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

  • Theresa May seeks to convince business of a 'global Britain'

    Economic CTV News
    DAVOS, Switzerland -- British Prime Minister Theresa May sought to convince business leaders Thursday that the country remains committed to free trade and globalization despite last year's vote to leave the European Union. Just two days after indicating that Britain would be leaving the European single market as well as the EU, May told an audience at the World Economic Forum at the Swiss ski resort of Davos that the Brexit vote was not a rejection of "our friends in Europe," or an attempt to…
  • World's free trading nations could rally against Trump protectionism: Don Pittis

    Economic CBC News
    The new anti-free-trade administration of Donald Trump hasn't even taken over the White House and it appears incoming secretary of commerce Wilbur Ross is already preparing to send Canada a list of demands. This is not the time to roll over to those demands. Source
  • Trump's plans for Scottish golf resort spark new conflicts worry

    Economic CTV News
    NEW YORK - Donald Trump has vowed his company will do "no new foreign deals" while he is president. But he's left "new" and "deals" open to interpretation. Now those words are drawing scrutiny as his company confirms plans to expand its golf resort near Aberdeen, Scotland, raising concerns about conflicts of interest. Source
  • Asian stocks mixed in sluggish trading

    Economic CTV News
    TOKYO - Shares were meandering in sluggish trading in Asia on Thursday as investors awaited the inauguration of Donald Trump as president. Japan's benchmark rose after the dollar slipped against the yen. KEEPING SCORE: Japan's Nikkei 225 gained 0.7 per cent to 19,027.09 and Australia's S&P ASX 200 added 0.2 per cent to 5,692.70. Source
  • Samsung exec wins court ruling in Korea scandal probe, but could still be indicted

    Economic CBC News
    A South Korean court on Thursday denied a special prosecutor clearance to arrest the head of Samsung Group, the country's largest conglomerate, amid a graft scandal that has led to the impeachment of President Park Geun-hye. Source
  • Hawaii bill aims for 100 per cent renewable transportation

    Economic CTV News
    HONOLULU -- Hawaii has the most aggressive renewable energy targets in the nation, aiming for its utilities to get 100 per cent of their electricity from renewable sources by 2045. Now advocates want to extend that goal to the transportation sector to urge all forms of ground transportation to fuel up using renewable sources by 2045. Source
  • JPMorgan settles mortgage discrimination lawsuit

    Economic CTV News
    NEW YORK -- JPMorgan Chase will pay $55 million to settle federal charges that independent brokers working for the bank discriminated against minorities seeking home mortgages during the housing crisis. While the settlement is not a big financial dent to the giant bank, the cases illustrate the depth of the mortgage quagmire that has trailed the financial sector for a decade. Source
  • Netflix's shrinking DVD service faces uncertain future

    Economic CTV News
    SAN FRANCISCO -- Originally cast in a starring role, Netflix's original DVD-by-mail service has been reduced to a bit player -- one that may eventually get killed off as the company focuses on its booming video streaming service. Source
  • Vegemite being sold by Oreo-maker Mondelez

    Economic CTV News
    NEW YORK -- Vegemite, the salty spread beloved in Australia, is being sold by the maker of Oreo cookies to an Australian dairy company. The spread and other grocery products are being sold by Mondelez to Bega Cheese in a deal worth about $345.3 million (460 Australian dollars). Source
  • Vegemite goes home: Oreo maker sells to Australia's Bega

    Economic CTV News
    CANBERRA, Australia -- Vegemite, the salty, brown spread beloved in Australia, is going home, purchased by an Australian dairy company from the maker of Oreos. Mondelez International Inc. said Wednesday it was selling Vegemite and other Australian and New Zealand grocery products to Bega Cheese in a deal worth about $345.3 million (460 Australian dollars). Source