Despite numerous substantial fits and starts, California’s legal cannabis market is still an a growth trajectory. In fact, it’s anticipated that within the next five years, California sales of the crop will account for almost one-quarter of the legal marijuana sold in the country. That’s according to a new analysis by ArcView Market Research and BDS Analytics.
Voters in the Golden State agreed to legalize recreational marijuana use three years ago, and sales officially became legal at the start of last year. Prior to that, only sales for prescribed medicinal use was allowed. Although there was a great deal of anticipation about how legalization would unfold, our Los Angeles marijuana business lawyers know the transition to a legal market was rocky at best.
Despite troubles with the black market and untested regulatory rules (including rigid new testing mandates, heavy taxation and licensing that moves at a snail’s pace in some jurisdictions), the current market size is $2.5 billion, according to the analysis.
By 2024, it’s plausible the market could increase to $4.7 billion. By then, the entire national market will be about $20 million.
This is important news to underscore, particularly given the somewhat depressing news of numerous lay-offs at cannabis companies large and small. Both investors and entrepreneurs need to know that cannabis will continue to be lucrative for years to come – but also that the market is likely to be incredibly competitive.
Working with an experienced cannabis lawyer can help ensure the longevity of your operation. Being properly licensed is just the beginning, especially when the drug remains an illegal Schedule I narcotic according to the federal government. That brings all sorts of complications when it comes to commercial real estate, agriculture, online sales and advertising/marketing. Marijuana businesses aren’t entitled to the same protections and benefits as other companies, even though they face many of the same obstacles to success.
Delivery companies are expected to do especially well, ever since the state declared that licensed marijuana retailers would be allowed to deliver their products anywhere statewide, even if local ordinances barred retailers from operating there. What we anticipate will likely happen as a result is that counties and cities reticent to allow stores to open within their borders will rethink their decisions, considering legal pot shops are no detriment to neighborhoods and local governments are only missing out on the tax revenues.
Estimates are there will be thousands of licensed retail stores throughout the state in just a few years.
The analysis polled Californians over the age of 21 to see how many answered in the affirmative as to whether they’d used the drug or related products in the last six months. Roughly 35 percent said they had. That’s lower than in neighboring Oregon, Colorado and Washington, where the percentages were 47, 41 and 40, respectively.
Part of this is no doubt thanks to the fact that our state jumped on the recreational cannabis bandwagon a bit late compared to the others, despite being the first in the country to allow medicinal marijuana. However, the fact that so many communities don’t have a local retail option (thanks to municipal bans) likely cuts into the potential consumer pool.
The Los Angeles CANNABIS LAW Group represents growers, dispensaries, ancillary companies, patients, doctors and those facing marijuana charges. Call us at 949-375-4734.
Additional Resources:
California’s marijuana market will soon have ‘thousands of retail stores,’ report says, Oct. 30, 2019, By Andrew Sheeler, Sacramento Bee