The success of marijuana legalization in Colorado deserves more than an “I told you so” after shares for cannabis-related companies have skyrocketed. Since the debut of recreational marijuana in Denver-area stores on Jan. 1, there has been little to complain about.
Though a sample size of two weeks is relatively small, a lot can be learned from the early success of marijuana.
Shop owners collectively said they sold about $1 million in the first 24 hours and with each sale came a new revenue source for our government. Sales at the Denver-area stores are charged a 10 percent tax, while a 15 percent excise tax can fluctuate based on the market conditions. The government said the first $40 million raised in taxes will be allotted to the school system. Studies estimate that the Colorado state government will raise $10 billion by 2018. So while investors and bankers are cashing in on the new legal market, so is the United States government.
Don’t think the growth will halt at Colorado, either. With Washington scheduled to legalize marijuana later this year, studies estimate the legal marijuana market will grow from $1.44 billion to $2.34 billion by the end of the year.
Unfortunately, all new things come with a few hiccups. Marijuana is still illegal under federal law, but last year the Department of Justice said it wouldn’t charge citizens of states where marijuana is legal, which therefore means informal legality. That being said, the fine details prevent the cannabis store owners from placing their money in the banks right now. Colorado state officials are currently working on getting the issue resolved, but in the meantime, official sales are impossible to exactly measure because of the lack of collection. Store owners had to be collectively polled in order to determine the sales estimate.
A small mishap after a large step in the right direction can be absorbed and ignored while the bigger picture reveals the success of marijuana legalization and its potential to grow. Of course part of the success is due to the initial excitement of legalization, but still, a market is being created.
MediaSwipe Inc. provides transaction processing systems to the cannabis stores and has seen its stock soar 88 percent throughout the past month while GreenGro Technologies saw share prices rise 52.3 percent. The market has the potential to be very large as more states legalize it. Opportunities will range from growers and processors to distributors and retailers. Some think the market is prepped and ready for the large cigarette companies to step in, but so far they have remained on the sidelines.
Bryan Hatchell, spokesman for the maker of Camel and Pall Mall, said, “Reynolds American has no plans to produce or market marijuana products in either of those states.”
The marijuana legalization process is young and still has a lot of room to grow and develop. There is a lack of laws and regulations surrounding it, but it will come with time. This is new territory to our politicians, but so far, so good. This progress report gives the legalization a grade of “satisfactory” until more time has elapsed and more experience has been gained.
