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Illicit Cannabis Still Dominates in Many Legal States, and Hemp-Derived THC Is a Growing Wild Card

Cross SectionalModerate evidence
The takeaway

A 12-state surveillance study found that THC products account for 90%+ of the cannabis market regardless of legalization status, with significant illicit market persistence and rapid growth of hemp-derived THC products in regulatory gaps.

Cannabis regulators and policymakers, market analysts, public health researchers studying legal vs. illicit cannabis.

THC products account for 90%+ of cannabis market value regardless of a state's legal status

What the researchers found

THC market size accounted for 90% or more of the combined cannabis market value across all 12 states regardless of legalization status. The composition of THC markets varied considerably even among states with the same legalization status. Hemp-derived THC emerged as a significant market segment in both legal and non-legal states, highlighting regulatory gaps.

Why it matters

This study provides a rare comprehensive view of the full cannabis market, including the illicit and hemp-derived segments that are often excluded from official statistics. The persistence of illicit markets alongside legal ones and the rapid emergence of hemp-derived THC challenge assumptions about how legalization reshapes cannabis access.

The numbers in context

12 US states analyzed; THC accounted for 90%+ of cannabis market value across all states; 142 in-store audits; 78 retailer interviews; 10 expert interviews; 2024 sales estimates; states classified by three legalization status categories.

How the study worked

Multi-source analysis combining national and state-level public data, Euromonitor Passport database, in-store audits (n=142), retailer interviews (n=78), and expert interviews (n=10) to estimate 2024 annual sales values across legal recreational, medical, illicit, and hemp-derived THC segments in 12 US states.

What this study cannot tell us

Illicit market estimates are inherently uncertain. Only 12 states included. Relies on multiple data sources with different methodologies and potential biases. Rapidly evolving market conditions mean 2024 estimates may not reflect the current landscape.

How to read the evidence

Moderate: Multi-source methodology with in-store audits and expert interviews provides comprehensive market estimates, though illicit market sizing involves inherent uncertainty.

When this study was published

Published in 2025 with 2024 market estimates.

The bigger picture

The emergence of hemp-derived THC products, legal under the 2018 Farm Bill but often unregulated at the state level, represents a major challenge for cannabis regulation. Combined with persistent illicit markets, the picture suggests that legalization alone does not eliminate the need for robust regulatory oversight.

Questions still open

  • How can states regulate hemp-derived THC products that exist in regulatory gray areas? What policy approaches are most effective at shrinking illicit cannabis markets? Will the hemp-derived THC market continue to grow or will regulatory action curb it?

Common questions

What is hemp-derived THC?
Hemp-derived THC comes from hemp plants (legally defined as cannabis with less than 0.3% THC by dry weight). Through chemical conversion or concentration, manufacturers produce THC products from hemp that may not fall under state cannabis regulations, creating a regulatory gap.
Why does the illicit market persist in legal states?
Factors include lower prices (no taxes), lack of age verification, wider product availability, and in some areas, limited legal retail access. The study found that even in fully legalized states, illicit THC sales remain a significant market segment.

Read the original research

Measuring commercial cannabis availability: findings from a multi-state surveillance study in the US.

Health affairs scholar, 3(12), qxaf209

Citation

Nargis, Nigar; Asare, Samuel; Westmaas, J Lee. (2025). Measuring commercial cannabis availability: findings from a multi-state surveillance study in the US.. Health affairs scholar, 3(12), qxaf209. https://doi.org/10.1093/haschl/qxaf209

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