The ball may be dropping to start a new year on January 1st, but in California the countdown has more to do with adult-use marijuana becoming available to the public. Just a weekend away, the partying this Sunday will be done the old-fashioned way, with the illegal marijuana that has been grown in the enriched soil of California for a long time. California legal marijuana may be a tough transition though that will likely benefit the investors in Silicon Valley more than anyone else.
California is a huge state with the 6th largest economy in the world. Adding it to the nation’s already large cannabis industry will have a huge impact upon the market, potentially reducing pricing on marijuana throughout the world over time. However, Californians are pretty comfortable with illegal marijuana and there is the potential that legal marijuana may not take off quite as aggressively as many are forecasting.
And there’s a lot to be made: The state’s existing marijuana black market is worth $13.5 billion, according to cannabis financial analysis firm GreenWave Advisors, while the legal market could be worth $5.1 billion in 2018.
“You’re taking an industry that was completely underground and making it the most regulated product of all time,” said Jessica Lilga, who runs a medical cannabis distribution service in Oakland, Calif., and hopes to expand into recreational pot. “It’s just insane.”
While five other states already offer legal marijuana sales, the Golden State’s sheer size is expected to reshape the pot industry worldwide, potentially driving down prices for consumers while generating hundreds of millions of dollars in taxes. It also holds the promise of wiping out criminal records for some people with previous cannabis convictions and helping longtime illegal drug dealers go legal by getting them licensed.
The strict advertising rules for marijuana dictated by voter approved Prop. 64 has store owners scrambling to erect billboards near Los Angeles International Airport and flooding bars with street marketers. California rules limit marijuana advertising, so dispensaries are getting creative in how they reach potential customers. Med Men, which sells medical cannabis but hopes to offer recreational pot come Monday, is wrapping 30 trucks with advertisements for its four existing high-end dispensaries. Cannabis firm American Green even bought an entire town — Nipton, Calif. — to create a marijuana mecca.
Because California’s marijuana law requires all cannabis to arrive in stores pre-packaged, growers and distributers are frantically developing branding and packaging to set their wares apart.
The illegal marijuana market in California is likely to persist for a long time simply because authorities are going to be challenged to shutdown all of the illegal grows hiding in the mountains. As long as other states are still attempting to enforce prohibition, illegal California marijuana is likely to slip past authorities into those states to meet the demand there. In the meantime, the New Year’s party is likely to be full of excitement and energy in California. What are your New Year’s plans for 2018?
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