A new state-commissioned report concludes that Hawai‘i’s current cannabis market, which includes the state’s medical cannabis market and hemp-derived cannabinoid sales, is already worth between $16.5 million and $32 million per month, and could grow to as much as $95 million per month within five years if recreational marijuana is legalized.
The 66-page report, prepared for the Hawai‘i Department of Health’s Office of Medical Cannabis Control and Regulation by Cannabis Public Policy Consulting, represents one of the most detailed examinations ever conducted of Hawai‘i’s cannabis economy. Researchers analyzed BioTrack seed-to-sale data from 2019 through 2024, conducted surveys of medical patients, adult consumers, tourists from the U.S., Canada, and Japan, and modeled future market behavior under various tax and licensing structures.
The report found that medical dispensaries account for roughly 86% to 87% of all dollars spent by registered patients on cannabis products. When researchers compared survey-based spending estimates with actual BioTrack sales data, the figures matched at a rate of 98.6%, an unusually high level of accuracy for economic modeling.
Despite this, the report makes clear that Hawai‘i’s total cannabis economy extends far beyond the regulated medical system.
Medical patients were found to spend about $210 per month on cannabis across all sources, but adult consumers over 21—who do not have access to the medical system—primarily obtain their products from illicit sellers, friends and family, homegrow, and hemp-derived retailers. Hemp products alone account for an estimated $6.17 million per month in spending by non-patient adults, representing nearly 31% of the total combined hemp and cannabis market among that group.
In other words, a large, functioning cannabis economy already exists outside of the medical framework.
The report estimates that tourists would add at least $11.5 million per month in cannabis spending under an adult-use system. Domestic tourists are projected to be the primary drivers, reporting an average willingness to spend $124.65 per trip. Notably, surveys of Japanese and Canadian tourists found that most said legalization would have no impact on their decision to visit Hawai‘i, countering common concerns about tourism decline.
If Hawai‘i legalizes adult-use marijuana, researchers estimate the state would need at least 65 retail outlets in the first year to meet demand from residents, patients, and tourists combined. The projected distribution by island includes 33 on O‘ahu, 13 on Hawai‘i Island, 12 on Maui, five on Kaua‘i, and one each on Moloka‘i and Lāna‘i.
Cultivation needs would be substantial. Based on current plant efficiency data from the medical system, Hawai‘i would need to produce roughly 117,500 harvested plants per year to satisfy demand. Depending on how the state structures canopy rules, that translates to between 17 and 67 indoor cultivation facilities, or between 47 and 376 outdoor facilities.
The report emphasizes that strong production management authority would be necessary to prevent oversupply, price collapse, and diversion to illicit markets.
Taxation modeling revealed another key insight: a total effective tax rate of 15% would maximize tax revenue while still keeping consumers in the legal market. A 10% rate would keep more consumers from turning to illicit sellers, while a 20% rate would maximize revenue at the risk of pushing some buyers away.
The research also highlights significant barriers within the current medical system. Patients on Moloka‘i and Lāna‘i reported travel times of 70 to 90 minutes to reach the nearest dispensary. Annual license fees for operators can exceed $100,000 regardless of sales volume, and mandatory annual financial audits add additional burdens, particularly for smaller operators.
At the same time, the report notes that Hawai‘i’s strict regulatory framework has successfully ensured reliable supply for patients. Nearly 68% of patients reported there is “plenty of supply,” and fewer than 5% reported serious shortages.
Home cultivation, while difficult to measure, is also a meaningful factor. The report estimates that at any given time, residents may be producing between 3,500 and 46,000 pounds of cannabis through homegrow across medical patients and adult consumers.
Perhaps the most important takeaway is that legalization would not create a cannabis market in Hawai‘i—it would shift a large, existing one into the regulated system.
By year five after legalization, total monthly cannabis demand across all sources is projected to reach between $59 million and $95 million. When adjusted for expected participation under a 15% tax rate, the figure still ranges from $46 million to nearly $90 million per month.
Researchers conclude that Hawai‘i’s medical system is functioning effectively for patients but is operating alongside a much larger, largely unregulated cannabis economy. Legalization, combined with thoughtful tax policy and flexible licensing structures, would allow the state to capture a significant portion of that activity while preserving patient access and encouraging small business participation.
The report repeatedly stresses that licensing fees must be affordable if Hawai‘i wants diverse participation, noting that survey respondents—particularly legacy farmers—showed very low willingness to pay high entry costs for cannabis business licenses.
Ultimately, the analysis frames legalization not as a leap into the unknown, but as a policy decision about whether Hawai‘i wants to regulate, tax, and manage a cannabis economy that already exists at scale across the islands.
More articles from The Marijuana Herald:
