A report this week released by the See Change Strategy, and independent financial analysis firm, stated that medical marijuana is now a $1.7 billion dollar market. This figure rivals the popular drug Viagra, which brings in $1.9 billion annually for drug giant Pfizer.
These figures are garnering interest from entrepreneurs and venture capitalists, as the market is expected to double in the next five years in the 15 states where marijuana is approved for medical use. If another 20 states pass a medical marijuana law, the market could grow to $8.9 billion by 2016.
Hundreds of businesses have sprung up around the country that grow and sell marijuana to customers. These businesses have taken hold partially due to the Obama administration’s decision to deprioritize federal prosecutions for businesses and individuals that are complying with state medical marijuana laws.
Ted Rose, the editor of the report, states that the cannibis industry as a whole generates between $18 billion and $35.8 billion annually. This includes the black market as well at the “grey market” (medical marijuana).
The report highlights some interesting information. There are an estimated 24.8 million potential customers for medical marijuana in the U.S. This accounts for patients with qualifying ailments that live in a legalized state. However, there are less than 800,000 actual medical marijuana users in these states. California and Colorado currently account for 92% of wholesale and retail sales. Washington State, Arizona and Michigan are well positioned for significant growth.
Jeffery Miron, the director for undergraduate studies for Harvard’s Economic Department feels that for the most part, the numbers in the report seem plausible. However, he does not agree that the industry can top $35.8 billion. He states the number is realistically closer to $18 billion. He sites that the alcohol industry is a $50 billion industry, where half adult consumers participate. Five percent of American adults participate the medical marijuana market. The disparity between the numbers does not compute in his opinion.
One thing is for sure, the medical marijuana business is poised to only grow stronger, and business investors and entrepreneurs are sure to follow.