42 Surprising Facts About the Marijuana Industry

Marijuana, or cannabis, is now legal for recreational use in 11 states and the District of Columbia, and for medical use only in 22 states. But because it's still classified by the federal government as a Schedule I substance, regarded as having a high potential for abuse and no accepted medical value, businesses and local governments in those states have largely had to forge their own paths in regulating and researching the long-illicit drug for recreational and medical markets. The product's novelty and complicated legal standing make this an industry like no other at present, so let's dive into some of the most interesting trends and statistics to come out of the nation's booming new cannabis business.

Related: Why So Many Seniors Are Turning to CBD

Legal cannabis sales reached approximately $12.2 billion in 2018, a nearly 50% increase from 2016, a figure that's likely due to the fact that, between 2016 and 2018, seven states legalized recreational marijuana use. 

The decline in arrest rates due to marijuana legalization doesn't come at the cost of public safety, studies have shown. Incidents of violent crime, particularly robbery and murder, declined by an average of 13% following medical marijuana legalization in southern border states, where illicit drug markets have historically been controlled by Mexican cartels, according to the Center for American Progress. Colorado saw a 6% drop in violent crime following full legalization.

Contrary to its Schedule I designation, the National Academies of Sciences, Engineering, and Medicine found conclusive or substantial evidence that cannabis is effective in treatment of chronic pain, multiple sclerosis, and chemotherapy-induced nausea. There's also moderate or limited evidence it can improve outcomes in patients with sleep disturbances, HIV-associated weight loss, post-traumatic stress disorder, and social anxiety disorders.

American veterans are among the most ardent groups pushing for marijuana legalization, as they stand to benefit considerably from its medical uses in easing the effects of post-traumatic stress disorder (PTSD). In a recent survey, 92% of members in the American Legion — the largest veteran group nationwide — supported funding medical marijuana research, while 82% said marijuana should be made a legal treatment option for veterans.

Laxer medical marijuana laws across the U.S. directly contributed to a reduction in the nation's alcohol consumption, according to a study conducted by three universities. Counties in states where medical marijuana was legal showed a nearly 15% reduction in monthly alcohol sales across a 10-year period.

As in any industry, cannabis businesses want to distinguish themselves from competitors, but that can be difficult to do under states' current restrictions for weed-related advertising. Major online platforms like Facebook and Google don't allow drug promotions, while radio and television outlets have their own broad restrictions, forcing advertisers to rely on industry-specific magazines like High Times or billboards in select locations. Though regulations vary by state, the nation as a whole is still a long way off from seeing weed advertisements run alongside alcohol commercials on primetime television.

In 2014 — the first fully legal year for cannabis sales in Colorado, the first fully legal state — specific brands accounted for 19% of the state's market. By 201, brand share had surged to 38%. The trend toward branded pot is even stronger for edibles, as the top 5 brands owned more than 40% of the edible market in Colorado as well as Washington, Oregon, and California.

There's another way pot brands can make themselves stand out: a celebrity endorsement. Many big names in music and movies have jumped on the cannabis industry bandwagon as well, with famous tokers like Willie Nelson, Snoop Dogg, and Tommy Chong respectively lending their image to brands such as Willie's Reserve, Leafs by Snoop, and Chong's Choice.

With major urban centers like San Francisco and Los Angeles now in the mix, legal marijuana sales are expected to grow more than 35% in 2019 and reach between $25 billion and $30 billion by 2023. That's of course taking into account other states that may follow the trend and legalize it between now and then.

Cannabis enthusiasts are eating rather than smoking their weed more than ever before under legalization. Revenue from flower (or dried cannabis) sales fell below 50% of the market for legal cannabis for the first time in 2017, implying that consumers are willing to pay higher prices for healthier consumption methods. In Oregon and Colorado, the market share of edibles rose to 24% between January and August of 2018, and some specific edibles products saw even more explosive growth. For instance, according to BDS Analytics, chocolate edibles saw a growth of 135% in Colorado during the same time period. 

They don't make up as much of the market, but many other forms of cannabis consumption have gained steam since legalization, including topical oils that are applied to the skin and sublingual doses that dissolve under the tongue. Low-dose products for medical patients or smokers who prefer a milder high have also gained in popularity, with their growth hitting 83% in Colorado at the end of 2017.

Pot isn't just for people anymore, as many shops and dispensaries have begun marketing CBD products for dogs, cats, and other pets. Veterinarians are currently prohibited from giving advice to pet owners regarding medical cannabis use, but there's evidence that CBD can help animals in much the same way it helps humans, providing relief from seizures, gastrointestinal issues, chronic pain, and cancer symptoms. The same can't be said, however, for THC, the main psychoactive ingredient in cannabis.

Cannabis sales may be consistently rising upward, but the actual price per gram has been plummeting for almost two years, according to a report tracking the industry's spot price index. Weed prices were down 13% in 2017 from the year prior due in part due to oversupply issues, and the decline is expected to continue as California and Massachusetts refine their markets and regulatory measures. In the last quarter of 2018, Marijuana Business Daily reported a one-year wholesale price drop in eight states ranging from 2% (Arizona) to 65% (Oregon). 

If you're looking for the nation's cheapest weed, head to Oregon, where a high-quality ounce of the green stuff on average sells for $210. It's followed, in order, by Washington ($233), Colorado ($242), and California ($256), while another legalized state, Nevada, lags behind medical-only Montana.

Even higher than the sales of recreational cannabis will be the industry's overall economic impact, which is based on a multiplier of 3.5, meaning every dollar spent on retail marijuana creates another $2.50 in economic benefit for the state. According to the 2018 Marijuana Business Factbook, the industry's impact will be roughly $30 billion in 2018, then more than $75 billion by 2022.

A breakdown of legalized states' recreational and medical sales totals from 2018 confirm California is by far the biggest market with $2.75 billion total, while Colorado trails after it with $1.56 billion. The other places with available data were Washington ($1 billion), Oregon ($778 million), Massachusetts ($106 million), Nevada ($102.7 million), Maine ($83.4 million), Alaska ($39.5 million), and the District of Columbia ($17.7 million).

In 2016, more than 42,000 Americans died from opioid overdose, many of whom became dependent upon the drug through prescription painkillers. Multiple studies have shown that cannabis could be a viable, non-habit-forming alternative to opioids for chronic-pain patients. Research also shows CBD may even prove to be an effective treatment for opioid addiction and other use disorders thanks to an ability to reduce cravings and withdrawal symptoms.

It's not just speculation that medical marijuana use can ease opioid addiction; thanks to states' legalization efforts, there is practical evidence to support the claim, too. Opiate-related deaths decreased by nearly one-third across 13 states in the six years following legalization of medical use.

For decades, federally approved research into the potential medical benefits of cannabis has been limited by a rule stating the cannabis researchers use must come from a University of Mississippi farm. The Drug Enforcement Administration relaxed its rules in 2016 so other facilities could apply to grow research-grade cannabis, which would lower the cost of research and better reflect the ecological range of recreational weed strains. The applications made little progress however, under Trump's notoriously anti-drug former Attorney General Jeff Sessions. Things might be looking up, however — in July, a bipartisan congressional group filed the Medical Marijuana Research Act

Obviously cannabis producers, processors, and sellers are raking in the profits, but how much are the states themselves making off this new industry's tax revenue? In 2018, excise taxes on marijuana and related products in Colorado and Washington — the first states to legalize recreational use — generated $267 million and $319 million in revenue, respectively. Though not insignificant, those amounts account for only 2 percent of total revenue in Colorado, and 1.2 percent in Washington.

Most of the health benefits of cannabis use can be linked to compounds called cannabinoids, or CBD for short. CBD can be extracted and isolated from THC, marijuana's main psychoactive compound, to make oils and tinctures for patients who want the anti-inflammatory or relaxant properties of the drug without feeling stoned. These CBD products are widely available in legalized states and used as home remedies for nausea, anxiety, acne, chronic pain, and even epilepsy.

Cannabis may have its medical applications, but most people buying it are still just looking to get high. Recreational cannabis sales are likely to outpace medical sales (available in many more states) for the first time in 2019, and will continue to eclipse them by about two to one in the coming years. In 2022, medical sales are expected to total up to $7.3 billion, and recreational up to $14.8 billion.

The legal cannabis business may be booming, but it's still puny compared to the black market for marijuana that's existed for decades. According to the Motley Fool, the total demand for cannabis in the U.S. is roughly $50 billion, while legal sales in 2018 worked out to about $8.4 billion. That means there's still as much as $46 billion in cannabis sales happening through illegal channels, which have yet to be tapped by the newer legal markets.

One of the major benefits of legalization for state governments is the tax revenue cannabis sales can bring in. Too high a tax rate, however, pushes consumers to buy more-affordable options through the black market, which is why Colorado, Oregon, and Washington have all taken steps to reduce marijuana tax rates and make legal channels more competitive with illegal ones. Most recent ballot initiatives for legalization have thus proposed tax rates between 10 percent and 25 percent.

Just how big would this industry get if marijuana became federally legalized? The Marijuana Business Factbook speculates that legal cannabis sales could come to surpass cigarette sales, which reached $93.4 billion in 2016.

The industry is growing so fast that the number of cannabis-related job postings has quadrupled since 2016. Marijuana Business Daily estimates that in 2017, there were as many as 230,000 employed by the legal cannabis industry, with job growth outpacing even other fast-growing fields like tech and healthcare.

Employment in cannabis is so high in part because states' regulatory systems require a lot of expertise to navigate, giving rise to weed-related businesses beyond the standard pot shops and grow facilities. Some of the more novel specializations in the cannabis industry include manufacturing child-proof packaging, developing 420-friendly business parks, meticulously tracking revenues, and navigating tax codes.

Because cannabis is still federally prohibited, it can't be certified organic by the USDA like other crops. The cannabis industry has thus developed its own forms of certification to confirm the bona fides of environmentally conscious farms and help set them apart from the competition. These independent certification companies include Clean Green, the Cannabis Conservancy, and Certified Kind.

In addition to certification, the cannabis industry has also given rise to a number of higher educational options, so producers, processors, budtenders, and medical consultants can obtain degrees as testament to their expertise on marijuana treatment and law. Some of these outlets, like THC University, are online and devoted exclusively to cannabis education, while other established schools, like Seattle Central College, have simply added on new departments to teach the subjects. Oaksterdam University offers both online and in-classroom experiences.  

Last summer, many news outlets loudly proclaimed that legalized marijuana had led to an increase in traffic accidents in Colorado, Oregon, and Washington, based on findings by the Highway Loss Data Institute that didn't establish any hint of causation between the two. Separate studies by Columbia University and the University of Texas, in contrast, showed that legalization didn't increase overall traffic fatality rates or the number of non-fatal accidents.

The number of traffic searches conducted in Washington and Colorado decreased sharply after legalization, according to Stanford University's Open Policing Project. That's because suspected marijuana possession is often the pretext for such searches, which can result in police seizure of cash and property regardless of whether drugs are found.

Though arrests have declined in legalized states, black people are still as much as three times more likely to be arrested for public consumption and other cannabis-related offenses, despite consuming it at roughly the same rate as whites.

Not only have minorities suffered more from marijuana prohibition, they're now profiting less from its legalization. Marijuana Business Daily found that blacks owned only about 4.3% of the nation's cannabis industry businesses. To combat this trend, the city of Oakland recently established an equity program to set aside half of all business permits for residents who have been targeted by the war on drugs, and MBD recently reported that six of the 18 states that have legalized medical or recreational cannabis sales since 2016 have taken measures to significantly boost diversity in their marijuana programs.

The federal government may not recognize cannabis businesses as legal, but they still collect income taxes from them through a tax code provision called 280E, requiring drug dealers to pay taxes on their sales of prohibited substances. The U.S. government collected around $4.7 billion in taxes from marijuana business owners in 2017.

A few billion dollars is chump change compared to what the federal government could make in tax revenue from full marijuana legalization. According to the analytics firm New Frontier Data, if pot was legalized in all 50 states, it would generate up to 1 million new jobs and around $132 billion in total sales tax revenue between 2017 and 2025.

Because cannabis remains federally illegal, banks aren't allowed to provide financial services to pot shops and other marijuana-centric businesses, which forces the entire industry to operate in cash. Some states have drafted bills, like Oregon's SAFE Banking Act, which would free up banks to serve the cannabis industry.

The cannabis industry's cash-only economy also renders businesses uniquely vulnerable to embezzlement and theft, since anyone can use states' online databases to locate pot shops and growers who are forced by banking restrictions to keep thousands in cash onsite. Many businesses have thus had to invest in fortress-like facilities and complicated access protocols to account for the resulting security risks.

According to a 2018 Gallup poll, support for laxer federal marijuana policies last year reached a new high, with 66% of Americans saying they'd want to see weed legalized on a national level. That's up from 60% in 2016, 36% in 2006, and 25% in 1995, the year before California became the first state to allow medical cannabis use.

A 2013 report by the American Civil Liberties Union found that enforcing marijuana prohibition costs taxpayers $3.6 billion per year, with one marijuana-related arrest occurring once every 37 seconds. Costs and incarceration rates have remained steady even as individual states liberalize their approach to cannabis, with nearly 660,000 people arrested for marijuana-related infractions in 2017, contributing to an overall incarceration rate that is the highest in the world.

One primary concern surrounding recreational pot legalization was that the new legal landscape would encourage higher use rates of cannabis and other drugs among impressionable teens. That fear has proven to be unfounded, at least in Colorado, where the rate of adolescent marijuana use was below both the national average and the percentage of teens who smoked pot before Colorado voters approved legal consumption for adults. Rates of teen alcohol, tobacco, and heroin abuse were down as well.

Canada recently legalized recreational marijuana use and sales, and American cannabis companies have taken notice, with many already planning international expansions. Quite a few have already pursued reverse-takeover deals to begin trading public stocks in Canada.

The federal government has taken less kindly to Canada's plans for legalization, as U.S. border guards have reportedly begun issuing lifetime travel bans to Canadians even remotely connected to the nation's new legal cannabis industry. Confusingly, the federal government has taken no similar retaliatory measures against Americans working in legal cannabis thus far.