The California medical marijuana industry will most likely see less activity following the recent legalization of marijuana for recreational use. The recreational market is one that is poised to grow exponentially, and if you haven’t heard, consumers are excited. This is good for entrepreneurs who exist in the recreational space, or are planning on entering, but is going to be devastating for medical marijuana companies. The recreational marijuana market has seen lots of good numbers in states that have legalized, like Colorado.
Colorado, one of the first two states to legalize recreational marijuana in 2012, wound up generating $996.2 million in legal sales during 2015, leading to $135 million in tax and licensing revenue. Yet that’s peanuts compared with legal pot sales in California, the eighth-largest economy in the world by GDP.
Colorado’s recreational marijuana sales show the success of legalization for both states and businesses. California has the potential to reign in the biggest market of all weed-legal states, with a medical market that includes half of the patients in the United States.
Since passing medical-cannabis legislation in 1996, California has amassed more than 720,000 current patients, at least according to a September 2016 estimate from the Marijuana Policy Project. That’s about 1.8% of California’s total population as of 2015, and it represents half of all legal medical-marijuana patients in the entire United States.
According to Troy Dayton, the CEO of ArcView, California generated $2.7 billion in medical-cannabis sales in 2015, which amounts to 62% of all medical-cannabis sales in the U.S. in 2015, as well as more than half of all cannabis sales, medical and recreational combined, in 2015. California’s medical-marijuana industry is simply enormous.
This already-massive marijuana market is the source for half of US patients, and more than half of all cannabis sales in the country. Optimism in the recreational market creates the reverse effect in the medical space. Sale of recreational marijuana could take the consumers in the medical market and drive down existing customer base. Although this does limit medical companies, the California medical marijuana industry has a little while to figure everything out. The laws for retail shops will not be immediately effective, giving leeway to the medical industry. Until the laws go into effect, the California medical marijuana industry will speculate on the outcome of legality.