November 8, 2016 will go down in history as a big day for marijuana. Voters in eight out of nine states with marijuana-related questions on Election Day ballots said “Yes” to approve recreational or medical marijuana.
California, Maine, Massachusetts, and Nevada legalized recreational marijuana joining Alaska, Colorado, and Washington, DC. That means marijuana is now legal for adult use in eight states. The New York Times puts that into perspective saying, “With the addition of California, Massachusetts and Nevada, the percentage of Americans living in states where marijuana use is legal for adults rose above 20 percent, from 5 percent.”
Florida, Arkansas, North Dakota, and Montana approved or expanded their medical marijuana programs.
The Economic Impact
With the legalization of marijuana in four additional states, there is no doubt that there is now a significant opportunity to grow the economy. For states, it’s time to take dollars back from the black market and move that money into the tax base. Legalization could also lead to redeployment of police, courts, prison work forces, and more. Importantly, it guarantees job growth.
Nowhere is the economic impact of legalized marijuana more obvious than California and the enormous economic powerhouse that the “West Coast Bloc” of California, Oregon, Washington, and Nevada has created.
First, think of it this way. The population of California is greater than 39.1 million, and more than 30 million of those residents are adults. The consumer potential in this one state is massive.
Next, consider the size of California’s economy. The state of California has the sixth largest economy in the world behind the United States, China, Japan, Germany, and the U.K. You read that correctly. The state of California’s economy is larger than every country’s in the world except for five. Business Insider reports that legalization of marijuana is expected to add at least $1.5 billion in revenue to California by January 2018 and another $4 billion by 2020.
Finally, think about how many jobs the expanded marijuana industry could create. If just 2% of the adult residents of California purchase recreational marijuana, that’s over 600,000 customers that need to be served by workers in the marijuana industry. The number of employees who will have to be hired could be in the hundreds or thousands across the state. Furthermore, more workers and resources will be needed to serve marijuana businesses. In other words, more picks and shovels are needed to keep up with the new gold rush.
The above only focuses on California. Add the 16.2 million adults in Florida and include Nevada with its goal to turn Las Vegas into a cannatourism hot spot, and it’s clear that both legalized recreational and medical marijuana will have far-reaching effects.
Challenges and Opportunities of the Growing Marijuana Industry
The numbers don’t lie. The marijuana marketplace just got a lot bigger, and with a larger audience of consumers comes bigger opportunities and challenges. Perhaps the biggest unknown post-election is what will happen when Donald Trump takes office. Much is predicated on his pick for Attorney General.
Assuming the new administration doesn’t try to make sweeping changes to the marijuana industry, there is the potential for an enormous increase in the number of licensed businesses across the cannabiz spectrum – from growers through dispensing and retail. This would be great news for people in the picks and shovels businesses.
However, with growth and expansion will come cross-border issues. Yes, we’ll see companies like Vireo Health and Columbia Care continue their cross-border expansions, but the challenges we’re seeing in medical marijuana growth will carry over into recreational marijuana growth.
Another challenge will come for states that have legalized medical marijuana bordering states that have legalized recreational marijuana. People will cross state lines to access marijuana (like they did in the early days of gambling) or to avoid paying taxes (which is happening with gas). As recreational marijuana is legalized in more states, the industry will mature, but for now, the cross-border effect is very real.
What remains to be seen is whether or not we’ll see a norming of regulations as new states launch their recreational and medical marijuana programs. They have a lot of models to learn from and copy. Hopefully, it will help them avoid what has happened in Maryland with the lack of diversity in awarding licenses.
Furthermore, learning from other states might help them speed up the process to get the product into the hands of patients and consumers because one thing is certain – just because these laws have passed doesn’t mean things will change tomorrow. The slow path from a vote to program development and consumer/patient access is a long one.
For a detailed, state-by-state analysis of U.S. marijuana licensing, including market structure and state requirements, be sure to add your name to the growing list of people who want to be notified when the comprehensive reference guide, Tracking Marijuana Licenses State-by-State: 2017 Edition, is available! You can also subscribe to news alerts so you don’t miss any news and updates about marijuana licensing.