Legal Cannabis Outsold Girl Scout Cookies Last Year

Robert Celt

New Member
Sales of recreational marijuana could surpass medical marijuana as early as 2018, according to a new report from Marijuana Business Daily.

MBD estimates that retail sales for recreational and medical marijuana combined will be between $3.5 billion and $4.3 billion in 2016. That would mean growth of 17%-26% over last year's sales. Recreational marijuana will account for roughly $1.4 billion to $1.7 billion in sales in 2016, and MBD projects sales will climb to $2.6-$3.8 billion by 2018. While medical marijuana sales are expected to grow as well, it is only forecast to be in the range of $2.3-$4.0 billion by 2018.

To put this in perspective, in 2015 legal cannabis outsold Girl Scout cookies. The total cannabis market in the U.S., which includes illegal sales, is estimated to be in the range of $40-$45 billion. This means the marijuana market is bigger than craft beer, wine and organic food.

One of the most surprising success stories of the legal cannabis industry has been the popularity of cannabis infused products. Edibles and concentrate sales are growing monthly and now represent 30% of total sales. Plus, they are very profitable businesses. Of the infused product manufacturers, 27 percent are very profitable, 27% say they are modestly profitable and 37% are breaking even. Only 9% are losing money. 24% of the infused product manufacturers operate in at least 2 states and these early adopters are expected to be the winners when competition forces consolidation.

The sales have created huge tax windfalls for some states, but the economic impact can go even further. MBD estimates that the ripple effect on the U.S. economy based on cannabis retails sales to be between $14 billion and $17.2 billion this year and up to $44 billion by 2020.

"Overall, for each dollar spent/earned by cannabis companies, an additional three dollars in economic benefit will be realized," said the report. "For example, a cannabis dispensary/store makes a sale for $100. The business then uses a portion of that money to pay an employee, who in turn uses a portion of that money to buy groceries at the local grocer, and so on — a process that creates a ripple of economic value, most of which remains in the community."

MBD also found that even though there is a lot of money in this industry, it isn't a given that every cannabis business will be profitable. Only 57% of outdoor cultivators' report that they are breaking even compared to 80% of indoor growers. Ever changing regulations are also causing compliance costs to sky rocket.

When it comes to establishing a cannabis business, the days of the small player are over. The fees to get new licenses have resulted in businesses being forced to hire a team of experts. Consultants, lawyers and cultivation experts get expensive. If the business gets the license, real estate experts, security professionals and builders get involved. It isn't uncommon for a cannabis business to spend millions. The report said, "Cannabis is and will continue to be one of the most highly regulated industries in the world, and the price to play is hefty."

The report does note that its figures could be adjusted if California makes changes to the way it regulates its market. California doesn't track its medical cannabis industry even though the state is considered to be the largest marijuana market in the country. Since it is so big, any change the state makes affects the entire industry.

Marijuana Business Daily said its estimates may be lower than other reports, but it said it strives to give realistic numbers. It doesn't offer investments or consultations, so it isn't trying to hype industry numbers. Even if these numbers are on the low side, they still sound pretty impressive. Especially when one considers how few states are even selling legal marijuana.

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News Moderator: Robert Celt 420 MAGAZINE ®
Full Article: Legal Cannabis Outsold Girl Scout Cookies Last Year
Author: Debra Borchardt
Contact: Forbes
Photo Credit: None found
Website: Forbes
 
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