Finding holes for new markets is a valuable space with high returns. The marijuana industry is looking prime for booming, so let’s use our financial fluency tools to look deeper at its market impact.
How did we get here?
Marijuana’s usage in America dates back to the Native Americans, however, it only became controversial in 1860, when several states began signing the first regulations.
Criminalization efforts were backed by powerful lobbyists in the nylon industry who saw hemp as a main competitor. With the help of the newspaper industry, a public campaign designed to fearmonger the population and demonize marijuana was launched.
This was achieved by arbitrarily associating the plant with lawless behavior, psychosis, and “dangerous” minority groups like African-Americans and Mexicans.
Under the Marijuana Tax Act of 1937, recreational marijuana usage and possession was deemed illegal.
But now, the logic and reason for all of this is coming into question, thanks to Dennis Peron who is credited with rebirthing the conversation around recreational marijuana after forming Cannabis Buyers Club in 1992. Four short years later, in 1996, Proposition 215 was passed in California allowing the medical usage of marijuana.
Colorado and Washington took marijuana legalization to the next level. Rather than stopping at medical-usage, they became the first two states fully recreationalize marijuana on November 6, 2012. Oregon, Alaska, Massachusetts, Maine, Nevada, and, yes, California, have all followed suit since then.
California: The Green Rush
California has nearly 40 million people with a GDP of nearly $2.5 trillion in contrast to the 17 million people living in Colorado, Washington, Oregon and Alaska. That’s why California has been described as “the green rush”, with projections for the state’s recreational marijuana industry to grow to $5 billion by the end of the year; some analysts think California’s growth could triple the size of the national legal marijuana industry.
And that’s not hard to imagine.
In 2015, Colorado boosted its economy by $2.4 billion and added over 18,000 jobs, just three years after legalizing recreational marijuana. But there was a big difference: legalization was viewed favorably by the Obama administration which removed marijuana from the list of federal drug enforcement priorities.
What happens now?
Although the recreational marijuana industry continues to grow, it has been met with serious pushback. Current Attorney General, Jeff Sessions, repealed laid-back Obama-era policies directing federal drug enforcement officers to not focus on marijuana businesses functioning legally under state law.
During his candidacy, Trump claimed he would not interfere with marijuana legalization at the state-level, but many in the industry have lost all confidence in our President’s integrity, character, and ability to follow through on his promises.
Regardless, Session’s efforts and Trump’s hypocrisy have had minimal effects on repealing legalization efforts as Vermont became the 9th state to legalize recreational marijuana on January 22.
But how will this affect our markets? Let’s take a deeper look as we strive towards achieving financial fluency.
The recreational marijuana industry is one of the youngest industries in our country, and also one of the fastest growing. As with any new industry, marijuana companies are vying to capitalize on a potentially massive customer base.
One of Colorado’s most well-known companies, Dixie Elixirs & Edibles, specializes in THC-infused drinks as it attempts to corner the liquid edibles market. However, we have yet to see a true recreational marijuana brand take over the industry on a larger scale.
In Amsterdam, one of the most well-known countries to have legalized recreational marijuana, “Bulldog” is a household name. The Bulldog was the first real coffeeshop, which is simply a café to smoke in. Nowadays, it’s a top tourist attraction as people line up outside to grab a seat and have a toke. Souvenir shops decorate their walls with Bulldog apparel while every lighter is marked with the famous canine face. The returns are sure to be large for the number one marijuana brand in any country. However, the United States is still waiting for their “Bulldog”.
Regardless of our current government’s stance towards marijuana, it’s clear that recreational legalization (or at least decriminalization) at the federal level has never been closer to becoming reality in the United States. Although its future is unsettled, one thing is certain: the ceiling for the recreational marijuana industry is sky-high. By surrounding yourself with a greater understanding of the markets, you can continue to step closer to financial fluency.