Cannabis Market Analysis: 10-Step Guide

Want to succeed in the growing cannabis industry? Here’s a quick 10-step guide to analyzing the market:

Set clear goals
Study industry trends
Know your customers
Check out competitors
Review regulations
Measure market size
Do a SWOT analysis
Look at sales channels
Crunch the numbers
Make an action plan

Key takeaways:

Cannabis market expected to reach $69.25 billion by 2029
15.40% annual growth rate projected
Startup costs for dispensaries: $500,000 – $2 million
Monthly operating costs: $14,000 – $48,000

Step	Purpose
Set goals	Focus your research
Study trends	Understand market direction
Know customers	Target the right audience
Check competitors	Find your niche
Review regulations	Stay compliant
Measure market	Gauge opportunity size
SWOT analysis	Assess your position
Sales channels	Pick best selling methods
Financial analysis	Plan your budget
Action plan	Execute your strategy

This guide helps cannabis businesses make smart decisions and stay ahead in a fast-changing industry.

1. Set Your Goals

Setting clear goals for your cannabis market study is key. It helps you focus on what you want to achieve and makes sure everyone is working towards the same things.

Why Clear Goals Matter

Clear goals are important because they guide your whole study. Without them, you might:

Collect useless information
Waste time and money
Make bad business choices

By setting good goals, you can:

Know who might buy from you
Find the best ways to sell
Make products people want
Do better than other businesses
Spend money wisely

Questions to Answer

To set good goals, ask yourself these questions:

Question	Why It’s Important
What does our business want to do?	Helps focus your study
What information do we need?	Guides data collection
What numbers should we track?	Measures success
When do we need to finish things?	Sets deadlines
What do we need to do the study?	Plans resources

2. Study Industry Trends

Current Market Trends

The cannabis industry is changing fast. Here are some key trends:

More people are using cannabis
More states are making it legal
People want special, high-quality products
Buyers care about the environment

Year	Number of U.S. Adults Using Cannabis
2019	48.2 million
2021	52.5 million

59% of Americans think medical and recreational cannabis should be legal.

Future Outlook

The cannabis industry is expected to grow:

Sales could reach $69.25 billion by 2029
Yearly growth rate: 15.40%

What to expect in the future:

More places making cannabis legal
New ways to grow and sell cannabis
Famous people starting cannabis businesses
Focus on fairness in cannabis laws and business

The industry will keep changing as more people accept cannabis use.

3. Know Your Customers

Customer Groups

To do well in the cannabis market, you need to know who your customers are. Different people buy cannabis for different reasons. Here are the main groups:

Customer Group	Description
Medical users	People who use cannabis to help with health problems
Recreational users	People who use cannabis for fun or to relax
Seniors	Older adults who might use cannabis for health reasons
Health and fitness fans	People who use cannabis as part of their healthy lifestyle
New users	People trying cannabis for the first time

What Customers Want

Knowing what customers like helps businesses make better products. Here’s what many cannabis customers care about:

Products: They want different types of cannabis with specific strengths and flavors.
Safety: They look for products that have been tested and have clear labels.
Earth-friendly: Many people like products that don’t harm the environment.
Help and information: Customers want staff who can answer their questions and explain products.

4. Check Out Competitors

Find Competitors

To find businesses like yours:

Search online for similar products or services
Read market reports
Go to industry events
Look at social media and online lists

You can also use tools like Google Alerts or SEMrush to watch what other businesses are doing online.

Study Competitors

Once you know who your competitors are, learn about them:

What to Look At	Why It’s Important
Website and social media	Understand their brand and message
Products or services	Find gaps in the market
Prices	Know how they set prices
Customer feedback	Learn their good and bad points

By looking at these things, you can:

See what others are doing well
Find ways to make your business different
Understand what customers like and don’t like
Make better choices for your own business

5. Review Regulations

Current Rules

Cannabis businesses need to know the rules they must follow. These rules are different in each place:

Level	Rules
Federal	Cannabis is not legal
State	Many states allow medical or personal use
Local	Cities and towns may have their own rules

Dispensary owners should know:

What rules to follow
What can happen if they don’t follow rules

If businesses don’t follow the rules, they might:

Get checked by officials
Have to pay fines
Lose their license to sell cannabis

Future Changes

Rules about cannabis often change. Businesses need to be ready for these changes:

What to Do	Why It’s Important
Watch for new laws	Be ready for changes
Go to cannabis events	Learn about new rules
Talk to rule makers	Understand what might change

By doing these things, businesses can:

Avoid problems with the law
Do better than other businesses
Be ready for new rules

Staying up-to-date helps cannabis businesses do well as rules change.

6. Measure Market Size

Knowing how big the cannabis market is helps businesses make good choices and find ways to grow. Let’s look at how to figure out market size and guess how it might grow.

Market Size Calculation

To find out how big the market is, look at:

The whole market (TAM)
The part you can sell to (SOM)

Here’s how to do it:

Method	How to Do It
Top-down	Start with big market, narrow to your area
Bottom-up	Count possible buyers, multiply by what they spend

Use these formulas:

What to Find	How to Calculate
TAM	All people × How much they spend on cannabis each year
SOM	TAM × How much of the market you can get

Recent numbers show:

World cannabis market in 2024: $33.84 billion
North America has 92% of the market

Growth Forecast

Guessing how the market will grow helps find future chances:

Look at past growth
Think about what makes the market grow

The cannabis market is expected to grow 15.40% each year from 2024 to 2029.

Year	How Big the Market Might Be
2024	$33.84 billion
2029	$69.25 billion

Things that help the market grow:

More places making cannabis legal
More people using it for health and fun
Better ways to grow cannabis

Places to watch:

Europe for medical cannabis
Asia-Pacific as rules change
More people wanting cannabis in food and drinks

7. Do a SWOT Analysis

Strengths and Weaknesses

A SWOT analysis helps businesses look at what they do well and what they need to work on. This is important in the cannabis market, where companies need to do better than others to succeed. To check your strengths and weaknesses, ask:

What does your business do well? (like having good products or working efficiently)
What could your business do better? (like having more money or knowing more about the industry)

For example, a cannabis shop might be good at having many different products, but might spend too much money buying those products.

Opportunities and Threats

A SWOT analysis also helps businesses see what chances they have and what problems they might face. These are things outside your control that can affect your business, like new laws or what other companies are doing. To find opportunities and threats, ask:

What good things could happen in the market? (like more people wanting to buy cannabis products)
What bad things could happen in the market? (like new laws making it harder to sell cannabis)

For example, a cannabis growing business might see a chance to sell more CBD products, but might worry about too many other companies growing cannabis too.

SWOT Table

Here’s a table to help you organize your SWOT analysis:

Good Things About Your Business	Things to Improve	Chances to Grow	Possible Problems
Many different products	High costs	More people want to buy cannabis	Laws might change
People know and like your brand	Not enough money	New places to sell	More companies selling cannabis
Work gets done quickly	Need to learn more		People might think badly of cannabis

Use this table to write down what you find out about your business and the cannabis market.

8. Look at Sales Channels

Sales Methods

Cannabis businesses can sell their products in two main ways: online and in stores. Each way has good and bad points.

Sales Method	Good Points	Bad Points
Online	Easy to use, many choices, private	Can’t see products up close, might get low-quality items
In-Store	Talk to staff, check products, meet others	Fewer choices, might be far away

How Well Channels Work

It’s important to know which way of selling works best. Online shops can offer many products, while stores might have fewer but let you see them up close.

When picking how to sell, think about:

What products you have
What customers want
How easy it is to buy
How to teach customers
Prices and deals
How to get products to customers

To see if a sales channel works well, look at:

What products it offers
If it meets customer needs
How easy it is to use
How it helps the community
Its prices
How it handles getting products to customers

9. Crunch the Numbers

Startup Costs

Starting a cannabis business costs a lot. The price depends on what kind of business it is, where it is, and how big it is. Most dispensaries need between $500,000 and $2 million to start.

Here’s what you might need to pay for:

Item	Cost
Licenses and paperwork	$150,000 – $500,000
Building or store	$200,000 – $400,000
Help from experts	$50,000 – $100,000
Workers	$50,000 – $100,000
Tools and machines	$50,000 – $100,000
Safety stuff	$20,000 – $50,000
Ads	$20,000 – $50,000
Things to sell	$50,000 – $100,000

Running Costs

After you start, you need money to keep the business going. Here’s what you might spend each month:

Item	Monthly Cost
Rent	$5,000 – $20,000
Power and water	$2,000 – $5,000
Things you need to buy often	$1,000 – $3,000
Worker pay	$5,000 – $15,000
Other stuff	$1,000 – $5,000

Income Guesses

To know how much money you might make, you need to look at:

What’s happening in the cannabis world
What other businesses are doing
What people want to buy

Here’s how to guess your income:

Look at how the cannabis market is growing
See how much other businesses are selling
Think about how many people might want to buy from you
Figure out how much each person might spend

10. Make a Plan

Key Findings

After looking at the cannabis market, sum up what you learned. This helps you see the most important things for your business. Look back at your work and ask:

What’s happening in the cannabis world?
Who wants to buy from you, and what do they like?
What does your business do well and not so well?
What good things and bad things might happen?

Writing down these main points helps you make smart choices for your business.

Action Steps

Now that you know the main points, it’s time to make a plan. Here’s how to turn what you learned into things you can do:

Question	Why It’s Important
What should I do first?	Helps you focus on the most important things
What do I need to do these things?	Makes sure you have enough money and people
What problems might I face?	Helps you get ready for tough times
How will I know if I’m doing well?	Lets you check if your plan is working

Conclusion

Main Points

To do well in the cannabis business, you need to study the market carefully. This guide showed you 10 steps to do that. Here’s what you learned:

Step	What to Do
1	Set clear goals
2	Look at market trends
3	Know your customers
4	Check out other businesses
5	Learn about rules
6	See how big the market is
7	Do a SWOT analysis
8	Look at ways to sell
9	Look at costs and money
10	Make a plan

By doing these steps, you can make smart choices for your business.

Keep Looking at the Market

The cannabis world changes a lot. To do well, you need to:

Keep watching what’s new in the market
See what customers want
Check if the rules change
Look at how your business is doing

What to Do	Why It’s Important
Watch market changes	Stay ahead of others
See what customers like	Make products people want
Check new rules	Follow the law
Look at your business	Fix problems and do better

FAQs

How big will the cannabis market get?

The cannabis market is growing fast. Here’s what experts think:

Year	Market Size
2022	$27.7 billion
2027	$82.3 billion

The market is expected to grow by 24.3% each year. This growth is mostly because more places are making cannabis legal.