The Emerging Business of Legal Marijuana

by Scott Bartkus

We all know this past election had the interest and opinions of more Americans than ever, but from a business front, many entrepreneurs were equally, if not more, interested in a handful of state elections on the continued legalization of Cannabis.  It has been a hot topic for several years now, and even Pennsylvania broadened its conservative views in April of 2016 when Tom Wolf signed Senate Bill 3 into law. It is expected that Pennsylvania’s adoption of medical marijuana legalization will be in full effect by third quarter 2018 when it will allow marijuana to ailing patients who are under a physician’s care for the treatment of a serious medical condition. The law defines the qualified medical conditions one must have to access medical marijuana with a physician’s certification at designated state dispensaries.

The Pennsylvania law, Act 16, opens many opportunities for aspiring businesses to enter the growing legal marijuana business.  It sets forth the criteria for those companies who wish to apply to the Department of Health for a license as a manufacturer, dispensary, and registered physician.  The law also establishes taxes and fees related to obtaining any license.

As of the date of this article, twenty-six states and the District of Columbia, have legalized marijuana to some degree.  Seven of those states and the District of Columbia have voted for more liberal laws by allowing its recreational use beyond medicinal purposes.  What does this mean to businesses?  With these statistics growing, it is estimated that the market for legal marijuana, whether medicinal or recreational, will reach $22.8 billion by 2020.  In the United States alone, 2016 is expected to see the legal marijuana business reach over $7 billion, an increase of 373% since the first laws were passed.  To put this in perspective, the National Football League (NFL) grossed $12 billion during the 2015-2016 season.  The investment bank of Ackrell Capital predicts the marijuana industry to reach $100 billion by 2029.

It’s no wonder these numbers are attracting new start-up businesses across the country in the form of:

  1. Producers of cannabis product that start the chain of the market
  2. Technology research in advanced cultivation techniques
  3. Land and real estate related to the product growth
  4. Dispensaries for its distribution
  5. Production of alternative uses to ingestion such as in the form of food or drink
  6. Ancillary medical advancements containing cannabinoids, and
  7. Banking and venture capitalists.

All forms of marijuana are still classified as illegal under Federal Law.  But I should note that the Federal Government cannot force states to criminalize conduct that is illegal under its law, nor can the federal government force state and local police to enforce federal laws. There are no known cases in any of the twenty-six states that have authorized the use of medical marijuana of the federal government prosecuting an individual for a small amount of marijuana.

Even though the Republican Party, which has had conservative views on the legalization of marijuana, has the majority control of the House and Senate in Washington through the last election, Congress may have to revisit national laws and the classification of marijuana on a Federal level as more and more states legalize it to some degree.  This would mean even more opportunities for investors and businesses, as the industry would then have Federal backing.

Related Articles