Marijuana Economy Has Plenty Of Room To Grow
Colorado recently reported $2 million in tax revenue from recreational marijuana sales for the month of January. While the revenue potential is big, the trickle-down falls even further.
"How do you connect real smart people in other industries into this one? It's gonna be another big growth driver and we need that," industry analayst Alan Brochstein told Benzinga. "There's no 'Made In China' when it comes to marijuana."
While China can cash in big-time in its own way, the U.S. shouldn't fall behind. According to the International Business Times, Colorado estimates its total recreational and medical marijuana sales will top $600 million in the next fiscal year.
The 420 Investor said he has not paid too much attention to the revenues numbers, since it's so early in the game and many marijuana growers were not approved in time for the Jan. 1 launch. Brochstein said pent-up demand could make those numbers go higher, while constrained supply could see them drop.
"People like to watch these metrics, but there's more going on," Brochstein said. "The public companies are going to be key, not for consumption but for build out." He was referring to the building of facilities in Canada and the U.S., as well as the continued adoption of medical and recreational marijuana in the states.
This expansion would also lead to additional jobs, and with unemployment a constant issue in the U.S., this could help plenty of citizens getting back to work. A recent CannaSearch job fair in Colorado brought together 15 private companies and about 1,200 people. Brochstein heard there was a three-and-a-half-hour wait for some attendees.
"It's creating a new economy. And this was just in Colorado, which has been a pot smoking state for pretty long," said Brocshtein. "What the heck is gonna happen with Massachusetts?"
Brochstein said it would create jobs such as a "budtender," a person who assists consumers like a waiter or car salesman might. Facilities would also need people to work the sales counter and general service areas, as well as the physical growing of marijuana plants.
The journalism industry could potentially see a boost in coverage and reporters. The Denver Post added a newspaper section, and even a separate website that is run by the paper's marijuana editor.
Brochstein said he wasn't sure how many "great" jobs the industry could create, but that there is a lot of potential from the marketing side.
"There's a good chance for companies with distribution and branding to make money," said Brochstein. He said the industry at this point is very inefficient, mostly attributed to its general youth and immaturity as a business. Marijuana is also illegal under federal law, which means retail cannabis is almost strictly a cash business.
"The risk is if they're a federal bank they could lose their charter," said CNN Legal Analyst Paul Callan. "They could also be prosecuted under a variety of federal regulations that have to do with money laundering."
While the marijuana industry's economic effect may not be tangibly felt for a while, its acceptance has reaped emotional benefits for some. Brochstein recently visited Colorado to check out various facilities, stores and products. He was joined by four people from Florida and New York.
"We went into a dispensary...these guys had tears in their eyes. Everyday users -- consumers. They walked into stores and it was like it was life-changing."
This is the second in a series of pieces with comments from leading industry analyst and 420 Investor Alan Brochstein. Check back for his thoughts on marijuana investing
© 2014 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.