Marijuana could be a $35 billion market by 2020

Published: July 15, 2015 1:36 p.m. ET

 

If all 50 states were to fully legalize pot, it could generate big sales

 

By

KathleenBurke

Reporter

If all 50 U.S. states were to approve the consumption of marijuana for medical and recreational use, it could become a $35 billion market by 2020.

That’s according to GreenWave Advisors, an industry research firm that tracks retail sales in the four states and the District of Columbia that have already legalized it. Those markets have experienced explosive growth since marijuana was approved, demonstrating the strong opportunity for industry players and state governments eager to gather the tax on sales and replenish their coffers.

The sale of recreational marijuana in Washington began July 8, 2014, and has steadily grown to $31.9 million in June from $2 million in that first month, or a total of nearly $180 million for the first 12 months, according to an analysis by Marijuana Business Daily of data from the state’s Liquor Control Board.

The Washington market is catching up on recreational sales in Colorado, which began in January 2014. Colorado state retailers brought in about $305 million in sales in 2014, according to GreenWave Advisors.

See also: Get marijuana on demand for $95 a month

Analysts attribute the growth in sales to a variety of factors, primarily the conversion of a long-existing black market to a regulated one.

“We’ve never had an industry that was a black market industry of this size,” said Leslie Bocskor, founder of cannabis industry consulting firm Electrum Partners.

Steve Gormley, chief business development officer at OSL Holdings, Inc. (OSLH), a company focused on consumer advocacy and social activism, compared legalization to the repeal of alcohol prohibition in 1933.

“As was the case in advance of the federal repeal of alcohol prohibition, there is a landscape of opportunity in states that allow for the use of recreational or medical marijuana,” Gormley said.

Analysts identify California as the watershed state that would lead to the rest of the country approving full legalization. State voters will decide on the issue on the November 2016 ballot.

“California is the big kahuna,” said Matt Karnes, founder of GreenWave Advisors.

Gormley agreed. “…It is a tremendous market, with its proximity to Washington and Colorado, there is an advantage from a revenue standpoint of legalizing recreational, and we will start to see other states moving rapidly in the same direction.”

As the recreational industry grows, there will be increasing opportunities for businesses to enter the market.

“This is an industry that is allowing people to come in and start businesses that they otherwise might not have been able to start,” Bocskor said. “The events and pressures—pressure for regulation of markets, federal legality versus state legality—create a unique business environment never seen before.”

See also: Marijuana moms shatter the grass ceiling

Though the budding market might seem attractive to potential investors, Gormley advises careful research before dedicating funds.

“The reality is you want to make investments in companies with solid fundamentals rather than concepts, specifically publicly traded companies in the space,” Gormley said. “If investors are going to go in privately, you need to have a well-developed network of people inside the industry. There are a lot of crooks out there, and investors can get fleeced. ”

Despite the potential risks, analysts expect the market to continue its upward trajectory for the foreseeable future.

“It will eventually plateau, but we still have a few years of growth,” Bocskor said. “Growth begets growth.”

More from MarketWatch

CONTINUE READING…

Feds Propose Taxing Marijuana, True Cash Crop

With all the upheaval in Washington, it isn’t likely that federal proposals to tax marijuana will pass anytime soon. Yet as Professor Paul Caron catalogs, economists are looking anew at the proposed Marijuana Tax Equity Act (H.R. 501). It would end the federal prohibition on marijuana and allow it to be taxed. Growers, sellers and users would not to fear violating federal law. But dealing with taxes would be another story.

The bill would impose an excise tax of 50% on cannabis sales and an annual occupational tax on workers in the growing field of legal marijuana. Is that a good trade-off? Federal Proposals to Tax Marijuana: An Economic Analysis by Jane G. Gravelle & Sean Lowry focuses on potential federal marijuana taxes. The authors present justifications for taxes and they estimate levels of tax. They consider possible marijuana tax designs, as well as tax administration and enforcement issues such as labeling and tracking.

Of course, statistics can be deceptive. When Colorado legalized recreational use, it trumpeted the tax revenue it knew would be piling in. There’s a 2.9% sales tax and a 10% marijuana sales tax. Plus, there is a 15% excise tax on the average market rate of retail marijuana. If you add them up, it’s 27.9%.

1

But it turned out that the $33.5 million Colorado projected to collect in the first six months of 2014 was a little too optimistic. When the smoke cleared, Colorado was missing $21.5 million in pot taxes! One explanation is that all those taxes meant many smokers still buy on the black market. Getting numbers on that can be tough.

The Marijuana Policy Group has suggested that perhaps only 60% of purchases in Colorado are made through legal channels. One reason is price, since legal marijuana is more expensive. And the taxes are still being contested. So far, the Colorado tax on marijuana has been upheld despite claims that paying it amounts to self-incrimination violating the Fifth Amendment.

Plaintiffs wanted the taxes on recreational pot outlawed, reasoning that they require businesses and consumers to implicate themselves in federal crimes. The plaintiffs lost on getting an injunction, but challenges to the taxes continue. The 2.9% medical marijuana tax compared with 27% on the recreational variety is a big spread.

Some patients could be reselling their 2.9% medical stock to the public. A medical marijuana card costs $15. About 23% of the estimated marijuana users in Colorado have medical cards, according to the Marijuana Policy Group.

Let’s talk about “corporate cannabis”…

 

1412462694814

 

In the last few years the corporate agenda has led the legalization movement of cannabis right thru the processes of capitalism, all nice, and tied up with a pretty bow on the “bag”.

There is a serious problem with this.

First of all I am not anti-capitalist.  In fact it would be my pleasure to be able to walk in my local town drug store and purchase an ounce of Herb and pay the taxes on that purchase as well.

I would probably be the first person in line in Cave City when the store opened if that were possible.  I would also love to see a Cannabis Café on the corner of  Broadway and First Street. 

That being said I can compare the legalization of corporate cannabis with the “Wet” vote that just passed in my town. 

Before the town went “wet” there were a couple/few people around the area that served the locals occasionally.  Yes, it is illegal, but in my opinion it shouldn’t be because taxes have already

been paid on that product by the “bootlegger” when he bought it from the store.   At any rate, the people who “served” us were good people and were hurting no one.  They were just trying to

get by day by day like most of the rest of us and provide a service.  Point is, now that the town is “wet” there will be no more business for the “bootlegger” who is just a small town

person trying to make a dollar…not a million dollars.  Although this is not a totally accurate comparison because alcohol is already taxed and regulated it is still illegal for someone to buy and

resell or even serve someone alcohol in this county with the exception of a couple of wet restaurants we had previously.

I find it ironic that a city could legalize alcohol consumption in a couple of restaurants, with the purchase of an alcohol license of course, even though that the county itself remains dry. 

Corporate cannabis will not give us the right to grow for personal use,or to be able to sell at the vegetable market like fresh oregano, catnip, white sage, etc.,

If we continue to “legalize” in the current fashion only corporate driven companies will be allowed access to the growth, processing and marketing of cannabis much the same as alcohol is now.

The “legalize, tax and regulate”  push was very convenient for corporate America. 

That is why that either repeal or re-legalization must be the avenue we take to ensure that we have our own personal rights to this plant restored.  If “legalize, tax and regulate” wins we will loose

our rights to this plant forever.  Laches will rule.

Another thing to consider is the fact that just because something is produced in a corporate environment does not necessarily mean that it is a good product.

Look at all the recalls that have been issued on the cars we drive everyday which were issues that have proven to be fatal in a lot of instances. 

With a new market emerging such as the one we have with cannabis is it imperative that we retain our own personal rights to the plant AND that any corporate products which are

produced and sold from cannabis are ensured to be safe whether it be for medical or recreational purposes.  And just like the farmer’s market on Saturdays it will be “buyer beware”

when purchasing home grown or made items. 

Be smart.  Do not give up your personal rights in order to let the government regulate everything and then assume because it is government regulated that it is safe. 

Just read the side effects on prescriptions.  That right there will explain to you how interested the government is in your safety.  Regulation although needed in some

form or fashion cannot be relied upon to ensure your safety when purchasing or using any type of food or prescription medicine or herbal remedies.  So don’t let them take away

your personal rights under the guise of health and safety regulations.  That is just a farce. 

Cannabis/Hemp is a wonderful plant that can be used for so many things.  It is a treasure that God gave us to use.  We need to make sure the government does not take yet another

human right away from us.  If the laws governing cannabis/hemp are completely repealed then it will be free for everyone.   I can put my “flower” in the kitchen window and

Pharma’s can produce their own version of cannabis medicines, as well the recreational use will support many café’s, etc., 

Freedom for everyone to use and enjoy… and be thankful for.

Fight for freedom from the prohibition of your freedoms!

smk

*A Project CBD Special Report on Medical Marijuana Inc., HempMeds & Kannaway

*George Soros’ real crusade: Legalizing marijuana in the U.S.

* America’s Drug Companies Are Bankrolling The Crusade Against Legal Weed

*Investing in MJ

*Inexco Mining (C.IMC): Canadian medical marijuana goes worldwide

*Medical marijuana update: Organigram certified organic