Key Points:
- U.S. Cannabis revenue growth hinges significantly on the emergence of new state markets.
Ohio, for instance, is set to kick off its recreational sales next month, a move that could
potentially be replicated in Florida (through a ballot initiative) and Pennsylvania (via a legislative
measure). - There has been a steady decline in medical marijuana cardholder counts (and revenues) in
states that have legalized recreational use (cardholders, in turn, become consumers of a rec
market). - Based upon an analysis of average spending trends in several Medical Marijuana markets, we
estimate, conservatively, a potential of $3.8B for Ohio; Florida, and Pennsylvania, $5.6B, and
$4.2B, respectively. - For a sense of reasonableness, we applied the same methodology and assumptions to the
Colorado market, established ten years ago for all intent and purposes. This exercise revealed ~
$1.5B, which approximates today's market. - Consensus revenue estimates over the next five years (and likely current valuations of publicly
traded operators) do not include the incremental lift from these new markets. - The timing of a complete rollout is unknown and, as we have learned over the years, difficult to
predict.