This year, maybe more than ever, the political process seemed like a dumbfounding whirlwind. From top to bottom, political issues were being driven home and debated diligently. What you may not have noticed in all the political turmoil is the cannabis industry — and all extraneous arms it contains — only gained more traction on the national landscape. No matter which side of the political aisle you stand, the presence of big marijuana business as a nationally competitive economic player is becoming impossible to ignore. Whether just starting a newly legalized statewide cannabis industry, or taking advantage and finding key success demographics of one already established, the potential for increased profits from pot is there for the taking.
Florida’s Newly Voted-in Cannabis Industry
Florida will not roll out the comprehensive medical marijuana coverage seen in previous states. Because of lacking initial sweeping rollouts, the forthcoming medical marijuana industry in Florida may find itself below the national average when it comes to future revenue.
Some experts believe the Florida medical marijuana industry, alone, will be worth $85 million in its first year in 2018. They furthermore believe that number will balloon to over $700 million by 2021, again that’s just in slow-moving Florida.
For a peek into the future, Florida should look no further than first-in-the-country Colorado, which just saw 2016 pot sales exceed $1B over the first 10 months of 2016. Of this, over $150 million in taxes from legal marijuana sales was collected. Colorado currently uses much of the marijuana tax revenue to improve public schools in the area.
Currently, recreational marijuana has been legalized in 8 states, with 28 states legalizing some version of medicinal marijuana.
Nationally, alternative forms of cannabis such as edibles and smoked concentrates such as wax or shatter are quickly garnering more and more of the sales pie.
Per Marijuana Business Factbook 2016, while edibles and concentrates have yet to overtake flower (“buds”) as the main mode of mota consumption, they already make up nearly 30% of all legal cannabis sales in the United States.
Furthermore, the Factbook goes on to show that cannabis-infused products, also known as concentrates, display a profit margin beyond that of pharmaceuticals, beer, wine, and spirits, and even cigarettes (Figure 1). Concentrates profit margins will continue to increase with each new state legalization of marijuana. The systematic elimination of the black market in now-legal states has decreased the street value of marijuana, allowing for the creation of concentrates — which need large amounts of “trimmings,” or excess marijuana plant matter — at a much more affordable rate than was previously possible. As the product prices decrease, the profit margin soars. With over
Concentrates profit margins will continue to increase with each new state legalization of marijuana. The systematic elimination of the black market in now-legal states has decreased the street value of marijuana, allowing for the creation of concentrates which need large amounts of “trimmings,” or excess marijuana plant matter — at a much more affordable rate than was previously possible. As the product prices decrease, the profit margin soars. With over 58% of all Americans now looking upon cannabis favorably, there is no indication of a profit plateau in the concentrates or edibles industries any time soon.
Practicing Public Patience
The relatively small number of publicly traded investment companies in the marijuana industry indicates an untapped market. Unfortunately, it also indicates a severe lack of options when it comes to investing in the cannabis industry in 2016.
Public information site MarijuanaStocks.com currently lists under 100 publicly traded cannabis industry entities. Many cannabis industry companies shy away from going public due to the fact that marijuana is still illegal at the Federal level — causing an industry quagmire. Many more simply do not have the capital or are otherwise far too new to allow themselves to be situated to become a publicly-traded company.
Either way, marijuana industry investment opportunities are few and far between in the current national landscape, despite the continued success of the industry as a whole.
For the first time in 2016, North American pot sales numbers included sales in Canada thanks to nationwide legalization efforts fronted by now Canadian Prime Minister Justin Trudeau. Thanks, in part, to the additional country boost pot sales also soared over $6 billion annually for the first time. According to one report from Arcview Market Research, cannabis sales grew to $6.7 BILLION in 2016, $5.86 billion of which coming from legalization efforts in the United States. That’s over a 30% annual increase from 2015 cannabis sales data.
The report goes on to project North American cannabis sales will exceed $20 billion by 2021.
“You will not find another multibillion-dollar market growing at 25% anywhere in the world that is not already filled with multinational companies and institutional investors,” ArcView CEO Troy Dayton said in the release.
Dayton went on to agree that the legalization of marijuana in the four states of California, Maine, Massachusetts, and Nevada will have a significant lasting impact on the success of the marijuana industry, nationwide.
While ever-increasing numbers of states legalizing marijuana will certainly positively impact the industry down the road, the spending in the largest three existing recreational markets — Colorado, Washington and Oregon — “was up 62% through September 2016, after doubling in 2015. Fueled, in large part, by the sudden popularity of alternative ingestion methods such as edibles and concentrates,” per the report.
It is often difficult to find economic futures reports that nearly exactly mimic one another when predicting future economic success in an industry. When it comes to the emerging cannabis industry, however, it matters not if the data comes from brand new legal states, states with solidly-founded, preexisting cannabis legalities finding niche sales opportunities, or national market research agencies, the data is clear:
No other industry will see the kind of continued growth as the national recreational and medical marijuana industries will see in 2017 and beyond. For no matter left-leaning or right, successful industry speaks volumes. And the cannabis industry volume is currently at 11.