If Massachusetts voters approve an expected ballot measure this fall legalizing the recreational use of marijuana, the state could become home to a $1.1 billion cannabis industry by 2020, according to a report.
The research, released last week by the marijuana data and investment firms ArcView Market Research and New Frontier , predicts the advent of legal marijuana would make Massachusetts a thriving hub of “canna-tourism” in the Northeast, depending on whether neighboring states also legalize marijuana.
Researchers projected that revenues from the sale of recreational marijuana — “adult-use” marijuana, in the parlance of proponents — would top $300 million in 2018, likely to be the first full year the business would be legal. Revenues would then nearly triple to more than $900 million in 2020, the firms said, which combined with the expected continued growth of medical marijuana sales would put the state’s total marijuana market at $1.17 billion.
The projection is speculative, but not outside the realm of possibility: Sales of recreational marijuana in Colorado topped $996 million last year, netting the state about $135 million in taxes and fees, according to the Denver Post’s Cannabist publication.
The ArcView/New Frontier projections include only direct sales of marijuana, not potential ancillary economic benefits, which proponents of legalization argue will be substantial.
Besides tourism, they say, a legitimized marijuana industry would open the door to companies that offer accessories and equipment to consumers, such as vaporizers. There’s also money to be made by firms that provide marketing, consulting, logistics, grow lights, transportation, and other services to marijuana retail and cultivation operations.
Such businesses are already sprouting up in Massachusetts. Earlier this month, more than 100 entrepreneurs, venture capitalists, advocates, and others gathered for a cannabis industry meet-up held at Microsoft’s NERD Center in Cambridge. Few among the diverse crowd fit the stereotypical stoner profile; instead, venture capitalists in suits grilled a parade of local startups on their business models. The products on offer included a cellphone case that makes it easier to roll joints on the go, a vaporizer hailed as the marijuana equivalent of a Keurig machine, and software that securely tracks marijuana shipments.
Meanwhile, the medical marijuana business in Massachusetts grew dramatically in 2015, a year that saw the state’s first licensed dispensary open in June after a controversial start-and-stop licensure process managed by the state’s Department of Public Health. (Six dispensaries are now operating.) As of February, 26,137 patients are certified to buy medical marijuana in Massachusetts, according to Department of Public Health statistics, up from about 10,000 a year ago.
ArcView and New Frontier estimated the size of the Massachusetts medical marijuana market in 2015 at $7.9 million, but said they expect it to expand to $78.7 million this year. The firms project that the legalization of recreational marijuana would dampen growth in medical market, however, with total medical marijuana revenues reaching just above $240 million in 2020.
If it is certified for inclusion on the ballot this summer and approved by voters in November, the law proposed by the Campaign to Regulate Marijuana Like Alcohol in Massachusetts would make it legal by January 2018 for anyone over 21 to buy and consume limited amounts of marijuana from dedicated retail shops.
It would also enact a series of regulations on consumers, stores, cultivation and testing facilities, and manufacturers of edible products, to be enforced by a three-person Cannabis Control Commission under the state Treasurer’s office.
The work of the new agency — which would be advised by a 15-member committee of medical marijuana patients, cultivators, attorneys, and law enforcement experts, among others — would be funded by fees on shops and a 3.75 percent excise tax on retail marijuana sales on top of the state’s existing 6.25 percent sales tax. Municipalities could enact an additional 2 percent tax on marijuana and keep the proceeds.
Critics of the proposal, including a prominent state lawmaker, Senator Jason M. Lewis, who traveled to Colorado to observe the effects of legalization there, worry it will increase youth access to the drug, make it difficult for police to identify impaired drivers, and create complications because marijuana remains illegal federally. Proponents counter that these and other potential problems with marijuana are better mitigated through regulation than prohibition.