The U.S. cannabis industry is one of the shining lights of the domestic economy. As many other industries have suffered due to the ongoing COVID-19 pandemic, legal cannabis continues its path of strong economic growth.

“Within the dispensary channel in 2020, BDSA estimates total dispensary channel sales for all regulated cannabis to top $17.6 billion, reflecting an over 45 percent increase vs. 2019,” says Kelly Nielsen, vice president, insights and analytics, BDSA, Chicago. “We expect this to continue to grow to $21.6 billion in 2021.”

Total U.S. Dispensary Cannabis Sales

Total U.S. Dispensary Cannabis Sales
Source: BDSA
* Projected


Through every election cycle, more states add measures to legalize medical and recreational cannabis use for its citizens, progressively opening new markets. “Growth for the category has been a function of new markets getting established—such as greater development in the Illinois and Michigan markets—as well as growth within established markets,” says Nielsen. “For example, established markets of Arizona, California, Colorado, Maryland, Nevada, and Oregon combined demonstrated over 25 percent growth in dollar sales vs. last year.”

Current trends show more people migrating toward purchasing cannabis products in legal markets. “Overall, BDSA has also observed an increase in percentage of the population in legal states who are consuming, up to 43 percent in the fourth quarter of 2020 vs. 36 percent in the first quarter of 2020,” says Nielsen.



The food and beverage market within cannabis continues to grow along with the market overall. “Within the regulated cannabis market, edible products—including infused foods and beverages—make up about 15 percent of dollar volume, and growth is keeping pace with the broader category,” says Nielsen. 

Part of the mainstream appeal of cannabis-infused foods and beverages is their familiarity. “Edibles are a very accessible product form,” says Nielsen. She notes 73 percent of cannabis consumers consume edibles, and 33 percent actually prefer this format to inhalable or topical products. “Ultimately, the purchase decision to edibles is driven by the overall positive taste/flavor, followed by low price.” Consumers also appreciate the convenience of food and beverage product formats. 

“Edibles’ share within the market is generally holding steady, as edibles consumers tend to be new entrants into the category or lower volume consumers vs. those that prefer inhalable products,” says Nielsen. “However, we have seen an increase in the frequency of consuming edibles among edibles consumers.” For example, she notes about 55 percent of edibles consumers in California report consuming edibles at least daily. 

Nielsen notes the top three reasons for consuming cannabis edibles are to help sleep better, relax, and help relieve pain.

“Another interesting dynamic about the edibles category is that it benefits from the ability to control dosage, and those who consume edibles are more likely to be looking for lower-dosage products,” says Nielsen. She notes 41 percent of edibles consumers claim an ideal dosage is less than 10 mg. 

The edible category is dominated by candy—and particularly driven by gummies. Nielsen notes over 55 percent of the category spend is specifically toward gummies, a segment with a loyal consumer base. Chocolate follows in popularity.

Beverages are starting to gain ground. “Although relatively small, beverages in particular have grown,” says Nielsen, citing over 20 percent growth vs. 2019. “Growth has been particularly strong in the California market, where sales have increased nearly 40 percent vs. last year.”

New beverage innovations help meet consumer dosage needs, says Nielsen. “More products are coming into the market with sophisticated branding that also fits with a beverage usage occasion.” This includes smaller product formats, with individual cans or bottles of product that are 2.5 to 10 mg each, instead of just offering a larger multi-serve bottle.

Outside of the dispensary channel, sales of products infused with cannabidiol (CBD) continue to grow, says Nielsen. “Food and beverage products specifically are estimated to have topped $330 million through general retail/e-commerce in 2020.” That sales total doubles what we saw in 2019.

Kelly Nielsen Headshot“Today, edibles products make up about 15 percent of total CBD dollar sales sold through general retail,” says Nielsen. “However, this is expected to increase to nearly 30 percent by 2025.”

BDSA predicts this growth will continue. “Today, edibles products make up about 15 percent of total CBD dollar sales sold through general retail,” says Nielsen. “However, this is expected to increase to nearly 30 percent by 2025.”

Due to the current lack of FDA regulation for CBD-infused foods and beverages, much of this non-dispensary sales activity is through e-commerce. Nielsen notes 45 to 50 percent of general retail CBD product sales occur via e-commerce directly from the manufacturer.

“This is a key to consider for growth in this category, as volume for CBD food and beverage products through general retail stores—such as grocery, drug, convenience, and mass market outlets—actually declined slightly vs. 2019, per IRI sales tracking information,” says Nielsen. (BDSA and IRI have established a strategic relationship to integrate cannabis dispensary data within the IRI Liquid Data technology platform, providing a holistic view of the industry.)

“Beverages seem to be a primary driver of growth, with 10 percent growth in grocery channels year-over-year, according to IRI sales tracking information,” says Nielsen. “BDSA expects continued growth of the beverage market in particular, and expect them to make up 10 percent of the total CBD mainstream market by 2025.”



Federal regulation of CBD as an ingredient in mainstream foods and beverages will serve as a significant catalyst for market growth. “BDSA expects the FDA will approve CBD as a food additive in late 2021 or early 2022,” says Nielsen. “This is increasingly more likely due to the latest changes in federal administration.” Once FDA has approved CBD as a food additive, there are likely two key outcomes, notes Nielsen:

  • More availability of distribution, as more supermarkets, drugstores, mass market retailers, gas and convenience stores, and other retailers allow for distribution of the products in-store
  • More mainstream manufacturers and traditional CPG manufacturers will begin to innovate and seriously explore this space 

CarryOn Sparkling CBD Water Beverages
Traditional beverage companies have begun testing the market potential of new functional beverages featuring CBD.

“This would generate an influx of innovation and new entrants into the space,” says Nielsen. “A key with mainstream consumer package goods manufacturers entering the space is also that they have pre-existing distribution systems that can be leveraged.”

Nielsen notes BDSA market forecasts for CBD already assume FDA regulation in 2021, with retailers beginning to open distribution channels throughout 2021 to 2022.

“Edible products are a very accessible and familiar form to consumers, so it is an opportunity for new consumers to enter into the cannabis space—be it regulated cannabis or hemp CBD,” says Nielsen.

“In general, keep in mind that consumers seek functional benefits from many different food categories,” says Nielsen. “Beverages is a great example of a format that has functional benefits—coffee or energy drinks, tea to relax, wine to unwind, sports drink to recover, etc.” As such, she notes, it isn’t surprising to consider cannabinoids as yet another ingredient option to provide functionality.

This is where established food and beverage brands, with masses of existing loyal consumers, can step in with new, CBD-infused lines to drive incremental bottom-line growth. “We expect to see continued brand development and sophistication of marketing and product development,” says Nielsen.

One of the challenges that foods and beverages infused with tetrahydrocannabinol (THC) face is delayed onset of the relaxing effects. However, ingredient manufacturers have already begun devising solutions that can significantly reduce onset time. “Technology will likely play a role coming into 2021 as more organizations explore innovation options for faster-onset products,” says Nielsen.

Image Source: Getty Images / CarryOn / BDSA

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