VIDEO: Weekly Weed Report (05-10-22)
Welcome to my latest “Weekly Weed Report” video presentation. Below is a condensed transcript; you’ll find charts and additional details in the video.
Here’s an update of the “green rush” and its emergence as a vital growth engine for the economy and investor profits.
The lean, mean, green jobs machine…
The number of full-time jobs in the legal marijuana sector in the United States in 2021 jumped by 32% to 428,059, with total sales rising by $6 billion to $25 billion, according to a recent annual study released by Leafly and Whitney Economics. The numbers represent the fifth year in a row of annual job growth of more than 27%.
The upshot: Marijuana is the most prolific job creator of any industry in the U.S.
Currently, 18 states and the District of Columbia have legalized recreational marijuana and 37 allow medical marijuana. The study, called Jobs Report 2022, postulates that if marijuana were legal nationwide, the industry could eventually employ up to 1.75 million workers.
Last year, America’s legal cannabis industry generated more than 280 new jobs every day. In 2021, a person was hired for a marijuana-related job every two minutes of the workday.
The flood of venture capital money…
Since 2014, about $5.3 billion in venture capital (VC) has been deployed into 544 cannabis-related companies worldwide. The global marijuana market is projected to climb from around $22 billion in sales in 2020 to nearly $100 billion by 2026, representing a compound annual growth rate of 28%.
Some VCs are investing directly in cannabis companies, whereas others are mitigating risk by investing in picks-and-shovels plays, such as pot-related infrastructure.
As legal restrictions against marijuana are increasingly lifted, the plant is becoming commoditized. Growing marijuana isn’t that big a deal; the best way to make profits is by applying a unique value add. The most profitable companies in the marijuana industry will be those that develop a proprietary technology that they can patent. That’s where the shrewdest VC firms are focusing their resources.
The tax bonanza…
States that have legalized marijuana for recreational use collectively generated more than $3.7 billion in tax revenue from pot sales in 2021, according to a recent report from the Marijuana Policy Project (MPP).
Toi Hutchinson, president and CEO of MPP, said that the report provides “further evidence that ending cannabis prohibition offers tremendous financial benefits for state governments.”
Hutchinson went on to assert: “The legalization and regulation of cannabis for adults has generated billions of dollars in tax revenue, funded important services and programs at the state level and created thousands of jobs across the country. Meanwhile, the states that lag behind continue to waste government resources on enforcing archaic cannabis laws that harm far too many Americans.”
California generated by far the largest amount of tax revenue in 2021, at nearly $1.3 billion. The Golden State is the largest marijuana market in the world and it’s on track to continue its fast growth.
California also has the world’s largest black market for marijuana, which has led to an increase in arrests. The state’s heavy taxation has resulted in expensive weed, prompting many citizens to get their supply outside of regulated dispensaries. It’s a cautionary tale for the industry, as states increasingly covet tax revenue from pot and in some cases impose taxation that becomes a burden for canna-businesses and their customers.
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As they increasingly become legal around the world, cannabis and other psychotropic substances are generating huge gains for proactive investors. But the time to act is now, while these investments are still affordable.
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