Roy Bingham, CEO of cannabis research company BDSA

LOS ANGELES (AP) — Colorado-based research firm BDSA predicts legal marijuana sales in the United States will rise 8% this year to $27 billion.

Much of the increase comes from states like Illinois and New Jersey that recently legalized recreational cannabis sales, according to the BDSA. Those gains are expected to offset slower sales in more established legal marijuana markets, such as California, Washington and Colorado, according to a BDSA forecast released this week.

The BDSA predicts that sales in the United States will reach $42 billion in 2026. Recreational use of marijuana by adults is legal in 19 states, while medical use is legal in 39 states.

BDSA CEO Roy Bingham spoke to The Associated Press about the cannabis industry trends that have shaped the company’s forecast.

Q: Why are some markets experiencing sales growth, while others are slowing?

A: The industry is made up of a series of growth charts for each state. In the case of some of the mature states, they are now in stagnation or decline, largely due to price reductions. And in the case of early-stage markets like New Jersey, they’re catching up very quickly. And then there are still states like Illinois, Massachusetts, Michigan that are experiencing fairly strong growth. Combine that with the markets that are going to appear in the future when legalization takes place for medical use or for adult use, and you end up with our projection of $42 billion by 2026. So that’s a period difficult to be in the cannabis industry. in California, for example, but it’s a good time to be in the cannabis industry in Illinois, pretty good in Massachusetts, Michigan, and very exciting if you’re in New Jersey or New York.

Q: With inflation at the highest level in decades, why are we seeing price cuts in the legal marijuana industry?

A: (Cannabis companies) are also impacted by input costs, but that’s not enough in the supply and demand environment to outweigh the need to lower prices. You have massive oversupply in some markets like Oregon. The legal product cannot go from one state to another, so there can be very big regional differences. You can have one state that has a massive oversupply and in theory the next state could have a very large undersupply. I’m in New Jersey today where the market just opened and the price of flowers is about seven times higher than in California right now. And that’s purely because of local supply and demand factors, largely due to the fact that New Jersey has only had legal adult use for five months.

Q: Competition with unlicensed marijuana sellers also keeps the industry pricing under pressure, doesn’t it?

A: You have an illicit industry that coexists with the legal industry. And in a state like California, for example, the illicit industry is several times larger than the licensed and regulated industry. And the licensing and regulation industry is very heavily burdened with taxes and other regulations.

Q: How is the industry doing in terms of customer growth?

A: This was the first year that more than 50% of adults in most states reported using (marijuana) in the past six months. Go back 5 or 6 years, it was about 40% of adults, so that’s a significant increase. But we have to recognize that a significant number of these people only use once every 6 months or at a very low frequency of use.

Denise W. Whigham