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Legal Marijuana Profits High in the Rocky Mountain State

posted on January 17, 2014


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It’s hard to imagine any crops more controversial than those containing GMOs, but the states of Washington and Colorado may have found one: Marijuana.

Twenty states and the District of Columbia have legalized medical marijuana, but voters in Colorado and Washington State went a step further in 2012, becoming the first in the nation to legalize small amounts of weed for recreational use.

Retail sales in Colorado began on New Year's Day, while sales in Washington are scheduled to begin later this year. Both states plan to regulate marijuana and tax it like alcohol. And proponents have “high” hopes for a lucrative new cash crop – and a significant new source of revenue – for their states.

Though commercial sales of recreational marijuana were initiated less than a month ago, Colorado is on pace to enjoy significant revenue in 2014.

In the first five days of the New Year, retail cannabis sales averaged about $1 million per day in the Rocky Mountain State.  Long lines of eager customers over the age of 21 were common in the 19 municipalities and 7 counties where retailers can legally sell weed.  While many residents have taken advantage of their newfound freedom, plenty of out-of-staters also were on-hand for the landmark event.    

Adam Hartle, Jacksonville, FL:  "Well it’s just history, you know.  It’s the first time in 75 years that cannabis is going to be legal in America, so it’s a modern movement.  You know, it’s a major moment in modern American history and we wanted to be here for it."

With economic implications worldwide, many outside the Centennial State are keeping a close eye on how the fledgling industry unfolds.

Charlie Brown, Denver City Councilman: “Not only is the world watching but other states that are considering adopting similar rules are going to be watching too.”

So far, only Colorado and Washington State, where sales are set to begin this spring, have legalized recreational pot use.  Proponents nationwide find themselves on the cusp of a variety of legal maneuvers at the state level that, while groundbreaking, still run afoul of constitutional law.

Danny Conners, Madison, Wisconsin: “Quick as they made this law the federal government can still step in and take this ability away.  So I just have this at one time in my lifetime, even if I could only buy a gram, to have that receipt that says I made a legal purchase in my lifetime…I’d rather have that than see the third coming of God.”

Drug abuse was declared “public enemy number one” during the Nixon Administration, and since then, U.S. efforts to eradicate the global illegal drug trade have ramped up considerably.  Enforcement costs tens of billions of dollars per year, but critics claim the so-called ‘War on Drugs’ is more wasteful than beneficial.  From 1970 to 2010, the federal government spent $1.5 trillion attempting to stop the narcotic trade.  But, during that same 40-year period, the U.S. drug addiction rate has remained at a relative standstill.  And despite reforms in Washington and Colorado, federal law prohibiting both medicinal and recreational weed remains unchanged. 

The Controlled Substances Act of 1970 classifies marijuana as a schedule one drug, in the same category as heroin and LSD. Uncle Sam has long cautioned against the problems associated with chemical dependency, while remaining relatively silent on similar issues involving some other intoxicants like alcohol. 

Sean Azzariti, First legal retail marijuana customer in CO: “I get to use recreational cannabis to help alleviate my PTSD and it’s a stepping stone for other states to help other veterans as well.”

Regarded by some as a foot-in-the-door for outright legalization, nearly half of all states and the District of Columbia have medical marijuana laws on the books.  But patients in Colorado, whose physicians prescribe weed for legitimate reasons, have seen prices skyrocket since prohibition was abolished in 2012. 

While supply and demand will ultimately determine fair market price, existing medical marijuana dispensaries find themselves on the fast track for commercial endeavors due to the legal infrastructure they already have in place. 

As Colorado’s state coffers fill with tax revenue, a handful of other states are debating how to lift the veil on legal weed, while others prefer to lay the groundwork.

Andrew Cuomo, Governor of New York: “Research suggests that medical marijuana can help manage the pain and treatment of cancer and other serious illnesses.  20 states have already started to use it.  We’ll establish a program that allows up to 20 hospitals to prescribe medical marijuana and we will monitor the effectiveness and the feasibility of a medical marijuana system.”

Advocacy groups like the National Organization for the Reform of Marijuana Laws, or NORML have long supported the development of legal commercial markets for cannabis.  With those efforts beginning to bear fruit, the tide may be turning for growers to reap enormous benefits.  A 2006 study by the former head of NORML entitled ‘Marijuana Production in the United States’ goes so far as to label weed as the country’s biggest cash crop.  Author John Gettman estimates that rural areas are losing out on over $100 billion in annual income from cultivating pot, dwarfing the combined market of heavyweights corn and wheat at over $30 billion.

That theory, however, was criticized in a 2012 book - ‘Marijuana Legalization: What Everyone Needs to Know’. Written by a team of researchers and public policy experts from Carnegie Mellon, Pepperdine, UCLA and the RAND Corporation, the book claims that cannabis more likely ranks among the top 15 cash crops, somewhere near potatoes and grapes.

Regardless of the actual economics, there is no denying that preliminary results in Colorado show the potential for an emerging market which could prove to be lucrative. 

Tripp Keber, President Dixie’s Elixirs & Edibles: “The genie is out of the bottle.  I think it’s going to be an exciting time over the next 24 to 48 months.”

 


Tags: Colorado legalization of marijuana marijuana pot recreational drugs

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