Market Size Estimates For Legalized Marijuana

Policy Brief

Market Size Estimates For Legalized Marijuana

Estimates for the potential size of a new legal marijuana market are often riddled with uncertainty and inaccuracy, and can also be skewed by tenuous assumptions.

The process of legalizing marijuana has generated a need to estimate the potential size of the market for various reasons. Perhaps the most important of these is the ability of legislators to estimate the amount of tax revenue the government will receive from the market. Another oft-cited reason is to license an appropriate number of businesses to meet market demand in a command-and-control fashion. Private analytic firms provide similar reports for investors but, due to the proprietary nature of the reports and the capital at risk, these reports serve different functions. This paper first reviews the historical accuracy of government estimates of market size and then discusses potential uses and pitfalls.

Full Brief: Marijuana and Market Size Estimates