U.S. legalized pot industry poised for major expansion

Legal marijuana is becoming more and more entrenched in the United States each year, and 2016 looks to be no exception.

See Full Article

In fact, some observers say it could be a "tipping point" for an ever-growing industry already worth billions of dollars.

By the end of the year, nearly a dozen states will decide whether to legalize pot -- with seven to determine whether they will allow recreational use.

Already 23 out of 50 states, plus the nation's capital, allow pot in some form, whether for medical or recreational purposes.

At the beginning of 2016, 86 per cent of Americans lived in a state permitting cannabis use in some form.

As acceptance of the drug grows across the United States, so too do sales, which are expected to hit nearly $22 billion by 2020.

"It is going to be a very, very competitive market in the next five years," said John Kagia, director of industry analytics at New Frontier, a firm specializing in the cannabis business.

While possession, sale and consumption of marijuana remains illegal at the federal level, it is permitted for recreational use in four US states: Alaska, Colorado, Oregon and Washington, plus the US capital Washington.

According to Kagia, "2016 will be the tipping point" for pot, with 11 states slated to decide whether to allow it in one form or another.

The western states of Colorado and Washington pioneered recreational marijuana legalization in 2012, and sales have increased 30 per cent per year on average since then in the United States, according to New Frontier and the ArcView Group, another firm focused on analyzing the cannabis industry.

US pot sales climbed to $4.6 billion in 2014 and are expected to reach $21.8 billion in 2020, New Frontier says.

The explosion in sales is due mainly to the legalization of recreational pot in some states. Although medical marijuana represented 92 per cent of all pot sales in 2014, its share of the total is expected to fall to 47 per cent in just four years.

Budding entrepreneurs

The market for pot is in full bloom thanks to burgeoning industrial growing operations, marijuana edibles and a higher demand for equipment from those who want to grow -- or consume -- cannabis at home.

And while entrepreneurs see dollar signs behind every joint rolled, so too do state governments that stand to reap massive gains in the form of taxes.

Last year, Colorado earned some $135 million in taxes and licensing fees on nearly $1 billion in pot sales, according to The Denver Post.

The state of Washington, meanwhile, took in $70 million on statewide pot revenue totaling $257 million, a number that came in lower than expected after a pot shortage.

As America falls for pot, competition has become increasingly fierce, and the variation in regulations and taxes from state to state has given rise to some tension.

The amount of pot a person can grow varies as well, with up to four plants allowed in Oregon and six plants in Colorado, but none in the state of Washington.

Six plants are allowed in the US capital Washington, where marijuana advocates celebrated the city's one-year anniversary on Friday for legalizing pot.

But the US Congress, which has some authority in the capital's local governance, has prevented the city from regulating its pot market, which means buying and selling marijuana is still illegal.

The next president, who will be elected in November, could tip the balance in either direction at the federal level, experts told AFP at a marijuana tradeshow called CannaShow, held just over a week ago in Washington.

Fight against discrimination

For those entering the marijuana industry, the market has sparked particular worries and uncertainties such as the fact that all payments must be made in cash since banking services are not extended to the pot industry, the risk of Congressional intervention or even a price war.

Moreover growing cannabis, or "cannaculture" as it is called, is a costly endeavor, with plants needing gallons of water and a constantly warm environment, and thus electricity.

According to New Frontier, cannabis is the greediest of crops in terms of electricity, accounting for one per cent of all electricity used in the US (the same amount as 1.7 million homes) at an annual cost of $6 billion.

Electricity accounts for up to 50 per cent of the wholesale price of cannabis.

Despite these pitfalls, pot proponents are quick to point out that legalization of the substance has its societal virtues, such as putting an end to some discriminatory arrests.

In the US capital, for example, 91 per cent of those arrested for marijuana-related offenses before legalization were black.

Legalizing marijuana also keeps down overcrowding of courts and prisons.

Retired Baltimore police commander Neill Franklin, who is part of the advocacy group Law Enforcement Against Prohibition, an organization of officers who speak out against current drug policy, said that 500,000 to 600,000 people are arrested each year for cannabis in the United States.



Advertisements

Latest Economic News

  • Metrolinx appealing latest court loss over $770M contract with Bombardier

    Economic CTV News
    TORONTO -- Metrolinx has filed an appeal questioning the decision of an Ontario judge last month that preserved the transit agency's contract with Bombardier Transportation. The notice of appeal deepens the legal dispute between the Ontario transit agency and Bombardier over the company's ability to fulfil train orders in Toronto, where gridlock has become an increasing frustration for hundreds of thousands of commuters. Source
  • Majority say buying Canadian, even if price is higher, is more important: Nanos survey

    Economic CTV News
    The majority of Canadians say that buying Canadian products is more important to them, even if the price is higher, according to a recent Nanos survey. Fifty-two per cent of those surveyed said that it is more important to them personally to buy a Canadian product, even if it costs more, while 28 per cent said that buying the cheapest product is more important when it comes to shopping. Source
  • Female CEOs make more than their male counterparts – but there are a lot less of them

    Economic Toronto Sun
    NEW YORK — Women CEOs earned big bucks last year, but there’s still very few of them running the world’s largest companies. The median pay for a female CEO was US$13.1 million last year, up 9% from 2015, according to an analysis by executive data firm Equilar and The Associated Press. Source
  • Feds launch contest for $950M 'supercluster' plan aimed at creating jobs, growth

    Economic CTV News
    OTTAWA -- The Trudeau government is opening the competition for its $950-million "supercluster" program that aims to bring together industry and academia as a way to lift the innovation economy. Economic Development Minister Navdeep Bains is adding new details about deadlines and qualifying criteria for a five-year initiative central to the feds' innovation program. Source
  • New TD centre to create up to 575 jobs in Moncton over 6 years

    Economic CBC News
    The TD Bank expects to create up to 575 full-time jobs in Moncton over a six-year period when it opens a business services centre in 2019 with up to $9 million in help from the provincial government. Source
  • New York fines BNP Paribas $350 million in trading scheme

    Economic CTV News
    New York state regulators have fined French bank BNP Paribas $350 million, alleging bank employees for years manipulated global currency markets to benefit themselves at the expense of their customers. The New York Department of Financial Services said Wednesday that from 2007 to 2013 at least a dozen BNP Paribas traders manipulated the foreign exchange market, using chat rooms and fake trades in currencies including the South African rand, Hungarian forint and Turkish lira. Source
  • Bombardier and U.S. aerospace supplier Triumph settle legal dispute

    Economic CTV News
    MONTREAL -- Bombardier and Triumph have reached a settlement about five months after the U.S. aerospace supplier filed a $455-million lawsuit against the Quebec-based aircraft manufacturer. Details of the settlement announced Wednesday were not disclosed. Source
  • New TD call centre will create 575 jobs in Moncton, N.B., province says

    Economic CTV News
    MONCTON, N.B. -- TD has announced plans for a new call centre in Moncton, N.B., that the provincial government says will create up to 575 full-time jobs. The Toronto-based bank will receive up to $9 million in financial assistance from the government, which says the call centre will add $109-million to the province's GDP over six years. Source
  • Graco recalls My Ride 65 car seats in Canada for restraint defect

    Economic CBC News
    Graco's Canadian division is recalling 1,393 car seats with defective harness restraints. The recall affects certain "My Ride 65" model car seats manufactured between May 14, 2014 and July 30, 2014, according to a safety advisory from Graco. Source
  • Lavazza Coffee buys 80% stake in Canada's Kicking Horse

    Economic CBC News
    Italian coffee conglomerate Lavazza has bought an 80 per cent stake in B.C.-based Kicking Horse Coffee in a deal that values the company at $215 million. Elana Rosenfeld, who founded the Kicking Horse brand in 1996, will continue to own the remaining 20 per cent and will continue to be CEO of the company, which has grown to become the No. Source