U.S. Cannabis Market Size & Share Analysis - Trends, Drivers, Competitive Landscape, and Forecasts (2025 - 2032)

U.S. Cannabis Market Size

U.S. Cannabis Market Trends and Growth Drivers

Product Innovation and Diversification Are Key Market Trends

• Product innovations and application diversification strongly influence the U.S. cannabis market by widening applications and driving down costs.
• The launch of new CBD and THC products, such as beverages, edibles, vapes, and pre-rolls, provides consumers with a wider choice in the ways to use marijuana and hemp.
• Most companies working in the cannabis market are adopting eco-friendly solutions, such as biodegradable packaging; and organic ingredients, which meet the environmental regulations.
• This diversification is a result of the continuous rise in investment in the research and development on cannabis, its applications, and its consumable forms.
• In July 2024, Organigram Holdings Inc. completed its early partial funding of USD 1 million in Phylos Biosciences Inc., a U.S.-based cannabis genetics company.
• The investment will help the former company boost its auto-flower and rare cannabinoids portfolio.

Legalization and Regulatory Changes in U.S. Are Key Drivers for Market Growth

• The legalization of cannabis and favorable regulatory changes in the U.S. normalize its use and make it acceptable by society.
• This encourages product innovations, investment, and consumer confidence, driving the market growth.
• State-level legalization is the key driver for the market, as 24 states allow the use of cannabis for recreational purpose, and 38 states have legalized it for medical purposes.
• The legalization also contributes to tax revenues for the federal and state governments.
• Considering the growing popularity of marijuana and hemp and its large consumer base, taxes ranging from 6% to 37% are levied across states.
• According to the Marijuana Policy Project, states where it is legal generated more than USD 4 billion in tax revenue from product sale to adults in 2023.

Federal Prohibition Acts as Key Challenge in Market Growth

• Cannabis is classified as a Schedule I substance under the Controlled Substance Act (CSA) of 1970.
• Many states in the country have legalized cannabis for medical and recreational use, but federal illegality creates a dual regulatory environment, which acts as a challenge in the market growth.
• Those working in the cannabis sector do not get any traditional employment benefits, due to which there is a shortage of workers, which also restrains the market growth.

U.S. Cannabis Market Analysis

By Source

• Marijuana holds the larger market share, of around 70%, in 2024, due to its legalization, established consumer base, and usage awareness across the country.
• Marijuana is used for its medical benefits in curing various conditions, such as chronic pain, anxiety, multiple sclerosis, and epilepsy.
• Various states have started medical marijuana programs for expanding its usage over that of opioids.
• Hemp will grow at the higher CAGR during the forecast period, attributed to its broad industrial applications, regulatory support, and growing consumer interest.
• Hemp has a wide application in the textile, construction material, bioplastic, paper, and biofuel sectors.

The growing consumption of hempcrete, hemp insulation, hemp fiberboard, and hemp-based composites in construction drives the category’s growth.

The following sources have been analyzed:

• Marijuana (Larger Category)
  • Flowers
  • Oils & Tinctures
  • Others
• Hemp (Faster-Growing Category)
  • Oil
  • Fibers
  • Seeds
  • Others

By Component

• The THC-dominant category holds the largest market share in 2024.
• This is due to the extensive recreational usage of cannabis in the country, which is picking up even more since its legalization in a number of states.
• The psychoactive effects of THC make it popular among habitual users and consumers seeking a new experience.
• The CBD-dominant category will grow at the higher CAGR during the forecast period.
• This growth can be attributed to the rising consumer awareness of the medical benefits of CBD.
• A variety of high-CBD products, such as edibles, topicals, and supplements, are now available both at specialty stores and online.
• CBD-dominant products provide non-intoxicating therapeutic options, which increases their acceptance in the health and wellness sectors.

The components analyzed in the reports are:

• THC-dominant (Largest Category)
• Balanced THC and CBD
• CBD-dominant (Fastest-Growing Category)

By Cultivation

• Outdoor is the largest category due to the extensive land availability, low expenses, and high yields.
• In comparison to greenhouse and indoor cultivation, growing pot in the open requires a minimal investment.
• Moreover, farmers can take advantage of natural resources, such as sunlight, rainfall, and soil nutrients.
• The indoor category will grow at the highest CAGR during the forecast period.
• This will be due to the technological advancements in indoor agricultural practices, such as hydroponics, grow lights, aeroponics, and vertical farming.
• This provides a better control over temperature, humidity, and lighting, boosting the overall productivity.
• Indoor cultivation eliminates the use of pesticides due to the controlled environment inside the facility, further supporting the organic way of farming.
• Moreover, indoor cultivation alleviates the effects of adverse weather, enabling farming throughout the year.

Based on cultivation, the market has the following categories:

• Outdoor (Largest Category)
• Indoor (Fastest Growing category)
• Greenhouse

Application Insights

• Recreational is the largest category, with a market share of around 60% in 2024. The rising use for leisure, wellness, and lifestyle improvement drives the growth of the market in this category.
• This is itself due to the cultural shift, ongoing legalization, and acceptance of alternative recreational products, such as those in high in CBD, rather than THC.
• The medical category will grow at the highest CAGR during the forecast period due to the rise in the number of states legalizing hemp and marijuana for medical use.
• The launch of new kinds of cannabis products, such as oils, tinctures, capsules, and patches, for medical use has improved access for consumers.
• The rising aging population and incidence of chronic conditions drives the growth of the category in the country.
• Cannabis is being increasingly used for the management of arthritis, glaucoma, and neuropathic pain.

The report offers insights into these applications

• Industrial
• Medical (Fastest-Growing Category)
  • Chronic pain
  • Depression & anxiety
  • Arthritis
  • Post-traumatic stress disorder (PTSD)
  • Cancer
  • Migraines
  • Epilepsy
  • Alzheimer’s disease
  • Multiple sclerosis
  • Acquired immune deficiency syndrome (AIDS)
  • Amyotrophic lateral sclerosis
  • Tourette’s syndrome
  • Diabetes
  • Parkinson's disease
  • Glaucoma
  • Others
• Recreational (Largest Category)

Regional Analysis

• The west region holds the largest market share, of 40%, in 2024, as all western states, except Idaho, including California, Colorado, Oregon, and Washington, have legalized marijuana and hemp.
• Furthermore, the western region offers ideal conditions for cannabis cultivation, particularly northern California and southern Oregon.

The regions analyzed in this report are:

• Northeast
• Midwest
• West (Largest and Fastest-Growing Regional Market)
• South

U.S. Cannabis Market Share

• The nature of the U.S. cannabis market is fragmented due to the presence of a huge number of players, from small-scale cultivators and dispensaries to large multi-state operators.
• The market nature varies from state to state due to the differences in state laws, which leads to more fragmentation.

U.S. Cannabis Market News

• In December 2024, Trulieve Cannabis Corp. announced the opening of its medical cannabis dispensary in Tampa Florida.
• In November 2024, Curaleaf Holdings Inc. received a USD 40-million investment from a major regional commercial bank.
• In October 2024, Curaleaf Holdings Inc. opened a new medical dispensary in Miami Florida.
• In August 2023, Medical Marijuana Inc. completed the acquisition of KZ1, a network marketing company headquartered in Japan.
• In November 2024, CV Sciences Inc. acquired Extract Labs Inc., a distributor of cannabinoid gummies, topicals, and tinctures.