Legal marijuana is expected to generate as much as $44 billion a year by 2020, according to a report in Marijuana Business Daily.
The report examined ongoing trends in the cannabis industry and found it is poised to explode over the next four years. As new states legalize, the proceeds will grow faster.
Annual revenue could rise from less than $17 billion in 2016 to between $24 billion and $44 billion in 2020, according to the report.
Accelerated growth is probable
The numbers are large, but the explosive growth is to be expected. Colorado and Washington legalized marijuana for personal use in 2012, followed by Oregon, Alaska, and the District of Columbia in 2014.
As new states legalize – referendum petitions have been filed in 16 states in advance of the November election – the industry becomes ever more accepted by society. That means even more people are likely to use it in coming years.
“We’re witnessing the emergence of a business that is about to become a massive economic force,” said Chris Walsh, the magazine’s managing editor. “These figures, which we deem conservative, show not only how important the industry already is to the U.S economy at large, but also how much more important it is about to become.”
The new numbers are all-encompassing, painting a picture of all cash the industry is expected to pump into the local and national economies. That includes money taken in by the companies that sell marijuana, plus licensing fees, tax revenue, tourist dollars, spending by industry employees, job creation, and real estate prices.
But the key element is retail sales of medicinal and recreational cannabis, including bud, concentrates, and edibles. Each dollar spent by a customer generates an extra three dollars in economic gain, according to the magazine’s report.
This year’s sales revenue could top $4 billion, an increase of at least 17 percent or between $3 billion and $3.4 billion. But that’s nothing compared to the $8 billion expected from direct sales in 2018 and $11 billion in 2020. Sales of cannabis for personal use could bring in more cash than medical marijuana by 2018, though MMJ will always be a significant part of the industry.
The estimates are designed to account for variables such as the pace of legalization, the cost and effect of regulations, tax revenue, and problems the industry is likely to face as it grows.
New president opposing legalization could slow the trend
But there are other factors that could get in the way of major growth, the report found. The country could elect a president in November who opposes legalization, or local communities could react negatively by enacting bans on pot shops and other businesses.
Still, the outlook is strong, and experts predict the industry will get past these obstacles. Votes to legalize in new states will only accelerate the trend. Voters are likely to consider the issue this fall in California, Massachusetts, Maine, and Nevada, among others.
“These would be huge new markets for the marijuana industry, propelling its growth for years to come,” Walsh said. “At this point, marijuana executives are holding their collective breath and hoping for a big November.”