Selling legal marijuana is a multi-billion dollar business and many are saying the industry is the new gold rush. In 2015, sales of legalized weed grew to $5.4 billion, far exceeding the previous year’s total of $4.6 billion.
Two independent analysis firms, ArcView Group and New Frontier, released a summary report that the legal marijuana market is taking hold in the U.S. and is attracting attention from investors. As more states make the buying and selling of weed legal, stock market experts are looking to cash in on the new businesses.
While there are still some questions of morality, more and more companies that sell to legal marijuana businesses are popping up and benefiting from the growing industry. From companies that manufacture climate systems for growers to others that make high-tech, odor-resistant marijuana bags, all are seeing tremendous progress.
“There is still a certain stigma around it,” said Brandy Keen, a co-founder of Surna, which makes technology for indoor cultivation. “This is an industry that came out of the basement. It grew out of closets and basements and hidden facilities in cinder-block buildings.”
Of the $5.4 billion, legal recreational weed sales were $998 million, much higher than the $351 million in 2014. The analysts used state tax receipts and data on medical and recreational sales for the report.
In comparison, data firm IBISWorld estimated $48 billion in sales of alcohol and $43 billion in tobacco sales for 2015.
Two states where recreational weed use is legal, Colorado and Washington, fueled much of the industry growth according to the report. Colorado tax revenue for both medical and recreational is predicted to be $135 million for 2015, which is a 77 percent increase from 2014. Washington’s tax revenue was $70 million.
The report stressed 2016 would be the “tipping point” for legalized marijuana, meaning many states will enact legislation to make marijuana legal in some form. Currently, four states allow recreational weed use, while voters in California, Nevada, Arizona, Massachusetts, Maine, Rhode Island, and Vermont will get the opportunity to vote on the issue in 2016. Meanwhile, 23 states and Washington, D.C. allow cannabis use for medicinal purposes.
In November, research firm GreenWave Advisors predicted 2015 legal marijuana sales to be $4.8 billion and sustained growth over the next three years. Merrill Lynch agreed in their December report, saying the cannabis market and any associated businesses will continue to grow as long as the legalization trend continues.
While most analysts agree that the demand for legal weed is expected to grow, the industry faces some challenges not experienced by other types of businesses. As the federal government still considers cannabis a Schedule I drug, marijuana businesses cannot use many banks for basic services like checking accounts. Unable to deposit cash, many of these businesses keep large sums of money on hand, compelling them to invest in more security measures.
Even celebrities are trying to cash in on the growing marijuana legalization movement. As previously reported by the Inquisitr, actor Woody Harrelson recently announced he has applied to open one of the first medical cannabis dispensaries in Hawaii.
Harrelson’s company, Simple Organic Living, was one of 60 applicants to apply for a license in Honolulu County. Once the Hawaii Department of Health reviews all the applications, medical marijuana dispensaries will start opening sometime in July.
From $5.4 billion, marijuana sales are predicted to be $6.7 billion in 2016 and $21.8 billion by 2020, according to the analysts’ report.
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