Page 33 - Provoke Magazine Vol1

THE BIG BUSINESS
Despite being seen as a dangerous illegal substance through- out much of the 20th century, it is clear that acceptance of can- nabis and its use has become increasingly more common among Americans. Currently, there are nine states, plus the District of Columbia, that have legalized recreational marijuana, and there are 30 more states that allow for medical use. In a 2017 article for 24/7 Wall Street titled “The Next 15 States to Legalize Marijua- na,” Samuel Stebbins and Grant Suneson mention a 2017 Gallup Poll that shows that “a record high of 64% of Americans support legalizing marijuana for recreational use.” Stebbins and Suneson also predict that 15 more states aren’t far from legalizing canna- bis. These states include: Arizona, Arkansas, Connecticut, Dela- ware, Florida, Illinois, Maryland, Michigan, Minnesota, Montana, New Hampshire, New York, Ohio, Rhode Island and Vermont. This change to a more positive perception of cannabis is no doubt influenced by the plant’s medicinal uses; however, another ma- jor factor is the marijuana industry’s incredible economic power.
In a 2018 article for CNN Money titled “The U.S. legal mari- juana industry is booming,” Aaron Smith confirms that “Pot has become big business in the U.S.” Smith explains that, according to BDS Analytics, the cannabis industry generated nearly $9 billion in sales last year. He goes on to say that sales this significant “are equivalent to the entire snack bar industry, or to annual revenue from Pampers diapers,” and he predicts that with California’s new legalization sales, total sales in the U.S. will reach $11 billion in 2018 and $21 billion by 2021. But sales aren’t the only factor ben- efiting the economy. The cannabis industry has also been generat- ing plenty of job opportunities, with almost 10,000 active licenses for marijuana businesses to date, according to Ed Keating, chief data officer for Cannabiz Media. Smith reports that there were 121,000 jobs within the industry in 2016 and by 2021 that number could be as high as 292,000, according to BDS analytics.
It is clear that the marijuana industry is doing wonders for the economy, particularly in states with legalized recreation- al use. Take Colorado for example, where recreational mari- juana has been legal since 2014. According to Alan Pyke, in his 2016 article “Marijuana’s $2.4 billion impact in Colorado is a lesson for 5 states considering legalization” for Think Progress.org, “Colorado’s experience suggests that starting a le- gal cannabis industry is one of the most efficient ways to generate new economic activity.” In the year 2015 alone, the recreational and medicinal cannabis industries created almost 20,000 full-time jobs, and added over $2 billion to the state’s economy, according to the Marijuana Policy Group (MPG). Where did all that money
come from? The flocks of customers eager to purchase cannabis products legally and all those 20,000 people who work within the industry. Pyke also states that “Pot is generating more wealth and activity than almost anything else on a pound-for-pound basis.”
With recreational marijuana legalization still so recent, it seems like a no-brainer to invest in the legal weed market, but this may not be the case for everyone. Lester Black, a writer for FiveThir- tyEight gives some important warnings about venturing into the marijuana business in his 2017 article, “Legal Weed Isn’t the Boon Small Businesses Thought It Would Be.” He says that “The data behind the first four years of legal pot sales, with drops in retail prices and an increase in well-funded cannabis growing opera- tions, shows a market that increasingly favors big businesses with deep pockets.” Black suggests that the days of small-time grow are numbered in states like Colorado due to a steady decline in pric- es, making it very difficult to launch a successful cannabis busi- ness without a substantial initial investment. Another issue that Jonathan Berr of CBS News brings up in his 2016 article, “How profitable are pot shops? You’d be surprised,” is that cities often put restrictions on where cannabis businesses can operate, making it not only difficult to find a location to start a marijuana busi- ness but also more expensive, as landlords have incentive to raise rents in these locations. All that being said, if you do it right, you could still generate quite a bit of revenue from a cannabis business. Berr writes that, “According to the 2016 Marijuana Factbook, a store that sells either medical or recreational pot earns on average $974 per square foot in revenue, topping Whole Foods, whose 431 stores earn an average of $930 per square foot.”
It is clear that the cannabis industry has become a big business. What was recently known as an illegal drug is now widely ac- cepted as a wonder plant with many medicinal uses. Due to the economic success of legal medicinal marijuana, states have begun to legalize recreational use as well, and they have seen tremen- dous economic growth because of it. Colorado is one state that has proven just how powerful the cannabis industry can be, not just for the state but for those willing to invest in it. However, Les- ter Black has made it clear that stating a recreational marijuana business may not be in everybody’s best interest. Due to declining prices, and issues like zoning, it has become clear that in order to succeed within this industry, you are likely going to need to invest a lot up front. So does it make sense to get involved with selling cannabis? That depends on whether or not you have the large fi- nancial backing necessary to hit the ground running and keep up with the declining prices.
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