Economics of The Cannabis Industry in 2025

As we look ahead to 2025, the cannabis industry continues to draw comparisons to its more entrenched counterparts: alcohol and tobacco. At a glance, these industries appear similar—they all cater to human tendencies to enhance mood, alter consciousness, or provide a ritualistic escape. But beneath the surface, cannabis reveals itself as a far different beast, and perhaps this difference is why the market feels so hollow from within.

Alcohol and tobacco have been deeply woven into the fabric of social and daily life for centuries. A cigarette break is ritualistic but also habitual—a mindless extension of stress relief or social bonding. Alcohol, a depressant, paradoxically dominates social circles as a key to camaraderie. Bars buzz with laughter and clinking glasses, and few gatherings feel complete without a toast.

Cannabis, on the other hand, rarely takes center stage in this way. Even among its most dedicated users, cannabis often remains a personal or spiritual experience. A shared joint around a campfire feels like an ancient ritual, not the backdrop of a loud party. No matter how “dank” the strain or how smooth the puff, no one wants a fat cigar—or its cannabis equivalent—puffing away in the middle of a crowded room.

This social disconnection might be why big-money investors aren’t just waiting for federal legalization to join the cannabis party—they’re reevaluating the party altogether. While alcohol and tobacco boast high rates of daily, lifelong use, cannabis is different. It often follows a lifecycle: a phase of youthful experimentation, creativity, or self-discovery, eventually tapering off for many users. While some, like myself, use cannabis daily for anxiety or medical reasons, the vast majority don’t adopt it as a lifestyle.

Even as a daily user, I find myself preferring a drink with friends or a coffee shop hangout over a smoke session. Smoking cannabis socially doesn’t feel mainstream; it feels intentional, intimate, even sacred. It’s a tool for reflection more than a lubricant for socializing. And as much as I value its benefits, I don’t see cannabis becoming a cornerstone of American culture like beer at a barbecue or cigarettes during a break.

This is the heart of cannabis’s economic challenge. Unlike alcohol and tobacco, cannabis has diminishing returns. Many consumers will try it a handful of times—an edible here, a pre-roll there—and move on. Those who stick around expect cheaper, higher-quality products over time, a demand that keeps prices volatile and margins razor-thin. The market’s roller-coaster trajectory isn’t just about legalization delays; it’s about the fundamental elasticity of cannabis consumption.

Brand convenience drives American consumerism. Products like soda, candy, chips, alcohol, and tobacco dominate because they are cheap, accessible, and effortlessly integrated into daily routines. Cannabis, by contrast, remains an outlier. Its consumption requires intention—whether for wellness, creativity, or relaxation—none of which aligns with the mindless, habitual nature of its counterparts.

So, as we move into 2025, it’s worth reflecting on what truly drives sustainable growth in any market: culture. Social need, convenience, and routine consumption fuel demand, shaping industries that endure. For cannabis, the question isn’t when federal legalization will arrive but whether the plant can ever occupy a comparable space in human behavior.

Perhaps the industry isn’t hollow after all—it’s just misunderstood, standing apart in a culture that thrives on immediacy and convenience. In this sense, cannabis might always remain an outlier, a ritual reserved for the mindful, the meditative, and the occasional spark of something deeper.

Let’s keep watching, learning, and evolving.