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First and foremost, to my knowledge, state-licensed marijuana businesses are technically illegal under federal law. It is also an industry that has regulations that vary widely in the various marijuana legal states.
The recent emergence of America’s marijuana industry has many parallels to the path that recent dot com and e-commerce businesses start-ups followed. Initially there were huge surges in both of these new industries. This new state-licensed marijuana industry is analogous to this past dot com and e-commerce boom. this year, Colorado’s marijuana stores generated $947 million in nine months, close to the total of $996 million for all of last year. This year, revenues will likely exceed $1.2 billion.
There is no question in my mind that recreational marijuana will become a major industry in America. One need only look at Colorado, the first state where the sale of recreational marijuana was legal. Colorado generated revenues last year slightly under $1 billion. Through September of this year, Colorado’s marijuana stores generated $947 million in nine months, close to the total of $996 million for all of last year. This year, revenues will likely exceed $1.2 billion.
Colorado, with a population of almost 3.5 million is dwarfed by California’s population of almost 39 million. Since California’s population is ten times that of Colorado, it’s not unreasonable to assume that California’s legal marijuana industry will, within a few years, exceed $12 billion in annual revenues.
The Washington Post stated that Colorado’s marijuana industry added 18,000 new jobs last year. With ten times Colorado’s population, California could add close to 180,000 new jobs annually in that state’s new industry. Estimates indicate that Colorado’s marijuana business employs around 30,000 people. It is therefore reasonable to speculate that this business could generate approximately 300,000 new business positions in California.
Job growth is a component of economic growth. California, Massachusetts, Nevada and Maine are currently positioned to add new jobs in this new industry which will ultimately contribute to each of the state’s economic growth.
My experiences as an owner of recreational marijuana stores and a cultivation facility in Colorado dating from January 1, 2014 was documented in an eight-part CNN reality series, “High Profits” which aired in April 2015. The television series highlighted some of the challenges and problems that Colorado recreational marijuana businesses faced.
It is this past experience that provides me with a slightly different perspective than someone who is new to the industry. Although I remain bullish on the prospects of the recreational marijuana industry in the four states that just approved, it there are caveats to keep in mind.
Most importantly, entrepreneurs and investors seeking to get involved in the recreational industry should take a deep breath and slow down prior to plunging ahead into what conservatively could be described at best, as a “challenging” emerging market.
Reviewing the Colorado experience is helpful in anticipating what individuals in these new recreational marijuana states will likely encounter.