Will #Cannabis Lead America’s Economy?

Will the multi-billion dollar cannabis industry lead America’s economy? It depends on how you look at it. According to the Bureau of Economic Analysis, the status of the American economy has not been stimulating. Second quarter GDP came in at 1.1%, a significant drop since the same quarter in 2015 and well below the same quarter in 2014. Disposable income is up slightly and spending even less. These and other factors reflect a perhaps stable, but not explosive future for the national economy. So, what role is the cannabis industry likely to play?

The Cannabis Industry Today

The ArcView Group research paints the picture. Their research reports of a surge in medical marijuana and adult-use sales from 2014’s revenue of $4.6 billion to 2015’s $5.7 billion. That represents a 232% increase in adult-use sales as a result of decriminalization and legalization in an increasing number of states. At this pace, analysts expect a $22 billion market by 2020.

These numbers do not include the related markets in supplies and production, nor the taxes and increased job opportunities.

Other studies by advocacy groups and reports with a vested interest show wide and wild fluctuations in the promise, but even the most conservative estimates on actual and possible performance present a considerably lucrative opportunity for investors and entrepreneurs.

Medical Marijuana Sales

The legalization of medical marijuana has produced several economic benefits.

• In Colorado alone, the first year of approved medical-marijuana sales produced over $3 million in tax revenues.
• In turn, this tax income supports drug prevention programs, substance abuse treatment and public safety services.
• Availability of medical marijuana correlates with a reduction in teen traffic fatalities.
• It is expected to reduce healthcare costs related to glaucoma, spasticity, cancer pain and chronic pain.

Adult-Use Marijuana Sales

Allowing marijuana for “adult-use” seems preferable to calling it “recreational use.” Where not directly legalized, possession and use have been decriminalized.

• According to Gallup, 58% of Americans support legalization for adult use.
• State legislatures are watching the budgetary impacts of sales in Colorado, Washington and Oregon.
• Sales in Washington, alone, generate $70 million in taxes on sales of $257 million, despite pricing instability and product shortages.

And, with votes on approval scheduled for the November elections, the potential remains very strong.

Your Takeaway

Will the multi-billion cannabis industry lead America’s economy? Inc.com puts marijuana sales among its Top 5 Fastest Growing Industries. IBIS World also lists it among its top 5. But, the market is not yet free, as restrictions on permits, sales and licensing vary from state to state. For example, the majority of operations can only operate on a nonprofit basis.

With that said, given the pressing political and popular interest, there is every reason to expect cannabis restrictions will ease and standardize. If you settle for growth on the more conservative estimate of $5.7 billion, you have signs of significant demand. And, with population-dense areas like Los Angeles, Manhattan, Chicago, Miami and Boston opening in the future, vendors will rise to the market.

This also means there will be some shake-out among the smallest retailers, some problems with restrictions on interstate-trade and a redefinition of advertising rules. But, it also means the competition will spawn new industries and reduce prices. So, whether you go by growth percentage or dollar potential, the cannabis industry is poised to take a leading position in America’s economy.