Americans will spend $60 billion on illicit marijuana this year, report says

Published on September 16, 2020
An estimated 72% of all U.S. marijuana sales happen on the illicit market, due to cannabis prohibition enforced by 39 states. (AdobeStock)

Studies estimate that between 12% to 14% of adult Americans enjoy cannabis. That’s a massive group of consumers—and they spend billions of dollars every year on marijuana. Unfortunately, according to a new report, more than 71% of that spending goes to the illicit market, due to various forms of cannabis prohibition enforced in 39 states.

A new report by the website GrowCola, using data from New Frontier Data’s U.S. Cannabis Report, notes that the American illicit market encompasses roughly $60 billion in annual sales. That compares to around $23 billion in legal medical and adult-use cannabis sales. (State-legal cannabis sales figures are often disputed, as there is no government tally of the federally-prohibited products. Leafly’s 2020 jobs report estimated the size of the legal American cannabis market at around $14 billion.)

Legal v.s. illicit 
cannabis sales 2020 in the U.S.

View full data here

Source: GrowCola via New Frontier Data. Note: Washington D.C. is counted as a state in the above graphic.

That’s a lot of illicit weed, Texas

Texas leads all non-legal states in its purchases. The report estimates that the Lone Star State accounts for 7% of all illicit cannabis sales in the United States. That’s roughly $4.2 billion, or more than three times the size of Colorado’s legal market.

Next on the list: North Carolina, Georgia, Virginia, and Indiana, which each account for roughly 3% of the nation’s illicit sales.

Everything’s bigger in Texas, including the state’s appetite for cannabis. (Source: GrowCola/New Frontier Data)

600,000 jobs and $6 billion in tax revenue foregone

If the illicit market is about 2.5 times the state-legal market, as the GrowCola/New Frontier data suggests, America is missing out on hundreds of thousands of legal jobs and billions of dollars in tax revenue.

Today’s $14 to $23 billion legal cannabis market supports 243,700 full-time American jobs. Doing the math, a fully captured illicit market would add more than 600,000 full-time jobs to the national economy.

At a relatively conservative 10% tax rate, capturing $60 billion in sales would yield $6 billion in cannabis tax revenue every single year. That’s as much as New Hampshire’s entire annual state budget.

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Bruce Barcott
Bruce Barcott
Leafly Senior Editor Bruce Barcott oversees news, investigations, and feature projects. He is a Guggenheim Fellow and author of Weed the People: The Future of Legal Marijuana in America.
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