8 Stats That Proves The Cannabis Industry Is The Next Big Thing
The emerging cannabis industry seems to be moving faster and faster with each passing day. As these industry changes come, there is a green rush which has been taking place over the last decade since Washington and Colorado voted for adult-use of cannabis to be deployed in the 2012 election. Despite cannabis still being federally illegal, there are strong trends and numbers to suggest that the cannabis industry will be the next big thing in the world.
The formerly underground market of marijuana is coming to the business world faster than most expected. With this, look at the marijuana programs which are already operating across the country and the tax revenue generated from cannabis sales. For the states bold enough to deploy adult-use cannabis without federal prohibition being repealed, there has been a huge windfall of new tax revenue coming into the state. To show further the growth potential of the cannabis industry, we will take a look at the potential market size projections from firms such as ArcView, how companies are increasing user experience for cannabis consumers, and finally how there is a flow of institutional money coming from big-time investors. All of these trends seem to suggest and support the idea that the cannabis industry is not only here to stay but it will also be expanding at an exponential rate in the coming decade.
Number of Medical Marijuana States
There are already 31 states which have developed cannabis consumption programs for medical patients. These medical cannabis programs range in regulatory severity. Some states allow someone with any medical condition to apply for medical marijuana permits, while other states restrict patients to only a handful of extremely debilitating conditions such as cancer, Alzheimer’s, or post-traumatic stress disorder to access medical marijuana legally. It’s amazing to think that it was only a couple short decades ago when California became the first state in America to legalize cannabis for medical marijuana patients. This should go to show how quickly an industry can change over a couple of decades. Furthermore, we’ve seen a host of states offer an extremely inclusive medical marijuana program with over 100,000 patients accessing these medical marijuana programs in some locations. The sheer number of legal medical marijuana patients and facilities should be seen as a positive trend for the overall cannabis industry across the globe.
Number of Recreational Marijuana States
A similar but perhaps more progressive statistic than the first point is the number of states which have deployed recreational marijuana for consumers 21 years of age and older. Already in 2018, there are nine states and the District of Columbia which have legalized recreational cannabis in one manner or another. This is an exciting statistic considering the first adult-use cannabis programs which developed only a four and a half years ago in 2014 with Colorado and Washington developing their recreational cannabis programs. If and when the federal government starts to repeal cannabis prohibition, a few of these ten adult-use markets will become key examples of successful cannabis programs in which the federal government can adopt regulations from. Hopefully, this will happen within the next decade and is extremely possible considering 20% of states already support a change to legalize cannabis, with more states coming online with recreational cannabis in the near future.
Public Opinion of Cannabis
The public has had a negative view on cannabis for decades since polls starting asking Americans how they feel about cannabis. Yet, in the last decade spurred by initiatives such as SAFER, we’ve seen the tide turn on this negative opinion of cannabis to usher in a new era of cannabis legalization across the nation. The most recent polls today suggest that as many as two out of three consumers in America support the repeal of cannabis prohibition and want to see cannabis legalized and regulated. People around the world are starting to realize a more responsible choice than the prohibition of cannabis is to regulate and tax the substance in a similar manner to alcohol. As the trend continues to grow with more and more people supporting the cannabis industry, we believe it is only a matter of time before the federal government repeals prohibition of cannabis and starts to tax these lucrative businesses. After the United States as a country legalizes cannabis, we also expect other countries to follow suit and tap into the billions of dollars of taxable income from new businesses within the emerging cannabis sector.
Number of Cannabis Consumers Growing
Since more and more states have legalized the use of recreational cannabis, it is estimated that millions of new consumers will try cannabis for the first time in the year 2018. To be more precise, it is estimated that every day 7,000 new weed consumers enter the industry. Furthermore, the emerging cannabis industry should expect this number to grow as more consumers are introduced to adult-use cannabis programs in their home states. This will be amplified by the fact that a number of new consumers single reason not to consume cannabis was the illegal nature of it. With legalization spreading slowly but surely, this trend should change and allow these lawfully-minded individuals access to the cannabis plant for the first time. Furthermore, regular and formerly illicit cannabis smokers usually happily enter a regulated cannabis market if it is properly implemented by the state. All and all, suggesting the consumer base of cannabis consumers will grow from its current estimated number of nearly 33 million consumers in the United States alone.
Current Tax Base from Cannabis Companies
The many cannabis industries across the country have a variety of regulations that differ from state to state. Yet, one common trend is the heavy tax which is applied to these businesses. One of the positive aspects of legalizing cannabis is the huge increase for the tax base it will bring to a city and state. The state of Colorado’s cannabis industry alone is projected to bring in $1.56 billion dollars from cannabis sales since implementing its adult-use program in 2014. Washington has brought in $1 billion dollars and California has projections to bring in a whopping $2.75 billion dollars in adult-use cannabis sales. With tax rates ranging around 15% to 30% on these cannabis businesses, there is a lot of money to be made for the state. Thus, Its proven to be a popular new tax stream for states wise enough to pass cannabis legislation and take advantage of this trend early.
Potential Growth of the Industry
The cannabis industry is only projected to grow in the coming years. Today, it’s estimated that the entire United State’s cannabis industry will grow to be worth nearly $24 billion dollars by 2025. Some estimates have come in as high as $146 billion dollars for the international cannabis industry by 2025, assuming the programs continue to be deployed as quickly as they have been in the last few years. Already today in 2018, it’s a $13 billion dollar market in the United States alone. It should be noted the American cannabis industry is worth $13 billion with only a tenth of states operating a recreational cannabis program and about two-thirds of states operating medical marijuana programs. As more states and hopefully entire countries legalize cannabis for adult-use and medical use it is easy to assume the market size of the cannabis industry will rise significantly.
Better User Experience
With the expanding cannabis industry sweeping the world quickly, there has been a huge increase in the amount of private capital which has been invested in the cannabis industry. Companies are spending millions of dollars to research and develop new products for the nascent cannabis industry. Also, many firms are trying to increase consumer’s experience to be on par with other industries which have been around operating for decades. This includes new product developments such as pipes and other cannabis consumption devices, technology services to serve the cannabis sector, and new types of growing and extraction methods. As the cannabis industry grows and becomes more competitive, we should expect to only see a rise in more emphasis on user experience to help these companies find a competitive advantage.
As more cannabis markets come online, the weariness of investors to enter the cannabis industry is starting to change into a fear of missing out on the next big thing. Investment firms which specialize in the niche cannabis industry such as Steve DeAngelo’s ArcView platform have a war chest of $150 million already invested in cannabis. Furthermore, in 2017 CEO of the huge cannabis enterprise Privateer, Brendan Kennedy says, “We’ve had more conversations with larger institutional investors in the last six months than ever before,” says Brendan Kennedy, CEO of Privateer, which focuses on consumer brands in cannabis.” As the trend of money flowing into the nascent cannabis industry continues, we should expect to see future valuations of well-performing companies head for a higher price than ever before.