The Legal Cannabis Industry Projected Growth in California is Mind-blowing
California was the first U.S. state to legalize medical cannabis when voters passed Proposition 215 in 1996. It's crazy to think it has been twenty years since this historic public policy shift occurred.
California's legalization of medical cannabis has inspired tremendous growth and change in other states. As I write this article, there are now 25 states which have legalized medical cannabis beyond 'CBD only,' with potentially more states being added in this November’s elections.
North Dakota, Florida, Arkansas, and Montana are voting on medical cannabis in November, although Montana's vote is to re-establish a program which was previously in place, but was recently rolled back dramatically after a court decision.
Oklahoma may vote on medical cannabis, but it has yet to be officially confirmed. Recent news suggest that Oklahoma may not make the ballot after all.
Beyond medical cannabis, there are now four states, and Washington D.C., which have legalized recreational cannabis; Colorado, Washington, Oregon, and Alaska, and five states voting on recreational cannabis this election; California, Arizona, Nevada, Massachusetts, and Maine. Michigan has an initiative which is being appealed to the Michigan Supreme Court. Depending on the outcome, it's still possible Michigan could be on this list as well.
California missed the first wave of legalizing recreational use
A lot of people, myself included, expected California to be the first state to legalize recreational cannabis. After all, California was the first to legalize medical cannabis.
However, after a failed attempt in 2010 in which recreational cannabis legalization was rejected by California voters, California has been unable to put recreational cannabis use back on the ballot - until this year.
Polling has been favorable for California's initiative, and with strong funding, the initiative currently appears to have a great shot at winning the election.
But despite falling behind in the public policy realm, California still reigns supreme when it comes to industry size. I heard an estimation in which half of the entire legal cannabis industry in America is located in California. This isn’t entirely surprising considering the fact that California's economy is one of the top ten economies in the world. Even so, the numbers are still staggering.
Huge growth expected
Over the next five years we project the total state market to grow at a compounded annual rate of 18.5%, from $2.76 billion in 2015 to $6.5 billion by 2020.
To put this into perspective, California's cannabis industry would be bigger than the current entire state budgets of several states according to the National Association of State Budget Officers. According to their numbers, Arkansas' annual budget for the entire state is currently 5.3 billion dollars. Delaware is 4.1 billion, Mississippi is 6.2 billion, South Dakota is 4.03 billion, and Vermont is 5.8 billion,
This is absolutely mind-blowing. California may have fallen behind other states with legalized recreational cannabis, but these states are going to have a hard time ever catching up to California when it comes to industry size.
Opportunities abound in an uncertain landscape
When people hear these types of numbers being thrown around, they tend to get excited, which is understandable. Everyone wants to get in on the action if possible, but people also need to be wary of being blinded by dollar signs.
There's so much dust that has yet to settle from new regulations on the medical cannabis industry, and if history is any guide, there are likely more regulations and changes on the way, especially if recreational cannabis is legalized.
In Oregon and Washington, the medical cannabis programs changed dramatically once recreational legalization rules were made. Legislatures took it as an opportunity to do a lot of tweaks (and sometimes outright harms) to the medical programs in the Northwest, all in the name of recreational cannabis rule making.
California recently passed medical cannabis regulations, but there's nothing stopping the California Legislature from making more legislative changes.
California's cannabis industry will continue to grow whether this years’ initiative passes or not. Recreational legalization would just add gas to the fire, as the saying goes.
Even if the mind-blowingly huge projected figure of 6.5 billion isn't achieved, the fact remains that California is an absolute powerhouse when it comes to industry size.
Will California legalize recreational cannabis in November 2016?