Prohibiting certain drugs tends to have the opposite effect of what governments hope. For example, in the United States, people spend approximately $150 billion on cannabis, heroin, methamphetamine, and cocaine each year.
Of the drugs mentioned above, cannabis at least is legal in some (not all) states. Still, it remains the #1 most used illegal drug in the world. How much do Americans spend on it? Let’s find out.
America’s Cannabis Expenditure is Increasing Rapidly
Estimates vary, but according to the RAND Corporation, total spending on marijuana, legal and illegal, in America increased by 50% from 2006 to 2016. This was hardly a surprise given the large jump in MMJ and recreational legality in various states during that time. The 2016 figure was $52 billion.
With more states legalizing cannabis, it was inevitable that spending would grow, and it did. According to New Frontier Data’s U.S. Cannabis Report: 2020-2021 Industry Outlook, American consumers spent over $78 billion on legal and illegal marijuana products in 2019. Black market sales accounted for an estimated $66 billion.
This means the legal market was worth $12.7 billion in 2019. By 2020, it had increased to $17.9 billion. The report suggests that the illegal market will experience a 15% drop in sales by 2025. At this point, the legal recreational and MMJ markets will exceed $35 billion.
The fact that South Dakota, New Jersey, Arizona, and Montana voted to implement recreational sales in November 2020 will help expand the legal market. As will Mississippi’s decision to legalize MMJ.
The report pointed out that 67% of Americans now support full legalization. Also, 70% of the nation’s population live in states with legal medicinal or adult-use cannabis.
Who Purchases Cannabis in the United States?
According to Headset, a cannabis market intelligence company, Generation Z (people born between 1997 and 2012) and millennials (people born between 1981 and 1996) will eventually dominate the marijuana market. At present, however, Millennials account for over 51% of cannabis sales, followed by:
- Generation X (people born between 1965 and 1980) with 25.7%.
- Baby Boomers (people born between 1946 and 1964) with 15.8%.
- Generation Z with 5.9%.
The main reason why Gen Z isn’t higher is that there are so few possible consumers right now. Remember, you must be aged 18+ to buy MMJ and 21+ to get recreational cannabis. A decade from now, Gen Z will easily be challenging Millennials.
There is also a gender imbalance at play, with significantly more men buying cannabis than women. In fact, 67% of purchasers in the Millennial bracket are male.
People with Prospects Use Cannabis
What’s interesting is the crushing of a particular stereotype. Typically, marijuana use is associated with ‘slackers’ and ‘dropouts.’ In reality, a significant majority of users are professionals with steady jobs and positive career prospects.
Research from the Cannabis Consumers Coalition discovered that only 20% of marijuana consumers come from low-income households. 35% of households with at least one cannabis user earn between $26,000 and $55,000 per annum. Over one-quarter have a household income of over $75,000.
Why Do People Buy Marijuana?
The medical marijuana market is still the dominant force. The impact of the global pandemic is one of the main reasons why cannabis sales increased in 2020. A survey by Verilife in October 2020 revealed that over 70% of respondents said COVID-19 was the main reason for stress and burnout in their lives. Work was the next biggest reason at 69%, with finances the issue in 67% of cases.
Over 40% of respondents admitted using marijuana to cope with their feeling of burnout. Another 29% said they turned to cannabis to reduce their stress levels. An infographic published by COVA Software revealed the primary reasons why people used MMJ:
- Relaxation – 70%
- Sleep – 59%
- Anxiety – 52%
- Pain – 48%
- Improved Focus – 45%
- Depression – 39%
- Alcohol substitute – 35%
Meanwhile, recreational users had the following reasons:
- Fun – 79%
- Experimentation – 74%
- Celebration – 63%
- Boost creativity – 59%
- To relieve boredom – 51%
Approximately 70% of people who used MMJ claimed it enabled them to reduce OTC drug consumption.
It is worth noting that the majority of users don’t consume marijuana daily. A growing number of people use it as a replacement for alcohol. Also, a trend known as ‘California Sober’ is gaining popularity. This is a term used to describe the process of quitting drugs and alcohol – with a handful of exceptions. For most, it means using marijuana and nothing else. For others, the list can include psychedelics like psilocybin.
How Much Does the Average Consumer Spend on Cannabis?
The marijuana boom of 2020 was primarily down to an increase in consumption per customer. On average, ‘established’ cannabis users increased their monthly expenditure by over one-third.
Data from Headset indicates that the average cannabis user in America spends between $25 and $50 per trip to a marijuana dispensary. The ‘median’ spend per trip is $33. Interestingly, one-third of consumers spend less than $10 and only purchase one item, such as a roll-up joint.
The average annual expenditure is $645. However, almost half of cannabis consumers spend between $500 and $2,500 a year.
According to Larisa Bolivar, who authored the Cannabis Consumers Coalition study, full marijuana legalization could result in 41 million American users. If the average annual expenditure held, it would transform the legal cannabis market into an industry worth over $26 billion a year.
What Cannabis Products Do Consumers Purchase?
Marijuana flower remains the most popular product, but the gap is closing. In 2017, approximately half of all cannabis purchased in the United States was flower. By 2022, this percentage is estimated to shrink to 36%. Cannabis concentrates’ market share will likely increase to over 30% by this point. The edibles market comprises around 12% of the total market. Products such as topicals make up the rest.
However, edibles have become the most appealing products to U.S. consumers. Almost 70% say they are interested in solid edibles. Gummies are the #1 option in this category, followed by bites, chocolate bars, cookies, and mints. Marijuana drinks appeal to over 50% of users.
Final Thoughts on How Much Americans Are Spending on Weed
It is only a matter of time before the marijuana market exceeds $100 billion in the United States. At present, illegal sales still dwarf their legitimate counterpart. Increased legalization in states will reduce the flow of black market cannabis, but only marginally. It will take full federal legalization to put a dent in illegal marijuana. Even then, the high tax rates of legal weed will ensure people continue to seek out cheaper products.
Generation Z users’ rate is growing rapidly as millions of people become legally old enough to try cannabis. Suggestions that marijuana users come primarily from low-income households are wide of the mark. A significant number of users are individuals with a medium to high level of income.
A majority of MMJ users try it for issues such as anxiety and stress. Meanwhile, recreational users often consume cannabis to experiment or have fun. Average expenditure has increased massively, while edibles and concentrates could usurp flower’s dominance.
The future of cannabis in the United States is bright. However, full legalization is still a long way away.