Follow The Money: These States Dominate The U.S. Pot Industry

When asked why he robbed banks, Willie Sutton famously replied, “Because that’s where the money is.”

Why should marijuana investors pay particularly close attention to certain big states? Because that’s where the money is.

Driven by robust consumer demand in the newest operational legal state markets, annual legal sales of marijuana in the U.S. totaled an estimated $30 billion in 2022. Annual sales are projected to exceed $35 billion in 2023.

If the current rapid rate of state-level legalization continues, marijuana sales are expected to reach $71 billion by 2030.

Currently, 37 states have made it legal to use cannabis for medical reasons. There are also 19 states (plus the District of Columbia) where using cannabis recreationally is legal.

The following chart breaks down state-level marijuana market share, as projected into 2025:

Among the most promising marijuana investments are companies that function as multi-state operators (MSOs), especially in marijuana mega-states. Hence, competition is fierce for customers and regulatory approval in customer-rich jurisdictions. These states also are proving to be the most powerful magnets for investment cash and venture capital activity.

The top three state markets in the U.S. are California, Florida and Illinois. It only stands to reason that California is the leading marijuana market; it’s the most populous state in the nation, with 39.24 million people. California also was the first state to allow medicinal cannabis use, when voters passed the Compassionate Use Act in 1996. Today, cannabis is legal in California for both medicinal and recreational use.

Retailers in California generated over $5.3 billion in taxable sales of recreational and medical marijuana in 2022. That makes California the largest marijuana market in the world.

Florida shows outsized potential in the cannabis industry. In 2017, Florida made legal the use of medical marijuana to treat certain conditions. Marijuana for recreational uses remains banned in the Sunshine State. Efforts are currently underway to get recreational legalization on the state ballot in 2024.

Florida generated an estimated $1.5 billion in annual marijuana sales in 2022. With its huge population of elderly retirees, Florida is primed for exponential marijuana sales growth. Seniors remain an important and growing category of marijuana users. Clinical studies show that marijuana helps relieve aches and pains from arthritis; vomiting and lack of appetite from chemotherapy; and the loneliness and depression that can afflict many seniors.

Cannabis in Illinois is legal for both medical and recreational use. Illinois became the 11th state in the U.S. to legalize recreational marijuana effective January 1, 2020. As part of this legalization bill, Illinois became the first state to pass legislation establishing a taxed and regulated cannabis program through its legislature. Illinois marijuana sales reached a record high of more than $1.5 billion in 2022.

Problem is, as states and localities heavily tax marijuana products, legal pot is getting expensive, which drives many consumers to the black market. Accordingly, more and more states are taking steps to roll back their levels of marijuana taxation, lest they strangle the industry.

California has been in the vanguard of efforts to ease the marijuana tax burden. Gov. Gavin Newsom (D) and the state legislature recently cut the California cannabis tax, a move hailed by the pot industry.

WATCH THIS VIDEO: The Weed Report: Where Cannabis Meets Capitalism

According to a recent YouGov poll, the percentage of U.S. adults who say they have tried marijuana sits at 52%, the highest level for this metric to date.

In the coming months, an increasing number of lawmakers in states where marijuana remains illegal across the board are likely to feel political pressure from the majority of Americans who support lifting restrictions against marijuana.

New legal markets equal new profits, and higher share prices, for marijuana companies. Indeed, we could be facing a “break out” year for marijuana and the ancillary industry of psychedelics. That’s why I’ve launched an investment service called Marijuana Profit Alert.

My publication covers news and trends in the marijuana and psychedelics industry. I also speak on a regular basis with industry insiders, whether they’re on Capitol Hill or in corporate suites or on Wall Street.

I crunch a lot of data, put it through my proprietary screening system, and provide specific, actionable advice on the best investments in the marijuana and psychedelics sectors. In my portfolio of holdings, I strive to strike the right balance between risk and reward. Click here to learn more.

John Persinos is the editorial director of Investing Daily.

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