DENVER — Marijuana-legalization initiatives being decided by voters in November could provide a $7.8 billion economic jolt to the nation’s economy by 2020, says a new study highlighting the rush of investment into the semi-legal market.
Marijuana remains illegal at the federal level, but voters in nine states this fall will decide whether to loosen their own restrictions, with California having potentially the largest impact. Californians are voting whether to permit recreational marijuana cultivation and use, along with creating a complex system to regulate and tax cannabis, which is already widely grown and sold illegally.
A state-taxed marijuana marketplace could generate $1 billion in taxes in the Golden State alone, says the report from New Frontier Data and Arcview Market Research. That’s money that today vanishes into the pockets of black marketers and smugglers. The entire market, which includes those states where medical or recreational marijuana is already allowed, could be worth $20.6 billion by 2020, the report said. The legal cannabis market was worth about $5.9 billion last year, the report said.
“The cannabis industry is one of the fastest growing sectors in the economy and continues to astonish those in and out of the space,” Giadha DeCarcer, New Frontier’s CEO, said in a statement announcing the study.
New Frontier/Arcview earlier this year predicted the cannabis market would be worth about $22.8 billion by 2020, but revised the estimate down slightly as a result of better modeling and data, and after accounting for delays in some states getting their marijuana marketplaces operating. Twenty-five states now permit some form of medical marijuana use, while four – Colorado, Oregon, Alaska and Washington – also permit recreational use. The District of Columbia also permits both medical and recreational use, but sales are prohibited and not taxed.
The dollars flowing into the California legalization initiative alone show the potential stakes: Proponents have raised more than $10 million to support the proposal, including $2.3 million from former Facebook president Sean Parker, while Pennsylvania retiree Julie Schauer donated $1.3 million in opposition. Polls show the California legalization effort with broad support in a state that has long tolerated medical use.
And barely a day goes by that entrepreneurs aren’t pitching the next big thing in marijuana, from smoke-free vaporizers to contaminant-testing equipment, and many well-known names have also entered the marketplace, including Willie Nelson, Whoopi Goldberg and the family of reggae star Bob Marley.
“Savvy investors looking to get into the cannabis market can look at these numbers and see the industry is on the cusp, ready to explode. We are already seeing an enormous amount of interest from investors and entrepreneurs who recognize the unique scale of the opportunity presented by cannabis legalization,” said Troy Dayton, the Arcview Group CEO.