A five billion dollar industry? Marijuana sales topped $5.4 billion last year, and economists are forecasting legalized marijuana will bring in an even greater haul in 2016, close to $7 billion, and perhaps much more if Wall Street and the federal government take notice and push marijuana into the mainstream. It’s a gold rush, and demand remains robust.
Reports the NY Times on Feb. 4: “It’s not just heat lamps in closets and nickel bags anymore: Marijuana is getting some respect as legal sales take off. Demand is expected to remain strong this year, with a forecast of $6.7 billion in legal sales, the report said.”
As it stands now, twenty-three states and the District of Columbia currently have laws legalizing marijuana in some form. Currently, four states, along with DC, have decriminalized pot for recreational use. Other states have medical marijuana laws on their books that allow for limited use of cannabis.
The headwinds the industry is creating, and the huge payouts coming with it, are hard for states to ignore. Cannabis is going corporate, and businesses related to the production of the plant are booming. Even some parents are debating the ethics of their kids purchasing marijuana stocks.
“There is still a certain stigma around it,” said Brandy Keen, a co-founder of an indoor cultivation company called Surna. “This is an industry that came out of the basement. It grew out of closets and basements and hidden facilities in cinder-block buildings.”
According to Leafly.com, cannabis supporters are expecting some big changes this year. In many areas, marijuana usage is becoming more middle-of-the-road, and with 2016 being an election year, voters are eager to see what cannabis initiatives may be included in the candidate’s platforms. Leafly predicts Nevada, California, Maine and Arizona are all “almost a sure thing” to loosen legislation on recreational pot use.
Two marijuana analysis and investment firms – the ArcView Group, based in San Francisco, and New Frontier, based in Washington – teamed up to release the latest numbers. In 2015, non-medical pot use almost hit one billion – $998 million – up nearly $400 million from 2014. By 2020, the groups said total sales from medical and recreational use will be well over $20 billion annually.
Still, the road ahead is full of some pot holes, if you will. Explains the NY Times:
Cannabis businesses face a higher tax burden. They are also unable to use banks because of federal laws, which can hinder efficiency and pose security risks, forcing the businesses to invest heavily in security measures. Increased competition across state lines could pose new challenges as more states legalize the trade.
Nationwide, there remains strong public opinion to support the legalization of marijuana. A Gallop poll released last October showed almost 60 percent of Americans want recreational marijuana made legal. The numbers are much higher when it comes to medical use; over 80 percent of Americans favor the use of marijuana for therapeutic purposes. With marijuana being a $5.4 billion windfall, it’s hard not to take notice.