By Jenny Bloom
Washington Cannabis Connection
Marijuana business revenue is on the increase according to the newly released Marijuana Business Factbook. The report predicts that by 2021 annual revenues could reach $17 billion dollars. They are expected to reach $6 billion by the end of this year.
The Usual Players Plus A Few More
The projects are heavily based on current recreational sales in Washington, Oregon, and Colorado. These states have a stable marijuana industry and are expected to continue to grow. The authors are also optimistic about potential growth in Alaska as well as the newly legalized Nevada.
“The marijuana industry is primed and pumped for explosive growth in the foreseeable future, provided there isn’t a significant crackdown at the federal level,” explained Chris Walsh, Marijuana Business Daily’s editorial director.
A Growing Recreational Market
Although many more states are licensed for the medical use of marijuana than recreational use, 2017 marks the first years that recreational sales will surpass medical sales. These numbers combined with the growing Alaska market and Nevada’s 2017 summer lunch are credited for much of the expected growth in 2017.
Additionally, another 11 states will begin selling marijuana between now and 2021. California is likely to tip the scales when its well-established medical marijuana policy is updated to include recreational. The projections also consider potential delays due to legalization and regulatory issues.
An Analysis of Current Market Conditions
For existing businesses, this projection may not be a surprise, and many are preparing for healthy futures. The report states that roughly half of marijuana businesses claiming revenue are focusing on raising their capital. For some, this means expanding business operations, while others use the funds to stay open until they can turn a profit.
Marijuana manufacturing companies are also diversifying their product offerings. The report revealed that fewer than 25% of manufacturers produce only one product. Available products now include a good mixture of edibles, concentrates, and topics.
The Marijuana Business Factbook also revealed that the average marijuana business boasts a profit of 19%, with dispensaries and recreational stores doing the best.
“Given that annual revenue for a typical rec store/dispensary is nearly twice as high as their operating costs, retailers are obviously hindered by their inability to take the same tax deductions as a traditional business,” said Eli McVey, an industry analyst at Marijuana Business Daily.
However, adjustments to current tax laws could make the profitability of these types of better in the coming years.
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