The cannabis industry is quickly outgrowing its moniker as a “niche” industry to become an emerging market. Even though adult use marijuana has only been legal for four years and only eight states are participating, the industry is blowing past other markets. Sales, tax revenue and jobs are helping to push cannabis into the mainstream.
“Even with all the news going on today, there isn’t a week that goes by now without some mention of cannabis,” said Joel Milton of software company Baker. He noted that legislators are making headlines each week as they push back against the Justice Department and Drug Enforcement Agency with proposed legislation. “It’s rare to see bi-partisan initiatives at this time, but Democrats are in favor for more jobs and tax revenues, while Republicans want states’ rights.
Milton pointed out that there are three specific trends happening in the cannabis market that demonstrate that the industry is maturing into an emerging market.
Copycats are starting to emerge as successful businesses are being used to create cheater brands. In the early days, Leafly was called the Yelp of cannabis or Mass Roots was called the Facebook of pot. Now, instead of the cannabis companies copying mainstream companies, newer cannabis companies are copying the more established cannabis companies. “They see that a company like ours now has hundreds of customers and they put together a website that is almost identical,” said Milton. “At first, it was irritating, but then I came to see it as flattering and a sign of the maturing market.”
Milton also noted that beyond Baker, MJ Freeway and BioTrack THC were the leading seed-to-sale software businesses and now he said there are dozens in the same tech space. He mentioned the high-end vape business that saw the success of Pax and decided to jump in and emulate the leader.
The second sign of the maturing market is the shift of mainstream executives flooding into the cannabis industry. “Our vice president of sales, Carter Davidson came from Salesforce and our chief operating officer Geoff Hamm came from Silicon Valley,” said Milton. He added that the company receives applicants every week from big four accounting firms. “I went to a career fair and thousands of people from the mainstream were trying to get into this industry.”
Leafly researched the job market and determined that there are over 122,000 jobs in the cannabis industry in the country. Colorado has 23,407 jobs supported by legal cannabis followed by Washington with 22,952. When it comes to medical marijuana jobs, California leads the pack with 43,374 jobs. The jobs range from farmer to chemist to web developer. It used to be a topic no one would discuss in mixed company and now average Americans want to be a part of something new.
Finally, Milton said the investment community for cannabis is maturing. “They were throwing money at everything in the beginning, but now they are being more strategic.” He also pointed out that investors that had been reluctant to publicly attach their name to a cannabis investment now have no problem with it. The investment firms have also grown. For example, cannabis private equity firm MedMen’s minimum investment is $1 million and that is a long way away from a penny stock.
Milton’s company Baker has experienced this growth as well. The company has gone from 100 clients to 400 clients and from 12 full-time workers to 35. He said, “The original cannabis companies have only been around a handful of years, but it feels like we’re veterans.”