Legal California Weed Market To Reach $6.5 Billion
We sink our teeth into spliff politics with an analysis of the Legal Californian cannabis market. With sales expected to reach $6.5 Billion by 2020, the Golden State is poised for a green rush.
America is leading the way on the path to Legalisation. At present, the District of Columbia and 4 States (Colorado, Oregon, Washington and Alaska) have legalised recreational marijuana use. A further 9 states (Arizona, Arkansas, Florida, Maine, Massachusetts, Montana, Nevada, North Dakota and California) have legalisation on the ballot this coming November. Of all of them, California just might be the state where legalisation becomes “too big to fail”. The potential to generate up to a billion dollars in tax revenue for the state, coupled with savings on law enforcement costs and incarcerating stoners running to a hundred million dollars as quoted in a report by CNBC 30/6/16, cannot be ignored, nor dismissed as hype from the pro-legalisation camp. After all, the widespread cultural acceptance of medicinal marijuana is owed to the power of influence the state of California possesses.
Once again a poignant moment is upon us. Legalisation of recreational weed in California will impact drugs policies across the globe. The US Federal Government will be compelled to fold on “the war on drugs” and those other thugs in the cartels will be forced out of the business because their swag just won’t be able to compete.
CALIFORNIA: CHANGING THE CANNABIS LANDSCAPE
“It really is the state that wags the tail of the nation, so if California’s 55 senators and representatives in congress were to be in favour of legalisation, then it would be a total dynamic change”- Allen St.Pierre Executive Director of NORML.
This is no understatement. 10% of the US population call California home and it’s an economic powerhouse, in fact it’s the 6th largest economy in the world having overtook France according to Fortune. California’s economy is an engine that runs on innovation. Think about it, between Silicon Valley and Hollywood they’ve secured dominant market positions in the tech industry an the entertainment industry, they’ve pretty much got the whole pie.
In 1996, California was a pioneer state legalising medicinal marijuana and twenty years later it’s poised to be the volcanic catalyst with the potential to initiate a tremendous chain reaction with repercussions for the legalisation movement across the globe. Should the forces of Satan somehow prevail and vote down proposition 64, the consequences will be grave for the legalisation movement. Such a defeat would not be a complete doomsday but it could set legalisation back years in other states, and unfortunately the contagion would be certain to spread across the continental divides to infect European and South American legalisation efforts and initiatives. Fortunately, we are confident proposition 64 will be vigorously supported and endorsed by a comfortable majority of West Coast stoners happy to pay a 15% sales tax for legal cannabis. The real question is what does legal mean California style?
THROUGH THE LOOKING GLASS: A DEEPER ANALYSIS
If multiple viewings of the movie “Blow” and binge sessions of the Netflix’s series “Narcos” have taught us one thing, success in California is the fast lane route to international acceptance and boat loads of cash. These days, fat stacks of dollars are legally up for grabs, and according to the latest data from Arc View Market Research, by 2020 total sales of legal marijuana in the United States will be a staggering $21.8 Billion. That’s enormous and even bigger than the NFL. California is projected to make up $6.4 Billion, that’s a serious chunk of change.
This kind of money to shark financiers or Venture capitalists is the equivalent to a gold rush. Of course we are referring to the corporations that globalise everything they can get their greedy little hands on. A green rush is certainly on the cards, and if that’s how the chips fall then some will come to work the mines, while others will come to work the miners. We’re not so sure that this is the kind of model we would want to follow in Europe.
CONCLUSIONS: A GREEN FUTURE FOR CALI?
Two distinct business models are developing in the marijuana scene. The McDonalds franchise model and the association of small businesses model. The best example of the franchise model would be Diego Pellicer, a big player with aspirations to become the Star Bucks of the weed business.
Willie’s Reserve is the brand that best represents the growers turning ganjapreneurs. Essentially the brand is extended to one small company per state. The small company benefits from the brand recognition of association with the famous dope smoking musician and continues to cultivate organically. This model runs contrary to the fast cash-crop notion of the “agri-business”. Furthermore, the model is highly transferable and especially applicable for the EU with open free markets firmly in place for the movement of people and product.
Do you endeavour to avoid eating foods sprayed with toxic chemicals or otherwisely abused? Do you begrudgingly pay a little extra for the free-range burgers for the BBQ? Or would you rather save a few Euros and eat a horse burger? Err, again. These kinds of options and questions tend to crop up in free markets; the cannabis business could eventually become comparable with the supermarket business with room for multiple competing chains fighting for market share.
Eventually we will win and the “war on drugs” will be over. Marijuana will be legally available virtually everywhere. What will be the source of the product? Will it be high quality organics grown locally? Who will set the standards? Will Gordon Ramsay unleash a reign of terror against low rent dispensaries? Or will nobody be bothered and buying a pack of joints becomes akin to ordering a box of chicken nuggets? Nobody knows for certain.
The banking system or rather lack of access to the banking system has blighted the marijuana business in Colorado. Without access to banking facilities, dispensaries are forced into “cash only” sales, not only is this a security risk and unacceptable inconvenience, but it is actually a barrier to growth in an era of crypto currencies and cashless payments which are widely available on smart phones. If the California model is to succeed and come to be regarded as the industry gold standard it must be more functional and run smoother than all the others.
photocredit: Rena Schild, Shutterstock and Joshua Rainey Photography, Shutterstock.com