OUR 9TH YEAR OF PROVIDING PROPRIETARY CAPITAL MARKETS INTELLIGENCE ON THE CANNABIS / HEMP / PSYCHEDELIC SECTORS
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Chart of the Week
The Viridian Capital Chart of the Week highlights key investment, valuation and M&A trends taken from that week’s Deal Tracker that we believe are impactful for investors, companies and acquirers.
Week ended 05/23/2025
Viridian Capital Chart of the Week: How Big is the U.S. Intoxicating Hemp Market? – A Modeled Estimate
- The battle between the intoxicating hemp industry and the regulated cannabis industry is heating up. Several states, including California, Texas, and Tennessee, have passed, or are close to passing, highly restrictive legislation that would severely curtail the unregulated industry that many term “a loophole in the Farm Bill.” Other States have declared any form of THC, whether hemp-derived or not, to be illegal.
- The natural question everyone is asking is how big this hemp industry is. Unfortunately, unlike Cannabis, which is closely tracked by the states and estimated by Headset, BDSA, and Hoodie, among others, there doesn’t seem to be a single solid source of data.
- Some estimates have been compiled for individual states. Whitney Economics did a study for Texas and arrived at an estimate of $4.3B in retail sales. We utilized that data point to judge the reasonableness of our approach, deriving a figure of $3.8B.
- Given the lack of solid state-by-state data, we elected to separate the states into five categories and apply what we believe to be reasonable per capital spending to each category.
- States that have neither recreational nor medical programs (illegal states) but are not actively enforcing hemp regulations were assigned a $ 150 adult revenue estimate.
- Illegal States with active enforcement of hemp restrictions were assigned a $0 per adult estimate.
- Limited Medical states, which generally have only low THC products and often limited accepted diagnoses for prescriptions, were assigned a $160 per adult estimate.
- Full Medical States with comprehensive medical programs were assigned $100 per adult.
- Recreational states, where competition from legal sources is highest, were estimated at $40 per adult.
- The graph shows all states with estimated annual revenues in excess of $0.2B. The largest seven states are estimated to be Texas, Florida, Georgia, North Carolina, California, Indiana, and Tennessee. These seven states account for approximately $11.2B of our total estimate of $19.6B.
- At our estimated market size of $19.6B, the hemp market is nearly 60% the size of the legal cannabis market. Hemp clearly represents a highly significant drain of revenues from legal Cannabis. No wonder so many limited-license cannabis states are trying to stuff the Genie back into the bottle. Stay tuned.
