Below is a complimentary institutional research note written by our Cannabis analysts Howard Penney and Daniel BiolsiIf you are an institutional investor interested in accessing our research email

U.S. Cannabis Sales Are Surging Higher - 7 6 2020 12 17 39 PM

U.S. cannabis surges in a pandemic

Legal cannabis sales in the U.S. are projected to grow 40% by yearend 2020, surpassing $15 billion, according to the Marijuana Business Factbook. The high end of estimates expects sales upwards of $37 billion by 2024.

Outside of states reliant on tourism-driven spending (N.V., CO, & M.A.), retail sales have increased in most medical marijuana markets during the coronavirus pandemic.  States with resident-driven markets (OR, WA) have seen double-digit YoY growth in adult-use sales.  Stay-at-home rules nationwide likely contributed to the increased demand, with medical marijuana users participating in pandemic stockpiling on their prescriptions and recreational users increasing usage to ease the monotony of lockdown. 

Another effect of the epidemic has been the combination of stimulus checks and the unemployed receiving an added $600 weekly in benefits – whether the expiration of this financial stimulus at the end of July has a material impact on retail sales or not remains to be seen.

U.S. Cannabis Sales Are Surging Higher - 7 6 2020 7 01 51 AM

Virginia officially decriminalizes marijuana, top lawmakers signal intent towards full legalization

As of July 1st, a marijuana decriminalization policy officially went in effect in Virginia, making it the 27th state to enact the policy. 

The policy reduces penalties for personal possession of up to one ounce of marijuana to a civil violation, punishable by a $25 fine without the threat of jail time or a criminal record. Virginia law before the reform classified minor marijuana possession as a criminal misdemeanor, punishable by a maximum fine of $500, up to 30 days in jail, and a criminal record. 

On July 2nd, top state lawmakers announced their plans towards enacting full legalization.  Democratic legislators plan on filing a bill to legalize and regulate a commercial cannabis market in the state of Virginia. However, the law will likely not gain traction until sometime next year.

In Illinois, a reason to expedite legalization post-COVID

As of July 1st, municipalities in Illinois with cannabis dispensaries that passed a cannabis tax levy can now collect an individual 3% cannabis tax. 

Some cities in Illinois have already been able to avoid laying off public employees by using the cannabis sales tax to offset drops in their common sources of revenue. 

With the pandemic crippling the economies of states, counties, and cities, cannabis sales appear as an attractive channel to generate much-needed tax revenue and economic relief.  Will the financial fallout of COVID-19 accelerate a shift in sentiment towards legalizing marijuana at the federal level?