Marijuana is becoming a big part of the American experience – and a big piece of the economic pie.
By 2018, retail cannabis sales in the U.S. could bring in as much as $8.2 billion a year, according to the Marijuana Business Factbook. That’s a massive increase from this first year of legal weed sales, when between $2.2 billion and $2.6 billion is expected.
CannaBusiness Media owns the Marijuana Business Factbook. Chris Walsh, editor of CannaBusiness Media, calls the estimate “conservative.”
Keep in mind, Waslh’s prediction doesn’t depend entirely on legalization spreading. Rather, he believes huge room for growth exists in the two states that have already legalized recreational weed and the 24 others that have adopted medical marijuana.
That’s because the Department of Justice announced in August 2013 that it would lay off legal pot. As long as states enforce eight federal priorities, such as keeping cannabis away from kids, the feds won’t sue to stop the states that legalize or raid the cultivators and pot shops that operate in them.
The decision was announced in the now-famous Cole Memo, written by Deputy Attorney General James M. Cole. With an admittedly uncertain go-ahead from the federal government, the states and businesses are now free to open a real market with the full potential of a legalized drug.
“You could call it the $2 billion memo,” Walsh said.
“The reality of retail sales could be larger,” he said, because the estimate doesn’t include wholesale transactions “or the billions of dollars in ancillary cannabusiness revenues such as growing equipment, real estate, legal fees, testing labs, paraphernalia, etc.”
Of course, $8 billion is nothing compared to the black market. Illicit marijuana sales account for $40 billion a year. But that just means there’s a massive customer base that could be converted to the legal market with the right supply, prices, and access.
The market revenue of legal marijuana is set to grow so rapidly for a few reasons. For one, analysts expect the market to transform from mostly medical pot to mostly recreational in coming years.
Another factor that could dramatically expand the scope of the market, even beyond Walsh’s estimates, is the coming legalization of other states. Alaska is set to vote on recreational pot in August, while Oregon will vote in November. Other states will follow, and many such proposals are expected to pass.
Medical marijuana is also expected to keep growing over the next four years. It has run into obstacles in some places, but the general trend is still one of expansion. Florida, the fourth-largest state in the union, is expected to adopt MMJ in November.