An article from San Antonio Express-News, discusses the success of the marijuana industry and factors that would influence investing in the industry.
In 2014, Colorado generated $699 million in legal medical and recreational marijuana sales. This past year, Colorado fell $4 million shy of hitting $1 billion in legal sales. Also, it created $135 million in tax revenue and licensing fees and at least $35 million will be used towards the state's education system. People were thrilled with these results and national polls continued to show steady or growing support for legalization.
The article then discusses some concerns about marijuana such as the increase in total crime after it became recreational in certain states. They also provided case study regarding driving under the influence of marijuana.
Lastly, it mentions how investors are excited with the progress of marijuana industry since legal marijuana sales expanded 15% from 2014 to 2015 and is forecasted to grow by 30% per year through 2020, according to ArcView Market Research. However, there are a few things to think about as an investor because it might be difficult to find up-to-date information on marijuana companies. Some disadvantages the industry has is they have no ability to take normalized tax deductions and marijuana businesses experience minimal access to basic banking services.
It will be interesting to look at the long-term out look of investing in the industry.
http://www.mysanantonio.com/business/fool/article/This-Might-Be-the-Best-Marijuana-Study-You-ll-See-6924701.php
It was very interesting to hear the viewpoints of actual workers in the Marijuana industry at the "Cannabusiness" event that Professor Breidenbach organized in the fall. The main issue that the speakers at the event discussed were the high revenue but low profits they were making at the time, as no costs in production could be expensed due to the Federally illegal status. This among other issues (such as the banking services you mentioned) could mean it may take some time for the industry to truly take off in terms of being a profitable long-term industry. But for now we will just have to wait and see.
ReplyDeleteFrom the people who came to talk about the "Cannabusiness" they mentioned how regulations were introduced after the introduction of recreational marijuana because sales were so high a tax was added to control the amount of sales. Because the industry is still relatively young potential might be high initially, but we'll see if long term success in the industry can be sustained.
ReplyDeleteI agree with both of these comments. I think that Ohio should eventually allow the marijuana industry once it becomes more established and we know for a fact that it is best for Ohio's overall economy. I think that until this can be established as a profitable long-term industry as Trey discusses.
ReplyDeleteI also find it interesting that there has been an increase in crime in certain states once this was instituted. Obviously we know that causation does not necessarily mean correlation, therefore it would be interesting to look more into this.
I think the public health consequences will be the big question as well. I see decriminalization of marijuana having some unattended consequences. Penalizing individuals for marijuana possession is not worthwhile, but allocating some of the profits to treatment and support individuals with marijuana/alcohol/drug misuse could be a tremendous benefit to some high risk populations. Of course, I don't see businesses wanting anything taken out of their bottom line, but I believe that the support is viable.
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