Market Watch: The Business Side Of Bud


In recent years, the United States has seen a green gold surge of marijuana. With millions of people pushing to legalize marijuana, the bud industry generated nearly $10.8 billion just in 2018.

With an annual demand of $52.5 billion worth of marijuana products in the US, 10 states and Washington D.C have legalized marijuana for recreational purposes with 34 other states legalizing medical marijuana, as of March 2019.

Infographic: U.S. Marijuana Market: The Grass Is Getting Greener  | Statista You will find more infographics at Statista

But, what does this mean for the economy?

Cannabis is a huge business. It just hasn’t been a legitimate business in the eyes of law. Now that more and more states have voted to legalize marijuana, the local government enjoys a flush of cash from the bud growing industry in terms of taxes. Colorado, the first state to legalize recreational marijuana, collected $226 million in 2018 from the marijuana industry in the forms of licensing, taxing and excise taxes.

States that have marijuana declared illegal, miss out on a surplus load of cash, every tax-filing year.

Apart from providing the government with a sugar rush of money, the marijuana industry helps in reducing the unemployment rate of the country. The green industry expanded exponentially since 2016, has created almost 64,000 full-time jobs in 2018 alone. Employment rates for this industry are supposed to increase by 110 percent between 2017 to 2020, making cannabis the fastest job creator in the US.

Legalization of marijuana also gives traders an opportunity to invest in a growing industry, creating more flow of cash in the economy. Since marijuana remains illegal on a federal level, it remains a task for investors to capitalize on the emerging industry. Nearly 40 percent of all marijuana stocks in 2018 saw a drop of nearly 30 percent in their prices due to political instability in accordance to their business.

The marijuana industry didn’t turn a new leaf for everyone. The expansion and growth of this industry came at a price of another.

For years, pharmaceutical companies have been on the edge of a burning sword. Being accused of producing drugs that causes patients to become addicted to its products has proven to be fatal at times. Prescribed opioids cause 40 percent of all U.S. opioid overdose deaths. Sometimes, opioids are given to a patient as a minor pain reliever which causes patients to become addicted. Almost 22,000 people die every year in the U.S. due to overdosing from pharmaceutical drugs.

With many benefits like pain relief, reducing anxiety and depression and also not running into the risk of overdose, cannabis gave a big blow to the pharmaceutical industry. Use of medical marijuana instead of prescribed drugs as alternative treatment made a hole of $166 million in the profits of big pharmaceutical companies.

These companies poured millions of dollars to anti-drug corporations along with lobbying hard in Congress to keep marijuana, illegal. In the 17 states where medical marijuana is legal, prescription of painkillers and other drugs saw a sharp stoop as well. Doctors prescribed 1,826 fewer doses of painkillers, 265 fewer doses of antidepressants and 562 fewer doses of anti-anxiety medication each year.

Reduced prescribed drugs surprisingly help the economy. More than $165 million was saved in Medicare by the states that have legalized medical marijuana. Unable to beat the resurgence, pharma companies decided to join the race of the green. Since the Farm Bill was passed in 2018, pharmaceutical companies have ventured into a new business market that is compatible with the weed industry. The renewed Farm Bill of 2018 made hemp legal for industrial use. It allows farmers to grow hemp for non-pharmacological use or not to be used in drugs.

To move around the hurdle, pharmaceutical companies came out with CBD based dietary supplement. Currently, the FDA placed CBD in the Investigational New Drug (IND) category. But, the thriving $35 billion dietary supplement industry infused their products with CBD that stands in the grey area and started profiting off it. The CBD infused coffee that you drink, the CBD infused relaxing pills and CBD oil all are currently unregulated.

The FDA is currently planning to come up with a way to control the use of CBD in dietary products that are supposed to hit $22 billion by 2022. A meeting is decided to happen in April where Commissioner Gottlieb of the Food and Drug Administration is supposed to propose a plan to control the surging CBD use in food and dietary products.

Surprisingly, the marijuana industry also boosted up the sales of packed snacks. Oregon, Washington and Colorado saw a 4.1 percent increase in cookie sales while the sale of potato chips climbed 5.3 percent. The green surge has turned out to be green in economic aspects as well. While the industry is expected to hit revenue of $25 billion in the U.S. by 2025, political stability plays an active role in the growth of this industry.