When and if marijuana becomes legal in all 50 states, it will generate close to $50 billion in revenue, according to sources. To put this in perspective, the U.S. beer market annual sales are just under $100 billion, wine $32 billion annually, and coffee and tea $1.1 billion.
That $50 billion does not include black market revenue which will remain sizable no matter how many states legalize marijuana. On top of that, tens of billions of more dollars will be generated by ancillary businesses from security systems to accounting services to legal services to packaging and testing services. There also is the burgeoning industrial hemp market, plus the edibles markets and the tincture and oils markets. Just as the consumer packaged goods industry as a whole increases as new products are introduced, the marijuana industry is now exploding with a range of product lines.
In Colorado alone for 2014 the total recreational market is estimated to be as much as $500 million. That is in addition to at least another $300 million from the medical marijuana market. That is $800,000 in taxable income for the state and its municipalities.
Although taxes are higher with recreational marijuana than with medical marijuana, the medical marijuana market will be cannibalized in part by the recreational market. However, the aggregate Colorado market will be far larger than the former medical market. The market continues to expand significantly in a number of ways rather than just existing medical customers.
New customers include tourists and non-medical users who prefer to obey the law.
Washington’s recreational retails stores will not open until mid-2014, according to press releases issued by the state. In a fully functional marketplace, annual Washington State revenue is estimated to reach $1 billion. Some knowledgeable observers estimate licensed recreational sales will amount to only 20% of the black market, largely due to taxes and state and local regulations.
Washington has imposed an artificially low amount of space for indoor cultivation, creating a supply-side strain on the market. Also, the existing cap of only 334 licensed retail facilities may well keep the market smaller than anticipated.
California was the first state to legalize medical marijuana, in 1996. Twenty more states and the District of Columbia followed. Medical marijuana clients “medicate” and sometime actually medicate with dried flowers, edibles, plus infused and vaporized products. Treatable conditions include chronic pain, stress disorders, chemotherapy-related illnesses, and plain boredom, similar to needing a beer buzz but nowhere near as harmful to your physical and mental well-being.
Recreational marijuana is sold for the same reasons most people drink beer and other spirits. That is why the beer lobby was motivated to be instrumental in defeating the marijuana initiative in 2012 in California.
Recreational users do not need licenses and do not need to claim an often spurious medical marijuana condition.
States’ laws differ greatly. In general, the states with the most stable markets are the most regulated, both a curse and blessing. More and more states are moving toward greater regulation and taxation.
In 2013 medical marijuana sales were estimated at $1.4 billion in the United States. Sales of all marijuana and marijuana products was billions more.