The Business of Legalized Marijuana

Marijuana, Business, Money, Rights

Marijuana and CashOn Friday, New Jersey Governor Chris Christie requested changes to a medical marijuana bill before signing it. In its new state, the bill would permit doctors to prescribe medical marijuana to children under certain conditions. Christie has voiced his doubts about broadening the state’s laws regarding marijuana, but he, like other legislators nationwide, has responded to growing support for legalization of marijuana. As attitudes towards the drug change, so do laws, and more people are seeing opportunities in the marijuana industry.

Support for Legalizing Marijuana Increases

Marijuana is still a controlled substance according to federal law, but that hasn’t stopped several states from legalizing it. California started the trend in 1996, and in the last 17 years, 19 other states and Washington, D.C. have followed suit. Four states—Minnesota, New York, Ohio, and Pennsylvania—have legislation pending that would legalize medical marijuana. Taking it a step further, Colorado and Washington voted to legalize marijuana for adult recreational use. In both states, adults can possess up to one ounce of the drug for personal use.

Increasing support for decriminalization comes not from the belief that marijuana use is good, but that current laws and their enforcement regarding marijuana are unfair and ineffective. Some people support decriminalization, believing that revenue from taxes would allow states to fund worthwhile projects. Political support comes from a majority of Democrats and a large minority of Republicans.

Legal Marijuana Spells Business Opportunities

States see varying incomes through sales and excise taxes, ranging from hundreds of thousands of dollars to over a billion. Colorado alone is expected to make $130.1 million in taxes on sales of over $600 million worth of recreational and medical marijuana in the fiscal year 2014-2015.

Making the formerly illegal substance legal in more states is expected to more than double sales of marijuana by 2015, from $1.5 billion to $3.3 billion. Much of that money will go to growers, distributors, and operators of dispensaries. But some of that money will go to savvy entrepreneurs who see other opportunities. Consultants with business experience can make money advising people on how to take their operations from the black market into daylight. Software companies can sell marijuana-specific software. Owners of marijuana-themed websites can make money on ad revenue, or sell online education programs that teach how to grow marijuana plants. Cooks and bakers are finding innovative ways to make edible marijuana treats. These are just some of the businesses that may thrive as more states pass laws favorable to marijuana use.

The Marijuana Industry Still Faces Challenges

Although the laws are becoming more permissive, those involved in the marijuana business still have obstacles ahead. Dispensaries and growing warehouses might see zoning restricting even in municipalities where it’s legal. They may also face declining sales if taxes become too high and people turn back to black market sources to procure the drug.

And the fact remains that THC (the active ingredient in marijuana) is a Schedule I drug under the Controlled Substances Act of 1970, and manufacturing, distributing, and dispensing it is illegal. So is possession with intent to manufacture, distribute, or dispense. Last week, Attorney General Eric Holder announced big changes to federal policy regarding prosecution of marijuana, including “rethinking” mandatory minimum sentences, which appears to be in line with much of the nation’s attitudes on marijuana. An official statement on how the federal government will handle the recreational use laws in Washington and Colorado is expected soon.