Entrepreneurship · Entrepreneurs

What do you think about marijuana industry and the boom that would result from full legalization?

Merry Ferrer Owner at Meysine's Merchandise

October 6th, 2016

In Colorado you see a bunch of folks making a killing on this. What does the future hold for this industry?


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David Dallaire Founder/President at Fennec Marketing Group

October 6th, 2016

I've been following this a bit myself here in WA, and am seeing a few things:
1. Some growers in CO and WA are thinking ahead and are going to be ready to go national as more states legalize it. 
2. There is some very interesting technology being developed and deployed in the business that will make some of them rich outside of this industry.
3. The retail experience is not really evolving much...still a dark, stinky juvenile kind of feel.
4. Big Pharma is already nosing around in this space and will be making acquisitions sooner than later. It remains to be seen if regulatory practice will be designed to help preserve a diversity of small-time growers or not.

And as far as making the general public dumber, have not seen any evidence of that so far...it has been a pretty painless and smooth evolution without much more visibility than it had before it was legal.

Robert Warren Founder and Managing Director, Mean Eyed Cat Venture Labs

October 6th, 2016

It is a major growth industry both in the US and Canada.  Until it's decriminalized the players will be able to make millions with very little cost.  Once it's decriminalized, look for it to be regulated like tobacco and alcohol.  This will also lead to broader distribution.  While the profits will still be large, the cost structure will increase as will the push to build larger facilities to provide economies of scale.  This last point will drive consolidation and many smaller players out of the market.  If you get in now, save your cash and be ready to invest in the next wave as the current system won't be around in the medium to long term.

David Albert Founder & Principal at GreyGoo

October 6th, 2016

Agree with Arthur--federal legalization will come with high taxes. However, I don't believe you're going to see that anytime soon--regardless of who takes the White House. What's more likely is continued legalization (medical and recreational) at the state level for some time to come--I'd speculate another 5 years at a minimum--a decade is more likely.

As far as making a "killing" not sure that's the case. Yes, those who sold at the medical level in Colorado were well poised to do well when it was legalized for recreational use--but now it's hard to jump into the space without a lot of capital. Oregon allows residents to grow their own plants, reducing the need for retail sales.

California Proposition 64 gets voted on in November--if passed it would allow for recreational sales in California, which would likely dwarf the numbers you see in other states. However, like Colorado, there are many medical dispensaries gearing up for that to happen. Arizona, Maine Massachusetts and Nevada are also voting so it will be interesting to see the outcomes.

Kenneth Breeze Startup Advisor, Strategic Coach, Futures Thinker, Investor | SaaS

October 6th, 2016

Like almost any commodity, more and more people will jump on the band wagon, competition goes up, prices go down and this too will loose its appeal and income margins. It’s just a matter of time.

Chet Billingsley CEO of Medical Marijuana Public Company (MNTR) Raising & Investing $26MM in the Cannabis Space

October 11th, 2016

The regulated cannabis market is $5B.  The unregulated (illegal) marijuana market is $50 Billion.  With the 5 states and several other initiatives looking very positive for passage in 4 weeks, it is forecast that the regulated market will grow to $10 Billion in 18 months.  The market actually doesn't grow much, it already is developed and just rolls over from unregulated to regulated.  There are very few markets I know of in which one can predict a reliable 64% annualized market growth. (It was $1.7B in 2013 when MNTR started).  NEGATIVES: The biggest actors often have been at it since the illegal days and have not evolved in the "everybody knows the rules" contract environment of Silicon Valley or Bio-tech, but rather fall back to "self-help."  First tier financial firms cannot touch it.  You generally have a hard time depositing exempt shares.  Every now and then a bank will close your high balance account.  Brokerages will cancel your accounts. Many will think you are a pariah.  Your operating expenses are not tax deductible (!) (Rule 280E) only COGS.  Local politics rule and if you don't know someone it is very hard to win a license.  Even when you follow the rules perfectly, someone can still raid you and take everything your business, you, your wife, your kids and your mother owns. And, you must get to like tattoos, note that their dilated pupils are a bad sign, and don't schedule appointments before noon.  POSITIVES: You are in a $5 Billion market growing at 64% per year.  Your competition is often not sophisticated in business (but you may not know MJ).  If you have access to modest capital ($10M) you are the "one-eyed man in the land of the blind." The big boys are not yet in and if you do well they may buy you out.  There are only a large handful of legitimate public companies (like MNTR) in the space among a throng of illegitimate ones. Medical Marijuana blunts chronic pain, reduces seizures, calms chemo related nausea, stimulates appetite in cancer patients, reduces intra-ocular pressure for glaucoma sufferers, promotes sleep, quiets tinnitus, blunts arthritic pain, calms irritable bowel syndrom and crohn's and has anti-cancer attributes. Recreational cannabis does not act on the brain stem to relax mood and slow pain with the side result of slowing breathing leading to the death by overdose from opiates like vicaden, oxycodone and heroin. Massive cannabis overdosing results in sleep. Cannabis leads to more passive vs more aggressive behavior one finds with alcohol. Cannabis use is substituted for alcohol and other illegal drug use and that substitution effect is approximately 20% in our independent study.  Because of reduction from dangerous drugs for cannabis there would be approximately 10,000 fewer deaths in the USA from overdose if cannabis were legalized instantly across the USA.  PS This is the opinion of a conservative 64yr old fellow who went to West Point and then Harvard for graduate school and studied difficult to traet cancers at MIT in conjunction with Mass General Hospital.  I personally do not use pot and recently I finished off a bottle of rum -- that I bought 40 years ago in Puerto Rico -- I drink that much.  

Michael Burack

November 18th, 2016

"privatised prisons and drug rehab centers?" This man's thinking is so 20th century...Medicinal- non- psychoactive cannabis works better than opioids prison and institutional facilities and those who use it recreationally are a safer bet, particularly on the highways, than alcoholics...The weed person drives 20 mph and the alckie 90...Both verifiable by the police...Please, let's get this discussion on a more rational basis and make certain that we get into selling a plant rather than chemicals...

Scott Liebman Partner at Geometry Wines, LLC

November 22nd, 2016

States will continue to legalize the medicinal and recreational use, and yes, costs to remain in the business will increase.  However, if the states which legalize intrastate commerce avoid overtaxing cannabis products, then there will be less incentive to transact in the black market (In WA where the tax rate is too high, the black market survives).   

Responding to some of the assertions in other posts (with further clarification):
- We're a long way off from interstate shipping, though there are some national models will work.   Each state must, at least for now, be considered its own closed market (though there are parallels, so a multi-state approach can be valid).
- While there are a lot of naive ideas and business plans with absurd valuations circulating, and lots of home-grown businesses becoming legal, there are some very sophisticated business models, some already well established, that are positioning themselves for even strong growth. 
- The published market numbers are low.
- Cannabis laws are borrowing a lot from wine and alcoholic beverages regulations. 
- Big companies will enter the market for the low-end recreational market, but I think the market will look a bit like beer - There will be room for 'craft brews'.  Certain states have adopted regulatory practices to help preserve a diversity of small-time growers and dispensaries.
- There are valid medicinal purposes; with further research in the US, companies can refine their products to better target the medical issues (Much research is being conducted in the UK, Israel and Canada already).
- Inhaling anything into your lungs is probably not good - better to ingest tinctures. 
- As it becomes more of a commodity, prices will decrease, but there is significant opportunity in all parts of the market.

I spent 3 days at the conference in Las Vegas last week -- sold out, 10,000 participants, and moving to the Convention Center next year.    Many, many investors, equipment manufacturers, and other suppliers and service providers in the industry.   

Check out an incubator called Canopy which focuses on the industry (Boulder/Berkeley), and ArcView.   

Ultimately, my personal view is that cannabis should be descheduled and taxed and regulated in much the same way that alcohol is.   Note that alcohol is a drug and is far more addictive and dangerous than cannabis - and it's a way of life for many.... Abuse will always exist, but it's probably best to legalize it, tax it, regulate the manufacture and sale (e.g., some farmers are using land and water and pesticides illegally). 

Gregory Kinaga Law Clerk at TechLaw LLP

November 17th, 2016

The US cannabis industry has been projected to hit $21 billion by the year 2020. However, marijuana markets in the US have been extremely localized and any "boom" will probably play out gradually across each state, county, and city. This is because each state must first address the legalization and implementation of both medical and recreational use, and many states leave it up to individual municipalities to decide the issue.
 
For example, take a look at California. California was the first state to legalize medical marijuana  in 1996 with Proposition 215, but the initiative did not equip the state with necessary regulations for a successful statewide system. In the next two decades the California cannabis industry fell behind industry leaders like Colorado, until it passed a comprehensive medical marijuana licensing system via MCRSA in October of 2015. Currently, MCRSA permits each of the 58 counties and 482 cities to decide whether to legalize medical marijuana and how to license it. Most counties and cities within the state still prohibit the drug, at least with respect to manufacturing and retail.
 
On top of that we have the recent passage of Proposition 64 (legalizing recreational use), which is also slated for January 1, 2018. Like MCRSA, Proposition 64 currently authorizes the localities to license and regulate recreational use. Given that many counties and cities still ban medical marijuana it seems unlikely for them to suddenly legalize recreational use.
 
Another issue to consider is the delay. Both MCRSA and Proposition 64 are slated to take effect on January 1, 2018, but an enormous amount of work remains before that can happen - many believe there will be significant holdups, at least with respect to recreational use. The problem is that, historically, states like Washington and Colorado already had extensive medical marijuana systems in place for many years before permitting recreational use. For California to simultaneously roll out a consistent medical and recreational system by 2018 seems a daunting and perhaps unrealistic task.
 

A final issue to consider is the riskiness involved in the cannabis industry. As recent as August of 2016, the DEA decided that marijuana will remain a Schedule 1 controlled substance, alongside drugs like heroin and ecstasy. While Obama was viewed as pro-marijuana, Trump may bring additional difficulties for the industry. Many investors are still hesitant about cannabis, and any successful cannabis business requires a significant amount of groundwork with local policy makers to stay afloat.


David Albert Founder & Principal at GreyGoo

November 18th, 2016

When has Trump ever said he will enforce the Class 1 federal ban? Or even hinted at it?

“In terms of marijuana and legalization, I think that should be a state issue, state-by-state,” Trump said to The Washington Post last year.

The impact on the states would be dramatic. Trump is a businessman--unless he gets heavy pressure from his constituents to act (which he won't), he's not going to make legalized pot an issue. He's got plenty of other things on his plate.

5 * Agents for a TV Channel Franchise

October 6th, 2016

The Wisest regulation would to appease the protesters who claim its their legitamate reason to decriminalise it,is to enable its use for medicinal purposes,and fool those who want to freeload their "I wanna get stoned" hedonistic activities,is to legalise it & produce it as a tincture format only,thus fooling those who think that they can fool the Government into believing that it can be medicinal or healthy to suck any type of smoke into  your lungs!