Global 2020 Cannabis Sales Hit $21B, Insurance Brokers Saw Premium Boost
If one thing can be said about the pandemic, it definitely was not a bad thing for cannabis, a business that many states declared to be essential as numerous other business sectors shut down to help slow the spread of COVID-19.
Global cannabis sales rose nearly 50% in 2020 to $21.3 billion, a report released on Tuesday shows.
Cannabis data and analytics firm BDSA released its 2020 cannabis sales data and forecast future.
The 2020 figure was an increase of 48% over 2019 sales of $14.4 billion.
BDSA now forecasts global cannabis sales will grow to $55.9 billion in 2026, a compound annual growth rate of more than 17%.
Chris Boden, senior vice president of the cannabis division for Flux Insurance Services LLC, has felt the impact in a big way on his business.
“It’s going through the roof right now,” said Boden, who works out of the Sacramento, Calif., office. “I’d say in the last two months alone, I’ve written more premium than in the six prior months.”
It’s not so much that the number of policies he’s sold has increased, but Boden said that the average premiums per customer have risen as retailers adapted to the pandemic by offering curbside pickups, more deliveries, which necessitated more insurance.
Cyber is one of the lines where Boden has recently seen the biggest uptick.
“Now, they’re processing payments online, posting products online,” he said.
Of course, more cannabis sales mean increased revenues, and those increased revenues have driven up premiums, he added.
“Ninety-nine percent of the businesses that we work with were double or triple the revenue that they were doing the year prior,” Boden said.
Norm Ives, cannabis practice leader of wholesaler Worldwide Facilities LLC, has had a similar experience in terms of rising premiums per customer.
Ives said he may have even sold fewer polices in 2020, but his revenue was up and he written premium was up.
“They were better overall policies,” Ives said, attributing the increase in part to the rise in revenues, as well as his years in the business bearing fruit by attracting bigger and better cannabis operators.
Ives noted that pre-pandemic there was a great deal of talk in the cannabis industry centered on mergers and acquisitions, which may have been forestalled during the crisis.
He expects to see M&A activity pick up in the coming year, consolidating smaller operations, but creating bigger multistate operators to give potential business to brokers like him.
“An expanding and growing market is good for all areas, including insurance,” Ives said.
Micah Tapman, CEO of BDSA, said the figures beat earlier industry-wide forecasts, which were cautious because of the pandemic.
“Our previous forecast was conservative based on the expected economic fallout from the pandemic, but the industry not only survived, it thrived and legal cannabis gained considerable ground, exceeding our expectations in several markets,” Tapman said in a statement.
Legal cannabis sales in the U.S. passed $17.5 billion in 2020, growing 46% over 2019, while BDSA forecasts U.S. sales to reach $41.3 billion in 2026.
Several mature markets in experienced accelerated growth in 2020, the report shows:
- Colorado grew by 26%, double its 13% rise in 2019
- Oregon grew by 39%, versus 21% in 2019.
- Canada, the largest national market, grew by 61% in 2020 to more than $2.6 billion.
Medical and adult-use markets that launched in 2019 and 2020 contributed $1.6 billion in spending in 2020 – $422 million was in medical and nearly $1.2 billion was from in adult-use, the BDSA report shows.
Five new U.S. markets legalized medical or adult-use cannabis during the 2020 elections: Arizona; Mississippi; New Jersey; Montana; and South Dakota.
BDSA expects four new medical and five new adult-use markets to commence sales in 2021.
Illinois, which launched adult-use last year, saw the largest dollar gain in 2020, rising by $784 million.
The top four market expansions were: California ($586 million); Florida ($473 million); Colorado ($451 million); and Oklahoma ($400 million).
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