5 Ways Medical Marijuana is Changing the Economy
It's easy being green. The color of money and marijuana, green is the abundant trademark of a mushrooming micro-industry: medicinal marijuana. According to Forbes, the industry is expected to blossom into a $9 billion one by 2016.
With the recent recreational regulations passed in Colorado, it's only a matter of time before the market expands. And with the rapid haze of marijuana dispensaries descending on American cities, it isn't always clear exactly how the industry works and what the regulations are.
1. A Contemporary Cash Crop
Illegal marijuana trade is a $36 billion dollar industry, MadameNoire reports. This means the herb has been healing smokers and racking up cash long before the production and sale were made legal. The industry isn't new, and the market is already wide open.
When it comes to medicinal marijuana trade, the cash is in the crop – and lawmakers know this. In California, officials raised $600,000 in grower's permits alone. The industry has a vast potential to generate funds in sales, fees, and fines.
2. Location, Location, Location
California led the medicinal marijuana industry when it legalized its use in 1996. Since then, 19 states have made it legal to smoke your ailments away. Additionally, marijuana is legal for recreational use in two states. When investors consider the marijuana business, it's all about location.
With the legalization of the industry, dealers are replaced by dispensaries. Since dispensaries can set up shop only in cities where trade is legal, their potential profits are restricted to the local market.
3. Primo Product
The product itself, however, is highly versatile. Available as buds, edibles, tinctures, tonics, topicals, and vapors, there's something for every patient. The pricing of these customizable products is what makes the business so lucrative. Time magazine calculates that the average marijuana user in Colorado will spend approximately $650 on weed in just one year.
For example, when it comes to inventory prices, The California medicinal marijuana dispensary Grass Roots charges anywhere from $6 to $50 (or more) per gram.
4. The Green Market
Since the green market used to be black, you can bet there's a ton of regulations on the sale of medicinal marijuana – the notorious gateway drug. We already know that fees and taxes equal big bucks for lawmakers, but there's a host of other charges that can add up to thousands in fines alone.
Like any business, marijuana sale is subject to Occupational Safety and Health Administration (OSHA) inspections. According to the Maine Public Broadcast network, the largest dispensary in Maine was ordered to pay a fine of $14,000 for production and workplace violations. These types of regulations create alternative revenue for state and federal budgets.
5. The Pipe Print
The regulations on medicinal marijuana come with a lot of fine print. To work through the hash, business owners often employ industry-specific marijuana insurers. That's right: marijuana insurers. Unlike the old-school drug insurance, the owner's fingers aren't collateral. It's 100% legit.
In fact, numerous legitimate businesses have formed in response to the medical marijuana trade, rounding out its economy. Cannassure, one such insurer, offers general liability coverage, which includes everything from medical malpractice to crop insurance.
And in reality, it's a wonder that this particular economy can breathe at all with the smokescreen regulations imposed on new business owners. What do you think about the future of the medical marijuana economy and the possibility of other states joining the market? Share your thoughts in the discussion thread below.