Legal Cannabis Business
The numbers that the legal cannabis business industry put up in 2016 are already record-breaking, and as legal marijuana becomes more mainstream in American society, the industry is about to reach a “tipping point.” That tipping point leads to unprecedented profits for legal cannabis, which is already an industry worth billions of dollars.
Some experts expect sales to hit above $22 billion by 2020. But it’s not necessarily the case that those profits will be easy money. Cannabis businesses will have to find a way to get the upper-hand if they expect to make it in the legal cannabis market.
“It is going to be a very, very competitive market in the next five years,” said John Kagia, the director of industry analytics at New Frontier, which specializes in researching investment in the cannabis business.
And those businesses are watching 2016’s political campaigns closely. Twenty-three out of fifty states already have laws on the books permitting legal medical and/or recreational cannabis.
But eleven more states have ballot measures which will decide the fate of legal cannabis in one form or another. If just a fraction of those states legalize cannabis, it could be a major development for the cannabis industry.
The explosion in sales is one indicator of the sea-change that a legalization landslide could produce. Those states are looking to places like Colorado and Washington.
Last year, Colorado earned some $135 million in taxes and licensing fees on nearly $1 billion in pot sales, according to The Denver Post.
The state of Washington, took in $70 million on statewide pot revenue totaling $257 million. That number could have been higher had there not been a pot shortage in 2015 due to high demand.
That growth in sales, which climbed from $4.6 billion in 2014 to $6 billion in 2015, is attributable to the legalization in recreational cannabis.
Recreational sales are expected to have a dramatic effect on medical marijuana sales, potentially reducing the latter’s market share by a substantial amount.
While 92 percent of the $4.6 billion in sales in 2014 went to medical marijuana, that share is expected to drop to 47 percent by 2020.
Those forecasts are low-hanging fruit to budding cannabis entrepreneurs.
The market for pot is expanding further as marijuana edibles and other products diversify the market. Additionally, more people are able to legally access the equipment and products required to grow and consume cannabis at home.