The Booming Cannabis Market

The Booming Cannabis Market

May 11, 2017

If you consider yourself an entrepreneur, a cannabis enthusiast, or simply someone looking to get involved in a new market then the cannabis industry might just be for you. Of course, this is said with some precautionary undertones; cannabis continues to be recognized as a Schedule 1 controlled substance according to the FDA with its cohorts:  LSD, heroin, peyote, ecstasy, and methaqualone. In other words, the overall federal consensus about cannabis is that cannabis has dubious use under medical supervision and has an alarming rate for impending abuse. Despite the concerns of the FDA and the federal government (which can be argued for as one large conglomerate), Tom Huddlestone Jr.’s recently published article in Fortune magazine, “Legal Marijuana Sale Could Hit $6.7 Billion in 2016”, forecasts the growth of the cannabis industry for 2016. More importantly, it offers both current and potential investors a sense of reassurance that their money and effortd belongs in the legal cannabis market.

In Tom Huddlestone Jr.’s article, he states that according to the ArcView Group, the self-proclaimed “legal cannabis industry’s premier hub for investment, data, and progress”, the legal cannabis market “will see a whopping $21.8 billion in total sales by 2020”.  Moreover, such predicted sales numbers will entice even more investors and entrepreneurs in the coming years. Compared to the $2.7 billion accumulated in total industry sales in 2014, the legal cannabis expects to grow to $10.8 billion by 2018. With the ArcView Group and New Frontier- a cannabis data analytics firm- predicting such promising statistics, keen investors and cannabis enthusiasts might want to know, “What is causing the legal cannabis market to grow at such a high rate?” Huddlestone Jr. theorizes a few reasons for the growth of the legal cannabis market. In his article, he lists a few explanations.

According to Huddlestone Jr., more states are putting the legalization of recreational cannabis on the voter’s ballot. Assuming majority of voters vote for recreational cannabis, expect to see cannabis shops budding nation-wide. Another reason for the growth of cannabis market is that exponential hikes in the rate of recreational cannabis sales are fueling the supply and demand aspect of the market. As more patients, collectives, and consumers demand cannabis, whether it is for medicinal or recreational purposes, the growers must supply more flowers to their clients and patients. In doing so, growers must be able to supply more and better-quality produced flowers and cannabis derivatives, which generally require higher costs for the means of production, not to mention the transportation of the products. The last of Huddstone Jr.’s reasons, which he draws from New Frontier Director of Analytics John Kagia, pertains to the legal cannabis market’s ability to list edibles, concentrates, extracts, and other cannabis derivatives at higher prices. Opposed to flowers, such cannabis-derived products enable businesses to “capture higher sales per customer through the sales of these new products.” For example, an 1/8th or 3.5 grams of mid-shelf flowers might cost you $35 while 1 gram of a Blue Dream extract, such as wax, might cost you close to $50. The main reason for this is the fact that the percentage of THC that is readily available upon consumption is higher in most forms than flowers, which are generally smoked.

These explanations are only to name a few of the reasons for the booming sales rate of legal cannabis. Nonetheless, the data composed by the ArcView Group and New Frontier is promising. If you are an investor and want to dive into a growing market or consider yourself a cannabis enthusiast who hopes to see the legal cannabis market :fuel the U.S economy, provide jobs, help those who use it as medicine, or just simply provide a legal means for people to use cannabis recreationally, the legal cannabis market is where your money and efforts belong.

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