Weed crushes Starbucks and Macdonalds combined across the Atlantic

A new report from the’ArcView, a financial institution specializing in cannabis states that Canadians and Americans spent a total of nearly 53.3 billion dollars on cannabis in 2016. The institute points out that most of this spending on drugs takes place on the black market. According to High Times magazine, the North Americans' spending on marijuana would exceed the combined sales of McDonald's and Starbucks. .

87% Black Market Sales

In its 22-page annual report, « State of the Marijuana Markets«, Arcview estimates that 87 % of its transactions took place on the black market. In 2015, the black market’s share of total sales reached 90%.

While legal cannabis sales have surged by more than 20% this year, and even though we still don't have a Weed Starbucks, the share of black-market spending still makes it impossible to estimate the potential tax revenue from a fully legal market on the continent.

According to Troy Dayton, CEO of ArcView, this spending in the illegal market is a real obstacle to the growth of businesses in the legal market. However, he still sees this spending as future opportunities: «These enormous investments in the illegal market prove that cannabis is a product like no other. It’s a one-of-a-kind market; it doesn’t need to create demand or advertise. The future lies in shifting demand for the product to a legal market.»

The variety of cannabis products is an advantage

As a financier, he is nonetheless pleased with the new variety of legal products created by entrepreneurs. The « space-food »…attract customers who don’t smoke and boost the dispensaries« revenue. »The variety of products is the main reason for the shift from illegal to legal. The selection offered to customers at the counter gives businesses a tangible advantage.’"

According to Business Insider, the Colorado is proof that the legal market offers a real alternative to the black market. In 2014, the year it was legalized, only 30% of sales took place through legal channels. That figure has now reached 45% and amount to more than one billion dollars for the year 2016.

The ArcView Institute is directly linked to the cannabis industry, but these figures provide a snapshot of the competition between the illegal and legal markets. As prices for legal cannabis fall, the black market is expected to gradually dry up, to the benefit of the legal industry. Will we see Sales records for 2017 ?

Théo Caillart