Projections for Connecticut adult-use cannabis sales

Forecast Rationale

Connecticut is likely to be a medium to small adult-use cannabis market compared to others in the Northeastern US. Connecticut's total population is 3.6M, with approximately 2.7M residents (~75% of the total state population), above the age of 21. The majority of the state population is concentrated in SW Connecticut (near the NYC metro area), and in the central part of the state near Hartford. Connecticut borders three states: New York, Massachusetts, and Rhode Island. Two of these states (New York & Massachusetts), have legalized both recreational and medical cannabis programs. It should also be noted that New Jersey, where adult-use cannabis has been legalized, is very close to SW Connecticut.

Given the legality of cannabis in surrounding markets, which are expected to be significantly larger than CT in terms of both consumers and total market sales, cross-border shopping is anticipated to be limited. Some SW Connecticut residents who commute daily to the NYC metro area may purchase cannabis in New York, which could negatively impact Connecticut adult-use cannabis sales slightly. But this drag could likely be offset by the lift in sales via Rhode Island residents (where there is not adult-use legalization), crossing into eastern Connecticut to purchase cannabis.

Massachusetts' first complete year of adult-use cannabis sales (Dec 2018 - Nov 2019), was used as a baseline for Connecticut's forecast. Similar to Massachusetts, Connecticut had an operational medical cannabis market before passing legislation legalizing adult-use cannabis sales. Also like Massachusetts, medical cannabis retailers/producers in Connecticut are able to move to a hybrid medical/adult use business model. Although, it is worth mentioning that there are significant fees for existing medical retailers/producers to hybridize their businesses (i.e., $1M for a retailer and $3M for a producer). At the end of Massachusetts' first year of adult-use cannabis sales, there were 33 operational cannabis retailers. Connecticut currently has 18 operational medical cannabis retailers. This is an indication that the first year pipeline of supply and retail availability should be similar between the two markets.

Since the Connecticut adult-use cannabis bill was passed through legislation, and not a voter determined ballot initiative, we did not adjust the forecast to reflect public attitude towards cannabis.

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High level year one estimate of cannabis sales

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Massachusetts' first year total adult-use cannabis sales and the 21+ population were used to calculate the Massachusetts first year per capita spend of $78.86. As outlined above, we expect cross-border purchasing to be a net neutral impact between Connecticut commuters purchasing in New York, and Rhode Island residents purchasing in Connecticut. Additionally, given that Connecticut and Massachusetts both fall under the New England grouping for the CPI of Alcoholic Beverages, there was no adjustment made to account for pricing. Finally, applying the Massachusetts first year per capita spend to Connecticut's 21+ population results in a topline adult-use cannabis sales forecast of $216M for the first complete year of sales in Connecticut.

We will continue to watch Connecticut as it makes its way towards adult-use legalization. In the meantime, sign up for a demo of Insights Premium to learn how you can keep track of industry growth and find opportunities in the market.

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