On January 1, Californians lined up at some of the legal dispensaries ready to buy adult-use marijuana. California, which has the sixth largest economy in the world, is expected to be the largest legalized marijuana market. Early reports from the state seem to support the predictions of huge sales.
According to MJ Biz Daily, one dispensary named 420 Central has sold $30,000 worth of product by 1:30 in the afternoon on New Year’s Day. The owner said he normally stocks up on inventory once a week, but now he may have to do so twice a week to satisfy demand. Matt Karnes, the founder of Green Wave Advisors states California should reach ~$5.3B in retail sales, its first year of a consolidated market. This would be almost double the current market sales for medical marijuana alone.
Green Market Report forecasts that the low end of sales will be at $9.1 billion and the heavier side of consumption could result in sales of $11.5 billion. This is higher than Karnes estimate but lower than ICF International, a professional services, and technology company that estimated an even higher number. These analysts believe the California market could reach between $15.9 billion and $20.2 billion per year.
In addition to this forecast, Green Market Report has issued a new report, The 2018 California Cannabis Forecast that reviews the economic impact of this industry. The report covers the expected trajectory of cannabis prices as the market transitions from the wild west of a mostly unregulated market to one with rules and requirements. Green Market Report issues its own projections on the number of jobs to be added and the effect it will have on the residents of the state and the ripple effects of those new salaries.
In addition, the report takes a look at the established small businesses in the state and how these companies will be impacted by the rush of new companies that are well-capitalized and coming from out-of-state. Plus, the thriving illegal cannabis market is expected to be disrupted as law enforcement uses the tool of tax evasion to try to bring these businesses into the legitimate marijuana marketplace.
Overall, the addition of adult use marijuana in the state of California will be messy. It will take at least a year for the market to stabilize as existing companies try to become legal entities as well-capitalized new players try to corner market share. The black market will not go down without a fight and regulators as well as authorities will have their hands full trying to enforce new rules and regulations. Yet, capitalism will thrive and markets always find a way to adapt and right themselves. The lessons of supply and demand always seem to work no matter the end product.
Cannabis will prove to be an economic driver of significance in California just as it has in the recreational states before it. California was the state that the world was waiting for to embrace recreational commerce. It will indeed prove to be the tipping point for the world. Here at Green Market Report, we look forward to witnessing California evolve into the world leader it was always meant to be for cannabis.