The marijuana industry is a very fragmented and each state has their own set of laws and regulations. These differences make it tough for analysts to accurately forecast growth and they must model each state differently.

One of the most important factors analysts consider when trying to determine the size of a state’s medical marijuana market is the number of patients. This will differ from states with recreational marijuana programs (i.e. Colorado and Washington) where the number of dispensaries will be the most important metric.

According to statistics released by Marijuana Business Daily, the number of medical marijuana patients has increased significantly since early 2014 and this growth does not seem to be slowing down anytime soon. Since early 2014, the United States has seen an 11% increase in the number of medical marijuana patients.


An industry in its infancy

The medical marijuana industry is in its infancy. The industry is in the first inning of what will be a multi decade growth cycle and we expect to see these numbers continue to increase dramatically on a year over year basis.

According to the data released, every state that requires residents to register for medical marijuana cards saw an increase in the number of patients during the last 12-18 months. Seven of the nine states saw the number of patients increase by at least 50%.

The District of Columbia saw the most growth and reported a 2,293% increase in the number of patients (in early 2014, there were 165 patients. Today, there are approximately 4,000). New Jersey saw the second biggest increase at 182%.

Recreational vs. Medical

When creating a model that measures the size of the marijuana industry on a state by state basis, analysts must quantify growth differently for states with medical or recreational marijuana laws.

When measuring the growth in recreational markets, we found that the number of dispensaries is one of the primary drivers of revenue growth. Another primary growth driver is the number of counties that allow recreational marijuana. During 2015, the market has seen a number of counties in both Colorado and Washington implement bans on the sale of recreational marijuana.

When it comes to medical marijuana, a number of factors affect state growth. These factors include but are not limited to the number of dispensaries, accessibility of dispensaries, qualifying medical conditions and the number of doctors willing to recommend medical marijuana.

The biggest growth catalyst for medical marijuana state markets is the allowance of dispensaries. The states that are not allowed to have dispensaries will see incremental growth once they are allowed.


Authored by: Michael Berger

Michael Berger is the president and founder of Technical420, an independent research firm focused specifically on the cannabis sector. He was working for the equity research department at Raymond James Financial Inc., when he recognized a need for a service that provides up-to-date research and analysis on companies that operate in the cannabis industry. Mr. Berger studied finance and economics at Florida State University and is working toward achieving his CFA charter.


Michael Berger


Technical 420 LLC

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