Friday April 8, 2016
The marijuana industry has been experiencing steady growth over the past few years. Between 2014 and 2015, for example, the industry grew a whopping 184 percent despite setbacks like supply shortage and inconsistent pricing according to ArcView’s 4th edition executive summary. As legalization continues to sweep the nation, these figures are only going to increase, and it’s enticing many investors and entrepreneurs to get in on the action.
Marijuana and the 2016 Election
Much of the optimism for industry growth is based on numerous ballot initiatives that would regulate marijuana for recreational use at a state level. During the 2016 election, many states (Arizona, California, Maine, Massachusetts, Rhode Island, Vermont and Nevada) will vote -- and likely approve -- recreational marijuana laws. This is in addition to the handful of states who already have recreational marijuana laws in place making adult marijuana use one of the biggest predictors of industry success. Some suggest nation-wide recreational sales will make up more than half of the market by 2020 despite its more limited scope.
A few other states (Pennsylvania, Missouri and Florida) will have medical marijuana on the 2016 ballot, as well. Ohio and Arkansas may also have medical marijuana on the ballot, though a sufficient amount of signatures is still needed for this to happen. Should these initiatives all pass, 28 states will establish (or have established) medical marijuana laws and 11 states plus Washington D.C. will establish a recreational marijuana system.
Some federal measures may also improve the condition of the cannabis industry. Pending measures include prohibiting the Department of Justice from interfering with state marijuana laws, allowing VA physicians to recommend medical marijuana for veterans in legal states, and prohibiting the US Department of Treasury from punishing banks who work with cannabis businesses. These measures would improve the validity of the industry and prompt more investors and entrepreneurs to join in on the action, as well.
Investor Interest Growing
“I think that we are going to see in 2016 this next wave of investors, the next wave of business operators, and people who’ve sort of been watching or dipping their toe in, really starting to swing for the fences and take it really seriously,” said Troy Dayton, CEO of ArcView Market Research according to Fortune.com.
As the market stabilizes and regulations get ironed out, more businesses will become confident in taking the plunge into the industry. Investors are also more likely to throw their hats into the ring (and dig deep into their pockets to do so) which last year’s $75 million investment in the industry by Founders Fund confirms.
The edible market is proving to be especially fruitful in part because of its popularity and in part because of its higher price-point which allows dispensaries to reap a bigger profit over-all. With products ranging from cookie and candies to drinks and fine cuisine, marijuana edibles have gone from a niche product geared toward experienced marijuana enthusiasts to a nostalgic attraction for cannabis tourists who would rather nibble on a tasty treat then toke on restricted land. No wonder marijuana edibles accounted for roughly 45 percent of the marketplace in 2014. Marijuana edibles could well be one of the biggest money makers in the industry for many years to come.
The cannabis industry is growing rapidly and generating a handsome profit to boot! Calculating the estimated compounded growth rate of 30 percent each year, the total cannabis industry could be worth as much as $40-$44 billion by the year 2020. As marijuana reform continues, many investors and business owners will gain confidence in the industry, thus helping them fulfill their own version of the American Dream.