing social justice causes, such as racial equality, criminal justice reform, and environmental sustainability, and supporting organizations and movements that advocate for these issues.
Product innovation and diversification

The cannabis industry is constantly developing new and improved products that cater to the diverse and sophisticated preferences and needs of consumers. The industry is expanding its product portfolio, offering a wide range of formats, delivery methods, flavors, potencies, and effects, such as edibles, beverages, topicals, inhalers, transdermal patches, suppositories, and nanotechnology. The industry is also exploring the potential of minor cannabinoids, such as CBG, CBN, and THCV, that have unique and beneficial properties, such as anti-inflammatory, sedative, and appetite-suppressing effects. Moreover, the industry is enhancing its product quality, safety, and consistency, by adopting standards, certifications, and testing methods, such as organic, vegan, gluten-free, and lab-tested labels.

Consumer education and personalization

The cannabis industry is recognizing the importance of educating consumers about the benefits, risks, and best practices of cannabis use, as well as providing personalized and customized experiences that suit their individual goals and preferences. The industry is investing in consumer education, by creating informative and engaging content, such as blogs, podcasts, videos, and webinars, that cover various topics, such as cannabis history, science, culture, and wellness. The industry is also leveraging data, analytics, and technology, such as artificial intelligence, machine learning, and blockchain, to offer personalized and tailored recommendations, products, and services, based on consumers’ profiles, feedback, and behavior.

In the United States, consumer education regarding medical cannabis cards is a cornerstone for the responsible use and legal compliance of medical marijuana. With 38 states having legalized medical cannabis to varying degrees, it’s crucial for patients to understand the specifics of their state’s program. A medical cannabis card typically includes personal identification details and provides benefits such as lower costs due to tax exemptions, the ability to purchase and possess larger quantities, and access to higher-potency strains. Moreover, these cards often come with legal protections, including reciprocity between states, allowing patients to purchase cannabis with their card while traveling. Educating consumers about how to obtain a card, the legal rights it confers, and the responsibilities that come with it, is essential to ensure that patients can make informed decisions and utilize medical cannabis safely and legally.

Regulatory reform and harmonization

The cannabis industry is facing regulatory challenges and opportunities, as more states legalize cannabis for medical or recreational use, and the federal government considers changing its stance on cannabis. The industry is advocating for regulatory reform and harmonization, by lobbying, campaigning, and collaborating with policymakers, regulators, and stakeholders, to create a clear, consistent, and comprehensive framework for the production, distribution, and consumption of cannabis, that balances the interests of public health, safety, and economic development. The industry is also preparing for potential federal legalization, by complying with existing laws and regulations, such as banking, taxation, and labeling, and anticipating future changes, such as interstate commerce, interstate banking, and international trade.

Conclusion

The cannabis industry in the US is in a state of flux and growth, as more states legalize cannabis for medical or recreational use, and the federal government contemplates its position on cannabis. It is certain that we will see many development in 2024 given the progress we are seeing for cannabis in other global markets like EU and Asia.

Updates:

January 10, 2024 – President Biden issued pardons for thousands of people convicted on marijuana possession or use charges in D.C. or on federal lands. NBC News’ Aaron Gilchrist explains the specifics of the proclamation and speaks about the 11 sentences that were also commuted by the president.

March 6, 2024 – In a video post on X this morning, Senator Elizabeth Warren called for the legalization of marijuana nationwide.

Mar 15, 2024 – Vice President Harris convenes a roundtable conversation about marijuana reform to highlight the various actions that the Biden-Harris Administration has taken to advance long-overdue criminal justice reforms.

April 1,2024 – Germany’s landmark law legalizing the use of cannabis for personal consumption is effective from today. This move marks a significant shift in drug policy, reflecting growing acceptance and understanding of the benefits of cannabis.