At approximately $4.4 billion, California’s legal cannabis industry set a new record for sales in 2020. Let’s take a closer look at the industry’s record-breaking year, explore the market conditions that led to the 2020 boom, and what the future holds for legal cannabis in California.
A Look at the Numbers
Recreational cannabis sales have seen significant year-over-year increases since the industry’s inception in 2018. In its first year, cannabis sales reached $1.4 billion. The following year, sales continued to grow to $2.8 billion. And in 2020, sales hit an unprecedented $4.4 billion.
2020 now represents the high water mark. This includes a new monthly sales record in July 2020. That month California experienced its biggest sales numbers for cannabis since the industry made its debut in January 2018. July accounted for $348 million in sales compared to $332 million in January 2018. And in 2020, only January sales dipped below $300 million at $299.9 million.
2020 and Cannabis as an Essential Business
Several states including California, Colorado, Oregon, and Washington set cannabis sales records in 2020. Several key trends can help explain why consumers went out to buy cannabis in record-breaking numbers.
First, the year of 2020 was indelibly marked by the COVID-19 pandemic. The pandemic devastated many small businesses and even entire industries, however cannabis industry analysts agree that the pandemic helped boost sales in California and other legal cannabis markets across the United States.
Cannabis was recognized as an essential business by California and many other state governments. This allowed cannabis businesses to keep their doors open throughout the pandemic. With most other options for entertainment cancelled like travel, concerts, and any activity involving gathering in groups, California consumers turned to cannabis for a fun, new, socially-distanced experience.
Another major contributor is the increasing mainstream acceptance of cannabis. With California in its third year of legal cannabis sales and public attitudes rapidly evolving, more adults are willing to try cannabis for the first time. While coronavirus certainly accelerated the industry’s growth, increasing acceptance helped lay the groundwork to make such a significant sales increase possible.
What the Future Holds
Will 2021 see the cannabis industry cool off? Many think the industry’s steady growth will continue into the new year.
As the world slowly recovers from the peak of the COVID-19 pandemic, investors will regain confidence, providing capital to businesses poised to expand their footprint. And with the pandemic forcing many cannabis businesses to adopt contactless shopping strategies, the rapid shift towards e-commerce could continue to boost sales.
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