Is the cannabis industry worth getting into for startups and investors? According to ArcView Market Research, a data-driven group that specializes in legal marijuana markets, the answer is undoubtedly yes. The firm’s latest report titled “The State of Legal Marijuana Markets” suggests that legal cannabis sales may reach $21.8 billion in the next four years.
That’s impressive, considering that legalization only came to fruition in Colorado two years ago. Last year, the legal cannabis industry hit $5.4 billion; and with a steady compounding rate of 25 percent, 2016 should rake in around $7 billion in sales. Analysts are comparing the growth to the NFL’s projected annual revenue, which could be eclipsed by the nascent sector in 2020.
The Green Rush
With more states opening up to medical marijuana legalization (six states voting this year), cannabis enthusiasts have started to come out of the dark and embrace their passion publicly. Since hitting mainstream status, the industry has attracted a diverse group of individuals, ranging from senior citizens to conservative parents, due to its availability and alternative medicinal properties that can’t be replicated by synthetic, prescription medicine. Furthermore, investors who have been sitting on the sidelines, waiting to see how consumers would respond to the new market, are finally letting their guard down. Firms are slowly pumping money into the field, primarily into research and development projects.
“I think that we are going to see in 2016 this next wave of investors, the next wave of business operators, and people who’ve sort of been watching or dipping their toe in, really starting to swing for the fences and take it really seriously,” said Troy Dayton, CEO of ArcView, in an interview.
Cannabis Technology on the Rise
Propelling the growth of marijuana businesses is the adoption of new technology. Many investors are taking an indirect approach to supporting the sector by funding the creation of new cannabis tools, apps and platforms. Examples of such products include special point-of-sale (POS) systems for dispensaries and scanning software designed to match diseases with specific bud strains.
“As the industry grows, it will rely on technology to facilitate the development of businesses from an innovation perspective, which will create a more fertile environment for investment,” explained Leslie Bocskor, a funds manager who focuses on marijuana businesses for Electrum Partners. She also expects the industry to be a leading provider in new jobs and tax revenue. The outspoken manager compared the current standing of the cannabis arena to the energetic introduction of antibiotics in the 1920s.
There are also Cannabis Technology meetups popping up nationwide. Some of the event organizers, which include some of our team here at MassRoots, are also organizing the Cannabis Technology Association, a trade organization whose mission is “to promote the legitimization of the legal cannabis industry through collaborative creation of transparent technology.”