As we begin this new year, it’s important to reflect on how historic 2016 was for marijuana in this country. Last year, seven states legalized cannabis in some form, including recreationally in both California, the sixth largest economy in the world, and Massachusetts, the first state in New England to end prohibition.
These were important steps in the quest to end federal prohibition, as even President Obama attested to in his exit interview with Rolling Stone when he said, “It is untenable over the long term for the Justice Department or the DEA to be enforcing a patchwork of laws, where something that’s legal in one state could get you a 20-year prison sentence in another … So this is a debate that is now ripe, much in the same way that we ended up making progress on same-sex marriage.”
Last year was also monumental for states who already achieved legalization. According to a new report from Arcview Market Research, legal marijuana sales across North America generated $6.7 billion in gross revenue, a figure that represents an impressive 30 percent jump in one year.
Researchers at Arcview don’t foresee the marijuana industry losing momentum anytime soon. They project sales will continue to skyrocket at a compound annual growth rate of 25 percent for another half decade. Arcview estimates the North American marijuana market will be worth more than $20.2 billion by the end of 2021.
Very few industries have grown as rapidly as the legal cannabis market has in the past few years, and even fewer continue that trend according to Arcview Editor-in-Chief Tom Adams.
“The only consumer industry categories I’ve seen reach $5 billion in annual spending and then post anything like 25 percent compound annual growth in the next five years are cable television (19 percent) in the 1990s and the broadband internet (29 percent) in the 2000s,” Adams said in a statement to Business Insider.
“What broadband changed for the internet was a kind of remarkable parallel to legalization for cannabis,” Adams added. “We saw what had been a $5 billion industry — like this one — in North America take off at that point on new growth spurts.”
Advancements in extraction technology and a vast array of available products with different ingestion methods are two major reasons for the rapid growth happening in the cannabis industry.
“Spending in the largest three adult-use markets (Colorado, Washington and Oregon) was up 62 percent through September after doubling in 2015. That growth was fueled in large part by the sudden popularity of alternative ingestion methods such as edibles and concentrates,” said Adams.
Of course, with all of this additional revenue flowing into the marijuana industry, the banking industry’s failure to adapt and work with these businesses becomes an even more dire issue. The longer we force these flourishing enterprises to deal in all cash, the longer we keep them in the crosshairs of dangerous criminals who see these business as easy targets. Thankfully, members of the Senate are finally taking a stand on the matter.
“(In) these states, the majority of legal marijuana businesses, and businesses that provide services to them, are all but barred from participating in the financial system,” reads a letter from Senator Elizabeth Warren that aims to bring reform to marijuana industry banking. “As a result, many legal businesses are forced to operate in cash, which jeopardizes community safety, limits economic growth and greatly expands the opportunity for tax fraud.”
After 2016 marked the most lucrative year for the legal marijuana industry thus far, let’s hope that 2017 sees even more progress made — including not just revenue growth, but advancement on the business development and logistics side of things as well. As the stigma of cannabis washes away, the legal industry should be allowed to operate as efficiently and safely as any other legal business.
Now that legal marijuana has rivaled the popularity of high-speed internet, there’s only one remaining barometer of mainstream commercial success — sliced bread.