Recreational pot is expected to account for 95 per cent of the legal cannabis market in Canada after legalisation later this year.

That could lead to a re-assessment by ASX-listed cannabis stocks — most of whom are focused on the medical market.

Analysts are revising upwards the potential market for legal cannabis in Canada and the US.

Marijuana will be a $US6.5 billion ($8.7 billion) industry by 2020 in Canada, according to new research by one of Canada’s biggest banks CIBC.

That’s more than the $US5.1 billion Canadians spent on alcoholic spirits in 2017 — and it’s approaching wine sales. (That’s a worry for alcohol sellers because pot is regarded as a substitute product.)

Still, Canadian forecasts are dwarfed by existing sales of legal cannabis in the United States.

US users are already buying about $US50 billion worth of marijuana a year — a number expected to grow to $US75 billion in sales by 2030, says research firm Cowen & Co.

>> Scroll down for a list of ASX cannabis stocks

Analysts are busy upgrading thier forecasts for pit sales as Canada approaches an expected mid-year legalisation, joining the nine US States (and WashingtonDC) that have already done so.

Previously Cowen & Co predicted US sales would not reach $US50 billion until 2026, Bloomberg reports.

Canada's index of marijuana stocks over the past six months. Source:
Canada’s index of marijuana stocks over the past six months. Source:

Recreational use will dwarf the medical market

Canadians are expected to buy more than 800,000 kilos of marijuana by 2020, CIBC reports.

But the market will be led by adult recreational users — who CIBC predicts will account for 95 per cent of sales.

Medical patients will represent only 5 per cent.

That may lead to a re-assessment by ASX-listed cannabis stocks — most of whom are focused on the medical market.

>> Catch up on Stockhead’s coverage of ASX cannabis stocks here

The Canadian private sector will generate more than $US1 billion in earnings on marijuana sales, CIBC predicts.

The bulk of that revenue will flow to producers — companies that cultivate and process marijuana.

Mergers and acquisitions in the sector will continue at a “frenetic pace,” as producers seek to acquire medical expertise and elbow into new markets, CIBC predicts.

Canada is set to legalise marijuana nationwide sometime this year, with retail sales likely to begin in September, depending on the province.

>> Here’s a snapshot of ASX-listed cannabis stocks from early May:

ASX Code Company March quarter receipts December quarter receipts 6-month price change Price May 1 Market Cap
1PG 1-PAGE* (suspended) 0 0 0 0.165 25M
AC8 AUSCANN 0 0 2.40594059406 1.72 477.5M
AEB ALGAE.TEC* $5157 $1791 0.363636363636 0.03 23.4M
ATP ATLAS PEARLS* NA NA -0.259259259259 0.02 10.3M
BDA BOD AUSTRALIA* $201,000 $188,000 2.66666666667 0.44 24.4M
BOT BOTANIX PHARMACEUTICALS $145,000 0 1.76595744681 0.13 85.2M
CAN CANN GROUP 0 0 0.935135135135 3.58 499.6M
CP1 CANPAL 0 0 0.272727272727 0.21 19.6M
CPH CRESO PHARMA $188,000 $14,000 0.5 0.81 91.4M
ESE ESENSE $7000 $29,000 -0.276595744681 0.17 13.3M
EVE EVE* 0 0 1.5 0.01 24.6M
EXL ELIXINOL 5.9m NA 0 1.69 173.9M
LSH LIFESPOT HEALTH* $166,000 $196,000 -0.103448275862 0.13 9.4M
MDC MEDLAB CLINICAL $923,000 $1.2m 0.030303030303 0.68 145.6M
MMJ MMJ PHYTOTECH $1000 $43,000 0.0555555555556 0.38 84.1M
MXC MGC PHARMA $81,000 $69,000 0.12676056338 0.08 92.6M
QBL QUEENSLAND BAUXITE* $34,000 0 2.33333333333 0.05 79.7M
RGI ROTO-GRO INTERNATIONAL* $338,000 $380,000 0.012987012987 0.39 35.2M
SCU STEMCELL UNITED* $100,000 $46,000 0.304347826087 0.03 12.8M
THC HYDROPONICS CO $1.1m $821,000 1.32786885246 0.71 94.0M
ZLD ZELDA THERAPEUTICS 0 0 0.621621621622 0.12 86.9M
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This article includes reporting by Business Insider Australia, Australia’s most popular business news website. Read the original article. Follow Business Insider on Facebook or Twitter.