CANNAINVESTOR Magazine September / October 2016 - Page 18

Estimates of the legal cannabis industry’s sales to end users in 2014 vary between $2.0 billion and $3.0 billion. According to an article published on in October 2014, if all 50 states and the federal government were to legalize medical and recreational cannabis sales, the market would rise to around $35 billion per year within a decade. Other estimates for the total value of cannabis sales in the U.S., both legal and black market, vary widely, from Harvard economist and Cato Institute affiliate Jeffrey Miron’s 2010 estimate of $14 billion to George Mason University professor and marijuana reform activist Dr. John Gettman’s estimate of $120 billion, but many center on a range of $35 billion to $45 billion.

Cultivation and retail companies seek to take advantage of the anticipated growth of the cannabis market as new legislation opens additional jurisdictions for business growth and further market penetration. As new markets have arisen, cannabis production continues to scale as larger and larger grow facilities are being developed. Economies of scale in production will drive competition, putting downward pressure on raw flower prices and pushing many small- and medium-sized operations out of the market. If these first movers are able to successfully refine their operations, they will be strategically positioned to capture significant market share in the industry.