The movement to legalize recreational marijuana is growing across the country, and with it is an influx of capital into the industry.
It is twenty years since pot became legal for medical use in California in 1996. Recreational use began in 2012 in Colorado and Washington, and today there are 30 states that allow medical marijuana and nine that either passed recreational initiatives or already have them in effect. This trend is sending a clear message to entrepreneurs and investors, and top Wall Street talent is joining the party.
The legal cannabis industry is now valued at about $8 billion, but it is expected to triple by 2021 in annual sales, to $22.6 billion. If that comes to pass, then the marijuana industry will be substantially larger than the US’s most profitable sports organization. The National Football League had $13 billion in revenue in 2017, and expects to reach $25 billion by 2027.
During 2017 there were at least 27 venture capital investment funds in pot firms. Compare that to 10 similar funds in 2016 and 9 ventures in 2015. The money flowing into the industry is helping pay about 150,000 salaries in the legal weed industry, representing 20% job growth this past year.
Some of the companies are finding exclusive niches, such as Défoncé Chocolatier, founded by Eric Eslao, a company that makes pot-infused artisanal chocolates, which sell for $20 per bar.
This is not to say that there are no hoops that still need to be jumped through. The federal government still views possession of marijuana as a crime, making banks a bit fearful of doing business with cannabis companies. These companies get by with either using cash only or paying large bank fees for the privilege of having accounts.