US cannabis growth: "We are forecasting 2026 legal revenues to be $30.5 billion, an increase of 4.9% since 2025"

Whitney Economics (WE), a global leader in cannabis and hemp business consulting, data, and economic research, today announced it has published its U.S. legal cannabis revenue forecast for the period of 2025 – 2030.

"We are forecasting 2026 legal revenues to be $30.5 billion, an increase of 4.9% since 2025," WE founder and Chief Economist Beau Whitney said. "This is a welcome rebound from just a year ago, when the U.S. legal cannabis market experienced its first year-over-year revenue decline in the legal regulated market's history."

That decline, Whitney said, would have been worse nationally had it not been for significant growth in New York and Ohio, where consumers gained greater retail access to cannabis products. Even though unit volumes and legal participation rates remained strong, supply saturation induced pricing compression and reduced overall revenues in the U.S. "The growth rates are still positive, just not as much as in previous years where we had forecasted 13.4% growth for 2026," he said.

Additionally, price deflation has again reduced expectations for both near- and medium-term sales, and forecasts for 2026 and 2027 have been ratcheted down since last year. "Whitney Economics forecast accuracy has always been in the mid-to-high 90%, so when that dipped to 85% in 2025, we knew we needed to update our models," Whitney said. "Accounting for pricing compression was a major part of this adjustment."

In the past, key drivers for forecasting cannabis retail revenues were a function of the number of consumers multiplied by spends. However, with pricing compression becoming such a major factor in the U.S. cannabis market, forecasts need to account for the deflation in the market, and WE has since updated its model to incorporate pricing declines.

Whitney's forecast states that cannabis consumer behavior has changed considerably since the end of the Covid-19 era, when consumers would spend basically the same amount each month. Cannabis spending patterns took a major shift in 2023 and 2024, and now cannabis spending has begun to mirror the broader consumer patterns.

"During a period of uncertainty and higher inflation, consumers are no longer adding to their basket; instead, they are buying only what they need and applying any savings to other non-cannabis related purchases," Whitney said. "As a result of this shift, for the first time, pricing compression has become a major variable in the cannabis forecasting equation."

Since 2014, when the states of Washington and Colorado deployed the first state-based adult-use cannabis regulatory programs, growth in individual markets, driven by an influx of legal consumers, overshadowed the fact that pricing compression was occurring. The growth of the market outstripped the impact of the price declines was having. However, as markets began to mature and the pace of consumer conversions into the legal market slowed, pricing compression began having more of an effect on the growth of the market.

"We are approaching the point where growth rates of legal participation are slowing while price declines have accelerated," Whitney said. "As a result, pricing compression will play a major, increasing role in the value of the market moving forward. This is a sign of market maturity."

With the level of pricing compression and the suppressive effect it has on the growth of the market, states must account for this in their tax revenue forecasts, which are expected to decline. States can no longer expect to simply increase taxes to make up for lost revenues because those increases will lower demand, just like in any other industry, Whitney said.

Despite the significance of the pricing compression, the U.S. legal cannabis revenue forecast still indicates growth for the remainder of the decade. But considering the decline in prices, legislatures and regulators will be forced to incentivize consumers to participate in the legal marketplace; otherwise, both retail and tax revenue will continue to decline.

"Perhaps this will involve moving away from the marijuana dispensary model and open up sales via other distribution channels such as grocery stores and big-box retailers," Whitney said. "The U.S. market is at a crossroads, where the market is normalizing and no longer experiencing exponential growth. Single-digit growth will become the norm moving forward."