ArcView Archives - Green Market Report

Debra BorchardtDebra BorchardtJune 9, 2020
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5min19561

Legal cannabis sales continue to grow despite the strength of the illegal market. The new State of Legal Cannabis Markets report from The Arcview Group highlights the strengths of the industry going into 2020, while also acknowledging the challenges ahead.

Arcview partnered with analytics firm BDSA and is forecasting that worldwide spending on legal cannabis will grow 38% to $20.4 billion in 2020. Despite this, the lions share of purchases occur in the illegal markets. The report estimates that in 2019 $214 billion was spent in the illicit channels, while $14.8 billion was spent in the legal market.

This had been one of the biggest arguments for legalizing marijuana. Activists promised that if cannabis was legalized, then the illicit market would crumble because consumers would want to support legal businesses and enjoy the tested products with lots of variety. Instead, states that have enjoyed legal adult-use cannabis for at least five years continue to see 30-50% of sales occur in the illegal market. It would seem that this would not support more legalization, but it could have the opposite effect.

The report suggests that high taxation resulting in higher prices for product in the legal stores is the biggest hurdle. It said, “Local regulators could lower tax rates and/or relax regulations in pursuit of a quicker reduction in illicit-market sales, driving more legal spending and ultimately more tax revenue.”

This will be harder than it sounds. Oklahoma opted for a typical sales tax of 4%, while Washington is at an eye-popping 39%. California attempted to keep cannabis taxes from increasing, but it was blocked. It seems the state is pleased with the money it gets despite the effect it is having on pushing customers to cheaper options.

COVID’s Silver Lining

The COVID-19 pandemic certainly affected the industry for the first half of 2020, but the lingering effects will still be felt throughout the rest of the year. Cannabis was deemed an essential service in many states, but that didn’t mean all companies thrived under that designation. The report suggests that a recession starting this year could have short-term impacts that could be dire for some cannabis companies. Still, there could be a silver lining.

“State tax shortfalls due to recession could prompt more legislatures to proceed with cannabis legalization sooner rather than later,” read the report. It has the support of the population. BDSA’s fourth-quarter Consumer Insights study determined 29% of Americans already consumer cannabis. States that legalized cannabis also experienced an increase in cannabis consumers. In other words, passing new legislation would be popular and in turn increase, the tax revenue as more consumers come into the industry.

New Legalization

The flip side to COVID and new legislation is that with quarantines in place, it’s hard to push through new legal states even though it’s a big election year. 2016 was a big year for new states, but 2020 looks to be less so. Only three states have initiatives on the November ballot. Mississippi for medical use, New Jersey for adult use, and South Dakota for both. With limited federal aid, Governor Cuomo is considering cannabis legalization as a key strategy to generate crucial revenue streams for NYC and the entire state.

New Jersey had tried to pass legislation in 2019, but couldn’t get the three-fifths majority needed from legislators. Now the state is letting voters decide and it is expected to pass. That means sales could begin in 2022 or sooner. The report forecasts that New Jersey could jump from $107 million in 2019 spending to $1.3 billion by 2025.

The issue of federal illegality still looms over the industry. All the legislation that looked promising has stalled. While some thought President Trump might make a legalization move to garner support as his popularity declines amongst his base, he has not signaled any such effort. The Democratic nominee Joe Biden has taken a moderate approach and according to the latest CNN poll, looks to be leading Trump. However, COVID and racial injustice issues look to be the hot button issues, pushing legalization to the back burner


Video StaffVideo StaffOctober 4, 2019
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7min8970

Green Market Report thanks the ArcView Group for allowing us to tape Marijuana Money from their event this week. 

Constellation Brands (NYSE: STZ) wrote down its Canopy Brands (NYSE: CGC) investment to the tune of almost half a billion dollars. Constellation, which also owns Modelo beer and Robert Mondavi wines, said its share of equity losses from its roughly $4 billion investment came to $484.4 million. 

 Canopy Growth Corporation  (TSX: WEED) (NYSE: CGC)  has completed an all-cash transaction to purchase a majority stake in sports nutrition company BioSteel Sports Nutrition Inc. The amount of the acquisition was not disclosed. The deal gives Canopy a significant entry into the sports nutrition and hydration category and lays the groundwork for cannabidiol (CBD) products to be sold in the U.S.

Venture capital firm Canopy Rivers Inc.  (TSX: RIV)(OTC: CNPOF) completed a $10 million investment ( in TerrAscend Canada Inc., a subsidiary of its portfolio company.

Gotham Green Partners has invested an additional $20 million in iAnthus Capital Holdings, Inc. (CSE: IAN)(OTCQX: ITHUF) through the purchase of senior secured convertible notes. Green Gotham said it was part of a broader $100 million financing plan to support the buildout of all existing markets in which iAnthus currently operatesTerrAscend Corp. 

TILT Holdings Inc.  (CSE: TILT) (OTCQB: TLLTF) has negotiated an agreement with six of its remaining founders regarding the immediate forfeiture of all 60,217,088 stock options granted at the time of the merger. Adjusting for the subsequent forfeiture, TILT’s Q2 2019 net loss of $48.9 million would have been almost entirely reduced, bringing the Company close to break-even.

Fire & Flower Holdings Corp. (TSX: FAF) its financial results for the second fiscal quarter ending August 3, 2019, with total revenue of $11.1 million versus $9.5 million for the same time period in 2018. The net loss for the quarter was $6.4 million.

High Tide Inc. (CSE:HITI) (OTCQB:HITIF) announced financial results for the third fiscal quarter of 2019 ending July 31. Revenue in the third quarter increased by 281%, to C$8 million from C$2 million last year. 

48North Cannabis Corp. (TSXV: NRTH) delivered net revenue of $4.8 million marking 48North’s first full year of revenue, but a net loss of $8.1 million. In fiscal 2019, the company raised over $48 million and at the end of the year had $52.7 million in cash and cash equivalents on hand.

Arizona-based DNA testing technology company PathogenDx, Inc. announced $7.5 million in Series B funding. 

And finally HeavenlyRx Ltd. Acquired CBD company PureKana. 



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The Green Market Report focuses on the financial news of the rapidly growing cannabis industry. Our target approach filters out the daily noise and does a deep dive into the financial, business and economic side of the cannabis industry. Our team is cultivating the industry’s critical news into one source and providing open source insights and data analysis


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