How the November elections will impact the cannabis industry
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Cannabis for sale

Cannabis for sale Photo Credit: Oksana Smith / EyeEm / Getty Images Israel

Stressed out by the election? This ballot issue is a no brainer with lots of opportunities for entrepreneurs

The cannabis industry has a lot to gain this November. While others are focused on the presidential election, the cannabis industry is keeping a close watch on state-specific legislation. Initiatives to legalize cannabis in one form or another are on the ballot in nine states. Voters in five states; California, Nevada, Arizona, Massachusetts and Maine will be deciding whether to legalize marijuana for recreational use. Voters in Montana, North Dakota, Arkansas and Florida will consider legalizing medical cannabis. A couple of other states are involved in court battles, which may allow medical marijuana on their ballots this November.

If these measures pass, these states will join the other 25 states and the District of Columbia that have legalized cannabis to some extent.

If any of these states pass legislation it will further add to the growing legal cannabis market and provide new opportunities, especially to companies that provide ancillary services and can do business in any state, such as providers of packaging and accessories.

A few states stand out from the rest due to their size and potential impact on the cannabis market and the companies in the market.

California

The Adult Use of Marijuana Act (California Proposition 64) would establish a recreational cannabis system in California allowing adults 21 and older to purchase cannabis at retail shops. A 2016 poll from Probolsky Research found that 60 percent of California voters support the initiative.

California is the largest economy in the United States and is already the largest cannabis market even though it currently only allows for medical use. If the recreational use initiative passes, California will become perhaps the largest cannabis market in the world, with estimates that over $6 billion in sales will be generated each year.

The state could take in as much as $1 billion in tax revenues, which could help provide tremendous help for the state’s education system, infrastructure, and social programs.

Additionally, other industries will likely benefit if cannabis is legalized for recreational use. Take for example how tourism rose sharply in Colorado following legalization.

A record 77.7 million people visited Colorado in 2015, spending $19.1 billion. This is a 9% increase over the previous year and an all-time record. That same year, Denver hosted one million more visitors than during the previous year, marking another record.

What is driving this increase in tourism? To a large extent, it is legal cannabis. A recent study found that almost half of tourists were swayed to visit Colorado because of legal marijuana.

If we extrapolate these numbers to California, the effect is worth noting:

Over 258 million visits were made last year to California, and total direct travel spending in California was $122.5 billion in 2015. Accordingly, the state could expect over $133.5 billion in tourism dollars after cannabis legalization, potentially leading to a windfall of over $11 billion additional dollars pouring into the state.

There are other industries that will also benefit from cannabis legalization, including diverse market sectors such as software (point of sale and seed-to-sale tracking systems), security, lighting instruments, real estate, agricultural supplies, and more. In short, cannabis legalization can have a dramatic impact on the California economy and help turn the state Golden once again.

BERKELEY, CA - MARCH 25:  One-ounce bags of medicinal marijuana are displayed at the Berkeley Patients Group March 25, 2010 in Berkeley, California.  California Secretary of State Debra Bowen certified a ballot initiative late Wednesday to legalize the possession and sale of marijuana in the State of California after proponents of the measure submitted over 690,000 signatures. The measure will appear on the November 2 general election ballot.  (Photo by Justin Sullivan / Getty Images Israel)

BERKELEY, CA – MARCH 25: One-ounce bags of medicinal marijuana are displayed at the Berkeley Patients Group March 25, 2010 in Berkeley, California. California Secretary of State Debra Bowen certified a ballot initiative late Wednesday to legalize the possession and sale of marijuana in the State of California after proponents of the measure submitted over 690,000 signatures. The measure will appear on the November 2 general election ballot. (Photo Credit: Justin Sullivan / Getty Images Israel)

Nevada

The Nevada Marijuana Legalization Initiative, also known as Question 2, will be on the November 8, 2016 ballot.

Like California, Nevada stands to reap rewards both from a larger cannabis market as well as the ancillary sectors.

With over 55 million tourists visiting the Silver State each year, companies in the cannabis sector stand to profit handsomely. It is easy to imagine many tourists purchasing legal and easily-obtainable cannabis during their visit. Some experts predict that Las Vegas will become the new Amsterdam, claiming the title of the world’s leading cannabis tourism destination.

Companies are already lining up to get a piece of the Nevada cannabis market, including delivery services that will bring product directly to a visitor’s hotel room.

Kush Bottles is already well positioned in Nevada with several key accounts and rapid deliveries from either our Southern California or Colorado warehouses. As the Nevada cannabis market grows, we believe Kush Bottles will see a significant increase in both revenues and market share.

Massachusetts

The anchor of New England has a proposal to legalize cannabis (Question 4) on the ballot for this November. Notably supporters of the initiative point to the success in Colorado, and the Brookings Institution’s Center for Effective Public Management published 35-page report titled, “Colorado’s Rollout of Legal Marijuana Is Succeeding.” According to the report, “Colorado has made intelligent decisions about regulatory needs, the structure of distribution, prevention of illegal diversion, and other vital aspects of its new market. It has made those decisions in concert with a wide variety of stakeholders in the state.”

Other states in the northeast corridor don’t currently allow legal cannabis, or like New York, have struggled with implementing an effective cannabis program. If Massachusetts approves legal adult-use cannabis, the state could quickly become a hub for the entire northeastern United States, a densely populated area with an adult population of over 50 million. This large base of consumers within such a concentrated area can create a windfall of opportunity for companies within the cannabis industry.

I believe that the current wave of support for legalization of cannabis, either adult-use or medical-use, will continue, and that with ongoing legalization – especially in a few key states – the cannabis market will provide tremendous growth prospects for companies that have the insight, infrastructure, products, services, brand awareness, and capitalization already in place in order to maximize those opportunities.

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Nicholas Kovacev

About Nicholas Kovacev


Nick Kovacevichis a seasoned entrepreneur who has built several successful businesses, including Kush Bottles, a leading compliant packaging solutions provider for the legal cannabis industry. Mr. Kovacevich started Kush Bottles in 2010, with a goal to provide pharmaceutical grade, child-resistant packaging to the emerging cannabis industry. Kush Bottles now has facilities in three states with over 40 employees.

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