Growing like a literal weed, the marijuana industry is
attracting investors in droves. They cannot get enough of weed stocks, it seems.
Over the last two years, the notable majority of cannabis stocks have tripled,
some even quadrupled, with nearly everyone using a
weed delivery online.
Despite this, nobody knows much about the pot market, which is still operating
under a shroud of uncertainty.
After all, with the exception of Uruguay, Lesotho and
Zimbabwe, cannabis is still an illegal substance in every other country in the
world. Even though 29 states have legalized weed in some or other capacity
within the borders of the United States, the federal government still
classifies it as a Schedule I drug, which means it is illegal, has a high risk
of abuse, and has no recognized medical benefits.
Every year, Marijuana
Business Daily publishes its “Marijuana Business Factbook.” This provides
Wall Street, pot investors, and consumers with the latest insights into the
industry. “Factbook,” as people lovingly call it, offers numerous estimates on
U.S. growth of cannabis sales and jobs over the next five years. The latest
edition spans growth estimates from 2017 to 2022, and this is what it says:
1.
Legal Pot Sales Could Double in the United
States in 2018
As usual with this yearly report, the first statistic is how
much legal pot sales are likely to grow in 2018. After raking in between $5.8
billion and $6.6 billion in legal sales alone in 2017, expectations are that it
will swell to between $7.9 billion and $9.7 billion this year. Factbook
frequently lists growth and sales estimates in ranges instead of single
projections, but year-on-year growth sits at around 42 percent.
Recreational weed sales will be responsible for the bulk of
this growth, particularly those coming from California, which opened its doors
to legal sales on New Year’s Day. In fact, Factbook assumes Californian sales to
reach a minimum of $500 million this year. Massachusetts plans to launch
adult-use sales this summer, which, along with Nevada’s growing market, should
lift sales figures significantly.
2.
Legal Sales Could Reach $22 Billion in 2022
Long-term estimates show legal cannabis sales across the
United States growing by more than 27 percent each year through 2022, assuming
yearly peak sales estimates. After reaching its height of $6.6 billion in legal
sales last year, Factbook predicts that consumers could buy roughly $18 billion
to $22.1 billion worth of cannabis via legal markets in 2022.
The growth to possibly over $22 billion in sales would be
because of new states legalizing marijuana in some or other capacity, along
with organic growth already occurring in legal states. For example, the
Colorado Department of Revenue claims that legal sales more than doubled in
Colorado, from $699 million back in 2014, its first year of sales, to a
whopping $1.49 billion in 2017.
3.
Recreational Sales Could Be Twice Medical Sales
in 2022
Also of import is the breakdown of predicted pot sales by
2022. As Factbook shows, medical sales in 2022 are likely to account for
between $5.9 billion and $7.3 billion. Meanwhile, recreational sales should
total between $12.1 billion and $14.8 billion by that time. While medical sales
will be double what it is in 2017, recreational sales will quadruple over the
same period. Companies are focusing on adult users.
4.
Demand for Marijuana in the U.S. is $52 Billion
The cannabis market in the United States is huge, but nobody
knows exactly how big it is. According to Factbook, total demand works out to
$52.5 billion, which includes both legal and black market demand. This massive
figure is a main driver of pushing cannabis stock valuations even higher.
However, the legal weed industry still has a long way to go to squash the
thriving underground pot market.
Assuming a $6.2 billion midpoint in sales just last year,
this indicates that the black market conducted illegal sales of over $46
billion, untaxed and outside of any legal channels. Many people believe this
presents an opportunity for legal companies, while many others argue that the
illegal industry is too powerful to topple. Still others consider both views
potentially correct.
5.
Cannabis Employment Growth Could Average 21
Percent Annually Through 2022
In the United States, the expanding weed market is not about
sales alone: It is also about the jobs that marijuana can create, both directly
and indirectly. As of now, the cannabis industry is employing somewhere between
125,000 and 160,000 people. By 2022, it could create as many as 340,000 new
jobs for a growing, increasingly unemployed population.
If we assume the current peak prediction of 160,000 jobs in
the industry, this equates to a jobs growth of at least 21 percent every year
until 2022. In comparison, experts see jobs in the healthcare industry only
growing by approximately two percent in the same timeframe. Of every market in
existence, cannabis promises the highest number of jobs to anyone wanting to
work in it.
6.
Annual Economic Impact Will Exceed $75 Billion
in 2022
As Factbook predicts, the economic impact of the pot
industry could generate between $28 billion and $34 billion this year alone,
and even surpass the estimated $75 billion economic impact expected by 2022.
The report states, “Estimates for the industry’s economic impact are based on
retail marijuana sales and incorporates a multiplier of 3.5.” That may sound
confusing.
The report explains what it means, “For every $1 consumers
or patients spend at dispensaries or at recreational stores, another $2.50 in
economic benefit is created in cities, states, and nationwide.” Yet again, the
market is not just about sales, but also about way, way more. The growing legal
pot industry could create thousands of jobs and even support local economies.
7.
Legal Pot Sales Could Exceed Total Cigarette
Sales in the United States
Finally, and possibly most notably, Factbook suggests that
if the United States were to legalize marijuana completely, it is likely that
we will witness legal weed sales actually surpass cigarette sales. To put this
into context, the Wall Street Journal
released a report in April last year, which showed sales in the cigarette industry
reaching its $93.4 billion estimation back in 2016.
Such an assumption very possibly considers the strong
pricing power of marijuana products, as well as a continuing slowdown in
cigarette sales as more and more consumers quit smoking them and other tobacco
products altogether, or they ditch tobacco entirely in favor of marijuana. It
is true that fewer people smoke tobacco today than at any other time in
history.
Find a Weed Dispensary Online
With such exciting projections for the future cannabis
industry, now is the time to find a trusted
weed dispensary online. The most
important fact to re
member, above all else, at least for
now, is that marijuana is still an illegal substance in the United States. As
long as Attorney General Jeff Sessions, an ardent weed opponent, leads the
Justice Department, trouble could still arise.
To legalize marijuana at the federal level, the government
would need to take if off the list of controlled substances, or at the very
least, reclassify it into another category. Currently, pot is a Schedule I
drug, but if moved to Schedule II, it can become legal, albeit with heavy
restrictions. This is not good news for investors searching for opportunities
in the green rush. It also inhibits growth for the industry itself.
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