Wall Street Analyst Estimates U.S. Cannabis Market Will Reach $47 Billion

[dropcap class=”kp-dropcap”]T[/dropcap]he U.S. cannabis industry has previously been estimated to reach $44 billion by 2020, but according to a Wall Street analyst, the number could potentially keep growing.

Wall Street Investment bank RBC Capital Markets estimates that a legal cannabis market in the U.S. could generate $47 billion annually within the next decade, with the same analyst mentioning that the current combined legal and illegal sales top $50 billion, although the amount of total sales that illegal purchases make up is unclear.

RBC Capital Markets, an investment bank part of the Royal Bank of Canada, issued a memo to clients outlining the growth of the U.S. cannabis sector. Authored by Analyst Nik Modi, the memo outlines how cannabis sales in the U.S. are catching up to beer and wine sales. Wine currently generates $65 billion annually and beer generates $117 billion.

The investment bank praised Constellation Brands’ investment in Canopy Growth, the largest publicly traded cannabis company, and said they were ahead of the curve. “We think this is exactly the type of move that more companies should be making (not in cannabis necessarily, but having the foresight to invest in future revenue streams, especially at a time when the core business is performing),” Modi said.

Shares of Canopy Growth have increased substantially since Constellation Brands said it would increase its stake in the company, with the stock increasing by 38 percent since last week.

Other market analysts say that illegal cannabis purchases still account for a majority of cannabis sold in the U.S., and a recent study in California found that nearly one in five California cannabis consumers still purchase from the black market. As legalization expands nationwide, more consumers will have to make their purchases from the legal market, which makes the size of the illegal market difficult to measure.