How big is the marijuana market?
Marijuana is illegal at the Federal level. Therefore, it is difficult to collect
accurate statistics on the marijuana market. Alcohol is regulated, and
producers pay taxes on the amounts they produce. Therefore, economists can make
reasonably accurate estimates of the size of the alcohol market. This is not
possible with marijuana because producers are not licensed and there are no
taxes levied, other than general sales taxes, in the cases where it is sold
through store front operations. Throughout most of the United States, the
entire marijuana market is underground and therefore deliberately hidden from
anyone who might want to get details. The bottom line is that we really don't
know how big the market is.
Therefore, here are the various guesses at the size of the market. Each has its
own merits and rationale. Just for comparison's sake, the market for brewed
beverages in the US is a little over $100 billion.
Jeffrey Miron estimates
the national marijuana market at about $10 billion per year.
Dale Geiringer of California NORML estimates
the market in California to be
about $3-5 billion. If California is about ten percent of the national
market, this would indicate a national market of $30 to $50 billion.
estimates the size of the domestically grown marijuana crop at about $35
billion, based on DEA figures. Note that this is just the estimate for
the dollar value of marijuana grown within the United States. It would not
include imports. He has estimated the total size of the national market at
around $100 billion.
The officials involved in CAMP (Campaign
Against Marijuana Planting) have estimated that they seized $7 billion
worth of marijuana in California alone. Federal Government officials have
estimated that, at best, they only seize about ten percent of the crop. That
would put the size of the market at about $70 billion, minimum, if California
was the only place growing it.
There are no estimates for the dollar value of the marijuana that is imported
from other countries. Even the US Government does not attempt to offer figures.
By any method of estimate, it would have to be in the billions.
Marijuana Business News has done its own research by surveying the marijuana
clubs currently operating in the Los Angeles area. Because our research is
limited to the Los Angeles area, we cannot make estimates for anywhere but the
Los Angeles area. We expect to release the details of these surveys in 2008.
From our survey, we would now estimate that the sales of the combined marijuana
stores in the Los Angeles area (geographically, from about the 10 Freeway north
to the top of the San Fernando Valley) is probably at least $1 billion to $1.5
billion per year. It should be noted that this is the estimated sales for the
openly operating medical marijuana clubs. These are clubs that advertise openly
in local papers and on the Internet. Many of them have catalogs of their
current products on the Internet. People who buy from these clubs must either
be qualified medical marijuana patients, or they must be registered caregivers
for qualified patients.
Our estimate does not include any sales through more "traditional" methods --
the black market for marijuana that has always existed. It is difficult to tell
what percentage of marijuana users go through the trouble of obtaining medical
marijuana recommendations. Obtaining a recommendation requires a visit to a
doctor and the paying of a fee, usually around 100 dollars. Marijuana is
generally freely available through the black market so many people just don't
bother. Also, some don't want to have paperwork that connects them with
As nearly as we can determine, the biggest portion of the marijuana market is
NOT serviced by these clubs. The biggest portion of the market apparently still
goes to "traditional" dealers, by a margin that we would estimate as two or
three to one. That is, the medical marijuana clubs may service only a third or
less of the total market.
For example, most clubs report that they have only a handful of clients who are
under 25. The majority of the clients of these clubs are over 30, and many are
over 40. They are typically baby boomers, who are settled with jobs and
families and like the convenience and the selection afforded by the marijuana
clubs. They are tired of running around to friends' houses to get their
Considering those factors, the total market for marijuana in one limited area of
Los Angeles could be estimated at a minimum of $2 billion to $3 billion dollars
per year, and maybe more. If this is correct, we believe it would argue in
favor of Jon Gettman's estimate of a national market in the neighborhood of
We will publish a report on our findings, with our rationale for the numbers, in