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Marijuana Industry Analysis

 

Market Overview & Trends & Forecast

How big is the market for legal pot? A new report by a leading marijuana industry investment and research firm found legal cannabis sales jumped 17%, to $5.4 billion, in 2015 and they will grow by a whopping 25% this year to reach $6.7 billion in total U.S. sales.

The numbers are staggering, considered the first recreational dispensaries opened for business in Colorado only two years ago.

The State of Legal Marijuana Markets report includes the prediction that the legal cannabis market will see a whopping $21.8 billion in total annual sales by 2020. (By comparison, at that point, the legal marijuana market could be bigger than the National Football League, which saw roughly $12 billion of revenue last year but is aiming to reach $25 billion by 2027.)

 

Experts expects the legal pot market to show a compound annual growth rate of nearly 30% over the next few years.Size of legal cannabis market fig1

Legal cannabis is the fastest growing industry in the United States.

 

Governments, entrepreneurs, and people everywhere are beginning to acknowledge that the potential of the cannabis industry is too great to ignore. Its outdated, unsubstantiated stigma is quickly being replaced by legitimate research, supportive laws, and market demand that has surpassed expectations.

 

Medical Marijuana Inc has been a leader in bringing this promising industry to its current state, and will continue to support its rapid growth. If you’re still uncertain about the future of the legal cannabis industry, check out some of the facts and statistics below.

 

Forecast

Over the next five years, the marijuana industry is expected to continue to grow, with ArcView predicting that 14 more states will legalize recreational marijuana and two more states will legalize medical marijuana. At least 10 states are already considering legalizing recreational marijuana in just the next two years through ballot measures or state legislatures.

To date, four states — Colorado, Washington, Alaska and Oregon — have legalized retail marijuana. Washington, D.C., voters also legalized recreational marijuana use, but sales currently remain banned. Twenty-three states have legalized medical cannabis. Still, marijuana remains illegal at the federal level.

Current reports projects that, by 2019, all of the state-legal marijuana markets combined will make for a potential overall market worth almost $11 billion annually.

California still has the largest legal cannabis market in the U.S., at $1.3 billion. Arizona was found to have the fastest-growing major marijuana market in 2014, expanding to $155 million, up more than $120 million from the previous year. Medical marijuana is already legal in Arizona and California and recreational legalization measures are likely to appear on the 2016 ballots in both states.

More than 1.5 million shoppers purchased legal marijuana from a dispensary, either medical or recreational, in 2014. Five states now boast marijuana markets that are larger than $100 million, and in Colorado and Washington — the first states to open retail marijuana shops in the U.S. — consumers bought $370 million in marijuana products last year.

Oregon and Alaska are expected to add a combined $275 million in retail marijuana sales in their first year of operation.

The huge growth potential of the industry appears to be limited only by the possibility of states rejecting the loosening of their drug laws. Published reports project a marijuana industry that could be more valuable than the entire organic food industry — that is, if the legalization trend continues to the point that all 50 states legalize recreational marijuana. The total market value of all states legalizing marijuana would top $36.8 billion — more than $3 billion larger than the organic food industry

 

 

Facts & Stats

 

$2.7B

The current value of the legal marijuana market, which grew 74% in 2014. In 2015 the legal marijuana market is projected to grow by another 32%.

 

$36.8B

The projected value of US retail sales resulting from full legalization. This represents a 1,262% increase over 2014 wholesale and retail sales.

 

23

States that have already legalized medical marijuana. 11 more have pending legislation in 2015.

 

76%

of clinicians polled worldwide by the New England Journal of Medicine believe that the medicinal benefits outweigh the risks and potential harms. Within the next 5 years, the legal cannabis industry is expected to out earn the US film industry, the organic foods industry, and more than triple the revenues of the NFL.

 

17M

17 million people already live in states where recreational marijuana is legal. Based on legalization projections, this number is expected to increase to 86 million – over 25% of the US population – by 2017.

 

58%

According to a Gallup Poll, 58% of Americans now support legalization, an increase of 17% since 2010. Only 40% now oppose the legalization of marijuana.[source]

 

Within the next 5 years, the legal cannabis industry is expected to out earn the US film industry, the organic foods industry, and more than triple the revenues of the NFL.

 

$620M

The US imports $620M in hemp products each year. With the passing of the 2014 Farm Bill, Americans can grow limited quantities of hemp for the first time in 77 years.

 

Politics

Politicians of both parties, including the Koch Brothers, Rick Perry, Kofi Annan, Jeb Bush, Barack Obama and Nancy Pelosi support marijuana law reform.

 

Key Industry Facts

 

CBD, THC and Cannabinoids:

While THC is the well-publicized “high” inducing compound in cannabis, there are several dozen other unique compounds, called cannabinoids, with promising effects. Cannabidiol, or CBD, does not cause the “high” of THC, and studies show it may have many medical benefits. Naturally occurring hemp is relatively high in CBD, with low THC levels. More research is needed to better understand the potential of the other 60+ cannabinoids. Evidence also shows that these compounds are synergistic, working together to have greater effects.

 

‘507 Patent: 

CBD (cannabidiol) is classified by the National Institutes of Health as an antioxidant and neuroprotectant. US patent number 6,630,507, entitled “Cannabinoids as antioxidants and neuroprotectants” specifically describes the therapeutic properties of cannabidiol, listing over a dozen serious medical conditions that could be treated with the therapeutic use of CBD.

 

Legality:
While it is still illegal to grow cannabis in the United States under most circumstances, and THC is a schedule 1 drug, hemp oil products have been legally imported to the US for decades. Starting with hemp and importing CBD-focused products allows us to legally serve a large market today, and lays the foundation for broader cannabis legalization. We are excited about the progression of the legal landscape in the cannabis industry.

 

 

Industry History

 

2003 – NIH Patent Published
This patent, owned by the National Institutes of Health, describes the therapeutic properties of CBD.
2004 – HIA vs. DEA Decision
The result of this case reaffirmed the legality of hemp product imports.
2009 – Medical Marijuana Inc. Founded
Medical Marijuana Inc. becomes the first publicly traded hemp company.
2010 – First CBD Products
Medical Marijuana Inc. subsidiary sells the first legal CBD products in the United States.
2014 – “Farm Bill” Passed
The US Government passes the “Farm Bill”, which permits hemp agriculture for research purposes.
Current Legal States
Today 23 states have legalized medical marijuana, and 11 more have upcoming legislation.

 

 

Sales Statistics

 

 

U.S. retail cannabis sales will rise more than five-fold over the next five years, from an estimated $2.2-$2.6 billion in 2014 to $7.4-8.2 billion in 2018, according to new financial data published.

 

This data does not include black market sales. However, other research indicates that despite prior industry fears, the majority of cannabis consumers are willing to switch from black market providers when cannabis is legally available in their regions.

 

The U.S. black market is currently estimated to be in the $40 billion range. Thus, the legal marketplace has significant potential beyond 2018.

 

 

 

 

 

 

 

 

 

 

Why the market is growing

 

While the drug remains absolutely illegal on the federal level, the tide of public opinion has been moving in favor of legal marijuana for years, according to national polls. A handful of states could become the latest to allow the sale of recreational pot following expected votes in November. Four states already have legalized recreational marijuana, and a total of 23 states have legalized medical marijuana.

 

Well-established medical pot markets in states like California still account for much of the country’s legal marijuana sales, but recreational marijuana sales is expected to help fuel the cannabis market’s soaring growth over the next few years, says ArcView. It projects that adult-use pot sales will account for more than half (53%) of the overall market by 2020. That would represent growth of more than 1,150% for recreational sales over the next four years.

 

The huge jump in adult-use sales last year coincides with the first full year of recreational marijuana sales in Washington, which launched its legal recreational market in July 2014, as well as the beginning of legal sales in Oregon last fall. Meanwhile, 2015 recreational sales in Colorado had already increased by almost 68% year-over-year after only 11 months.

 

The growth in edibles, which are higher priced, have helped fuel sales, says New Frontier Director of Analytics John Kagia, who authored this year’s State of Legal Marijuana Markets report. “They also come at higher price points than the flower does, which means the businesses are able to capture higher sales per customer through the sales of these new products.”

 

Case Study: Coloraro

 

In Colorado, (legal) sales of recreational and medical marijuana totaled nearly $1 billion in 2015

Marijuana is a bigger business than many people realize. Although some are worried about the long-term health effects of marijuana use, it’s clear that legalization comes with some benefits to society — namely, more jobs and tax revenue. In 2014, Colorado collected $76 million in total marijuana-related taxes, and it had collected an additional $87 million from January through August of 2015 — and much of that revenue went to schools. Indeed, the state collects more from marijuana taxes than from alcohol taxes.

 

  • 833 retail establishment licenses issued
  • 1,416 medical business licenses issued
  • 15,992 occupational licenses issued
  • 109,578 pounds of medical flower sold
  • 38,660 pounds of recreational flower sold
  • 1,964,917 units of medibles sold
  • 2,850,733 units of retail edibles sold
  • 412,000 units of non-edible, infused medical marijuana products sold
  • 359,000 units of non-edible, infused recreational marijuana products sold
  • Average of 300,000-320,000 medical plants cultivated each month

Comparing Marijuana Market With Others

 

 

Drivers of growth

 

The biggest driver of growth in coming years is sure to be new laws being passed by states, according to Dayton. About a half a dozen states could put a legal pot to a vote this fall. California’s medical sales already account for a large chunk of the total industry; if it legalizes recreational marijuana this Novembers, as many expect, that alone could lead to a huge boom in industry sales.

 

Meanwhile, expect the cannabis industry to continue to gain legitimacy among entrepreneurs and investors. “A lot of people in the business and finance world, in particular, have kind of taken a ‘wait and see’ approach to the cannabis industry,” Dayton said. That will change in 2016, he predicts. Continued revenue growth attracts more investors (and convinces them to dig deeper for investments). The industry has already begun to see signs of that, such as last year’s news that cannabis-focused Privateer Holdings had secured a $75 million investment from Founders Fund, the firm founded by billionaire Peter Thiel.

Best Selling Edibles

First Place

Dark Chocolate Macaroons by Utopia Meds

Second Place

Pineapple Delight Bites by Lifted Edibles

Third Place

Cinnamon Maple Tree Hugger by Om Edibles & Gold Drop Collaboration

 

Other top selling edibles

 

 

 

 

 

 

 

Most Popular Cannabis Strains (Analysis) – sorted by popularity

  1. OG Kush

Effects

Medical

Negatives

 

  1. Skunk

Effects

Medical

Negatives

 

  1. Girl Scout Cookies

Effects

Medical

Negatives

 

  1. AK-47

Effects

Medical

Negatives

 

  1. Northern Lights

Effects

Medical

Negatives

 

 

  1. White Widow

Effects

Medical

Negatives

 

  1. Purple Haze

Effects

Medical

Negatives

 

  1. MK Ultra and G-13

Effects

Medical

Negatives

 

 

  1. Sour Diesel

Effects

Medical

Negatives

 

  1. Pineapple Express

Effects

Medical

Negatives

 

Most Popular Products By Type (sorted by popularity)

  1. Most popular overall item: Blue Dream buds.
  2. Most popular edible: 100mg Edipure Gummies.
  3. Best selling type of strain—indica, sativa, or hybrid?
  4. Most popular indica strain. Tie: Emerald OG and Purple Dream.
  5. Most popular sativa strain: G6 aka Jet Fuel.
  6. Most popular hybrid strain of flower: Glass Slipper.
  7. Most popular concentrate: Pen cartridges.
  8. Most popular cannabis drink: CannaPunch (100 mg).
  9. Most popular smoking device: Small pipes and “Raw” rolling papers.
  10. Most popular topical: Mary’s Medicinal CBD Patches.

 

Most Popular Cannabis Oils (sorted by popularity)

 

  1. QWISO
  2. FECO
  3. Hemp seed oil
  4. Cannabis Oil Infusion
  5. Rick Simpson Oil
  6. Solvents commonly used to make cannabis oil
  7. Naptha (boiling point between 30 °C and 200 °C).
  8. Acetone Boiling point 57 °C (135 °F).

 

Customer Preferences

Customers want variety. They expect new tastes and smells. People walk into the dispensary expecting to have in-depth conversations with budtenders. They want to know exactly how each strain or product will make them feel, and they expect the budtender to have a working understanding of things like terpenes. Terpenes, if you don’t know, are the pungent oils—with distinct flavors like citrus, lavender, and rosemary—that compose the smell of marijuana.

So don’t be surprised if, on your inaugural visit to a legal weed dispensary, you hear “I would describe this strain as grapey and sweet, but with a light undertone of spice…”

 

Medical Uses / Evidence Notes

General Remarks

There are marked differences in the knowledge on the medical uses of cannabis and cannabinoids in different diseases. For nausea and vomiting associated with cancer chemotherapy, anorexia and cachexia in HIV/AIDS, chronic, especially neuropathic pain, spasticity in multiple sclerosis and spinal cord injury there is strong evidence for medical benefits. For many other indications, such as epilepsy, pruritus and depression there is much less available data. However, the scientific evidence for a specific indication does not necessarily reflect the actual therapeutic potential for a given disease. Clinical studies with single cannabinoids or whole plant preparations (smoked cannabis, cannabis extract) have often been inspired by positive anecdotal experiences of patients employing crude cannabis products. The anti-emetic, the appetite enhancing, relaxing effects, analgesia, and therapeutic use in Tourette’s syndrome were all discovered in this manner.

Incidental observations have also revealed therapeutically useful effects. This occurred in a study with patients with Alzheimer’s disease wherein the primary issue was an examination of the appetite-stimulating effects of THC. Not only appetite and body weight increased, but disturbed behaviour among the patients also decreased. The discovery of decreased intraocular pressure with THC administration in the beginning of the 1970s was also serendipitous. Additional interesting indications that have not been scientifically investigated, but remain common problems in modern medicine may benefit from treatment with cannabis or cannabinoids. For this reason, surveys have been conducted questioning individuals that use cannabis therapeutically. They were conducted either as oral non-standardized interviews in the course of investigations of state or scientific institutions (House of Lords Select Committee on Science and Technology in the UK, Institute of Medicine in the USA) on the therapeutic potential of cannabis or as anonymous surveys using standardized questionnaires.

Nausea and Vomiting

Treatment of side effects associated with antineoplastic therapy is the indication for cannabinoids which has been most documented, with about 40 studies (THC, nabilone, other THC analogues, cannabis). Most trials were conducted in the 1980s. THC has to be dosed relatively highly, so that resultant side effects may occur comparatively frequently. THC was inferior to high-dose metoclopramide in one study. There are no comparisons of THC to the modern serotonin antagonists. Some recent investigations have shown that THC in low doses improves the efficacy of other antiemetic drugs if given together. In folk medicine cannabinoids are popular and are often used in other causes of nausea including AIDS and hepatitis.

Anorexia and Cachexia

An appetite enhancing effect of THC is observed with daily divided doses totalling 5 mg. When required, the daily dose may be increased to 20 mg. In a long-term study of 94 AIDS patients, the appetite-stimulating effect of THC continued for months, confirming the appetite enhancement noted in a shorter 6 week study. THC doubled appetite on a visual analogue scale in comparison to placebo. Patients tended to retain a stable body weight over the course of seven months. A positive influence on body weight was also reported in 15 patients with Alzheimer’s disease who were previously refusing food.

Spasticity

In many clinical trials of THC, nabilone and cannabis, a beneficial effect on spasticity caused by multiple sclerosis or spinal cord injury has been observed. Among other positively influenced symptoms were pain, paraesthesia, tremor and ataxia. In some studies improved bladder control was observed. There is also some anecdotal evidence of a benefit of cannabis in spasticity due to lesions of the brain.

Movement Disorders

There are some positive anecdotal reports of therapeutic response to cannabis in Tourette’s syndrome, dystonia and tardive dyskinesia. The use in Tourette’s syndrome is currently being investigated in clinical studies. Many patients achieve a modest improvement, however some show a considerable response or even complete symptom control. In some MS patients, benefits on ataxia and reduction of tremor have been observed following the administration of THC. Despite occasional positive reports, no objective success has been found in parkinsonism or Huntington disease. However, cannabis products may prove useful in levodopa-induced dyskinesia in Parkinson disease without worsening the primary symptoms.

Pain

Large clinical studies have proven analgesic properties of cannabis products. Among possible indications are neuropathic pain due to multiple sclerosis, damage of the brachial plexus and HIV infection, pain in rheumatoid arthritis, cancer pain, headache, menstrual pain, chronic bowel inflammation and neuralgias. Combination with opioids is possible.

Glaucoma

In 1971, during a systematic investigation of its effects in healthy cannabis users, it was observed that cannabis reduces intraocular pressure. In the following 12 years a number of studies in healthy individuals and glaucoma patients with cannabis and several natural and synthetic cannabinoids were conducted. cannabis decreases intraocular pressure by an average 25-30%, occasionally up to 50%. Some non-psychotropic cannabinoids, and to a lesser extent, some non-cannabinoid constituents of the hemp plant also decrease intraocular pressure.

Epilepsy

The use in epilepsy is among its historically oldest indications of cannabis. Animal experiments provide evidence of the antiepileptic effects of some cannabinoids. The anticonvulsant activity of phenytoin and diazepam have been potentiated by THC. According to a few case reports from the 20th century, some epileptic patients continue to utililize cannabis to control an otherwise unmanageable seizure disorder. Cannabis use may occasionally precipitate convulsions.

Asthma

Experiments examining the anti-asthmatic effect of THC or cannabis date mainly from the 1970s, and are all acute studies. The effects of a cannabis cigarette (2% THC) or oral THC (15 mg), respectively, approximately correspond to those obtained with therapeutic doses of common bronchodilator drugs (salbutamol, isoprenaline). Since inhalation of cannabis products may irritate the mucous membranes, oral administration or another alternative delivery system would be preferable. Very few patients developed bronchoconstriction after inhalation of THC.

Dependency and Withdrawal

According to historical and modern case reports cannabis is a good remedy to combat withdrawal in dependency on benzodiazepines, opiates and alcohol. For this reason, some have referred to it as a gateway drug back. In this context, both the reduction of physical withdrawal symptoms and stress connected with discontinuance of drug abuse may play a role in its observed benefits.

Psychiatric Symptoms

An improvement of mood in reactive depression has been observed in several clinical studies with THC. There are additional case reports claiming benefit of cannabinoids in other psychiatric symptoms and diseases, such as sleep disorders, anxiety disorders, bipolar disorders, and dysthymia. Various authors have expressed different viewpoints concerning psychiatric syndromes and cannabis. While some emphasize the problems caused by cannabis, others promote the therapeutic possibilities. Quite possibly cannabis products may be either beneficial or harmful, depending on the particular case. The attending physician and the patient should be open to a critical examination of the topic, and a frankness to both possibilities.

Autoimmune Diseases and Inflammation

In a number of painful syndromes secondary to inflammatory processes (e.g. ulcerative colitis, arthritis), cannabis products may act not only as analgesics but also demonstrate anti-inflammatory potential. For example, some patients employing cannabis report a decrease in their need for steroidal and nonsteroidal anti-inflammatory drugs. Moreover there are some reports of positive effects of cannabis self-medication in allergic conditions. It is as yet unclear whether cannabis products may have a relevant effects on causative processes of autoimmune diseases.

Miscellaneous, Mixed Syndromes

There are a number of positive patient reports on medical conditions that cannot be easily assigned to the above categories, such as pruritus, hiccup, ADS (attention deficit syndrome), high blood pressure, tinnitus, chronic fatigue syndrome, restless leg syndrome, and others. Several hundreds possible indications for cannabis and THC have been described by different authors. For example, 2,5 to 5 mg THC were effective in three patients with pruritus due to liver diseases. Another example is the successful treatment of a chronic hiccup that developed after a surgery. No medication was effective, but smoking of a cannabis cigarette completely abolished the symptoms. Cannabis products often show very good effects in diseases with multiple symptoms that encompassed within the spectrum of THC effects, for example, in painful conditions that have an inflammatory origin (e.g., arthritis), or are accompanied by increased muscle tone (e.g., menstrual cramps, spinal cord injury), or in diseases with nausea and anorexia accompanied by pain, anxiety and depression, respectively (e.g. AIDS, cancer, hepatitis C).

The future

 

Promising Numbers

 

The legalization of marijuana has benefited Colorado both economically and socially. Official statistics show that the state collected $23.7 million from taxes, licenses and fees year-to-date for FY 2015-2016, an increase of 70 percent ($13.9 million) from the prior fiscal year. In Washington state, one year after the legalization of recreational marijuana, sales have been averaging $2.4 million a day in September 2015 (up from $420,000 a day in October of 2014). This translates to expected tax revenues of $65 million in FY 2015 for Washington state (Washington State Liquor and Cannabis Board). But Colorado and Washington have not just benefited from collecting tax dollars.

 

Since the passing of Washington Initiative 502 on the November 2012 general ballot, Washington has seen its violent crime rates decrease, while the overall crime rate continues to remain at a 40-year low. Colorado has also experienced similar decreases in crime. In addition, the Colorado has improved its bottom line, saving money on the reduced arrests and traffic fatalities. The example set by Colorado and Washington no doubt impacted voters in Oregon and Alaska who soon voted to follow suit in legalizing marijuana.

 

These combined actions of Colorado, Washington, Oregon and Alaska have contributed momentum to the federal legalization effort. Harvard economists estimate that legalizing marijuana for the entire country would result in savings of $13.7 billion.

 

Future of Medical Marijuana

 

It’s not just the government’s coffers that benefit from legalization. On the medical front, both public and private institutions are busy studying the effects of cannabinoids (the chemicals that give marijuana its active drug effects) for a whole slew of physical and mental ailments. Multiple studies have pointed to efficacy of cannabis in everything from alleviating pain in sufferers of multiple sclerosis and arthritis to helping to slow the spread of cancer or the progression of Alzheimer’s disease.

 

Furthermore, anecdotal evidence of marijuana’s for combating symptoms of post traumatic stress disorder (PTSD) and other psychological maladies have long been documented amongst the veteran community as well as other survivors of violent events. In the private sector, the potential pain-relieving effects of the compound tetrahydrocannabinol (THC) in marijuana, has led companies like Arena Pharmaceuticals Inc. (ARNA) to study THC for the development of new treatments. Arena’s leading pharmaceutical drug candidate, ADP371, is currently in clinical trials in the Phase 1 single ascending dose stage. Arena is not alone in this growing field of cannabis-derived pharmaceuticals. In April 2015, GW Pharmaceuticals plc (LON: GLC) of London received orphan drug status for Epidiolex, a drug based on the cannabinoid CBD. It has shown promise in trials for helping to reduce the number of seizures in those suffering from severe epilepsy.

 

Concerns

 

With marijuana’s many social, fiscal and medicinal benefits, why isn’t full-blown federal legalization happening now? And should investors jump in on companies that will profit from the national legalization of marijuana? Before making any investment decisions betting on the future of cannabis, consider a few important caveats. On the federal level, a case can be to keep medical marijuana illegal based on its increasing potency over time and properties that can lead to misuse or dependency (Whitehouse.gov). And despite its mild reputation, marijuana is a powerful drug with both positive and negative effects. Studies have shown cannabis can cause of short-term paranoia and exacerbate symptoms of psychosis for those suffering from or susceptible to psychotic disorders.

 

And how about those medical properties of marijuana that have long been touted by its supporters? Based on a meta-analysis conducted on 79 trials and 6462 participants, The Journal of the American Medical Association (JAMA), concluded that evidence for cannabis in treating chronic pain and spasticity was moderate. But JAMA went on to conclude that there was low evidence for suggesting the use of cannabis to treat nausea and vomiting during chemotherapy, weight gain in HIV infection, sleep disorders and Tourette’s syndrome. Finally, the much-cited tax benefits of legalized marijuana may be overstated. A study by the non-partisan RAND research group on the effects of legalization in California concluded that after legalization of recreational use, the price of marijuana can fall dramatically (California currently allows only medical use of marijuana). This can lead to lower tax revenues for the state. A report by Convergex has recently confirmed the Rand study’s predictions: after full legalization of marijuana in Colorado, there was a large sales initial spike that also resulted in increased tax revenues. After the initial spike, marijuana prices fell dramatically in Colorado, mostly due to increased competition among suppliers.

 

 

 

 

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