Investors, retailers, farmers, doctors and even delivery start-ups are cashing in on America’s profitable new medical marijuana industry.
Marijuana has long had its challenges in the US. In just a few years, the drug has gone from being banned across the US to being legalized not only for medical use, but recreational and industrial purposes too.
In 1996, California voters approved Proposition 215 – the first legislation legalizing marijuana for medicinal purposes at state level and since then, 25 US states have relaxed laws on medical cannabis use, with several – Alaska, Colorado, Oregon, Washington and the District of Columbia – allowing recreational use.
The opening of the medical marijuana industry in the States has led to a booming business, with investors, retailers, doctors and even delivery start-ups cashing in on the profitable new industry. A report released in February 2016 by ArcView Market Research found legal cannabis sales jumped 17% to $5.4bn (£4.2bn) in 2015 – and they are expected to grow by 25% to reach $6.7bn in total US sales this year.
Many different types of marijuana businesses are turning a profit in the States. It’s a long way from homemade bongs in dusty basements and plastic baggies – technology is now a major player in the cannabis industry.
In 2014, a tech entrepreneur called Keith McCarty set up a marijuana delivery service in San Francisco called Eaze ( https://www.eazeup.com/ )
Only two years since its launch, it has more than 200,000 members who use the platform to access marijuana from dispensaries on demand. It is effectively Lyft for cannabis, and with the click of a button, Eaze users have access to legal, medical marijuana in around 20 minutes or less.
“I find the intersection of cannabis and technology incredibly interesting and where I saw the biggest opportunity,” McCarty says. “Bringing technology to the industry is a necessity for the industry to responsibly get to where it needs to be.”
After McCarty sold his company Yammer – a social networking service – to Microsoft in 2012, he wanted to take “on-demand technologies” into a growing new sector. He settled on medical marijuana, to make the experience of accessing the drug “faster, safer and more convenient” for patients.
Most importantly, even though it is one of the fastest growing industries in the world, the industry is still in its infancy. “This leaves room for industry leadership and companies like Eaze to be uniquely positioned to define and shape its future,” McCarty says.
Moreover, the medical marijuana industry has given the US economy a boost, McCarty adds. “We look at any existing markets which may have started smaller – or medicinal – and have opened up – and you see countless jobs coming out of those markets and enabling people to positively and legally contribute to the economy,” he says.
“Aside from that, a regulated model where we see tax revenues flowing back into the economy further benefits local and national communities.”
California, which is already the world’s largest legal market for marijuana, has an even brighter future in the US cannabis industry. In November, the state will vote on whether to legalize recreational marijuana – which, when approved, will allow adults ages 21 and over to possess, transport and use up to an ounce of cannabis.
There are some setbacks in the industry, however. Although money made from medical marijuana firms is legal revenue, many US banks are not accepting the cash. Only 220 banks and credit unions of the more than 7,600 in the US accept cash from cannabis businesses, Bloomberg reported last October. And even less process payments for the industry.
This makes paying taxes difficult and it means cannabis companies are not eligible for the same tax deductions as other small businesses. And with so many cash-in-hand transactions, companies risk being targets for crimes such as burglaries.
This is not stopping the industry from developing, however. As well as cultivation, dispensaries and delivery services, the cannabis industry is also taking inspiration from social media giants to connect communities of users and patients. Although medical marijuana is not legal across the US – in part, over fears of crime rates and addiction – the stigma of the drug is gradually being eroded by making marijuana mainstream.
Isaac Dietrich is the co-founder and CEO at MassRoots, one of the largest and fastest-growing social platforms for cannabis users.
“We started MassRoots in 2013 to give cannabis consumers a place to connect with like-minded people, recommend the best products and express themselves in a stigma-free environment,” Dietrich says.
People use the app and website to share their cannabis content, stay connected with medical marijuana news and follow their favourite dispensaries. It now has 900,000 users – and Dietrich says he expects to reach one million soon. At the moment, they are focusing on product reviews, so users can find the best products for whatever condition they are treating.
“It [the medical cannabis industry] has created tens of thousands of jobs across the United States, contributed hundreds of millions of dollars in tax revenues, and is helping to end the unjust War on Drugs,” Dietrich says.
“Over the past three years, MassRoots has raised over $7m, facilitated hundreds of millions of user-to-user interactions, and changed App Store policies at the largest corporation in the world. And we’re just getting started,” Dietrich says. “We expect MassRoots to be at the forefront of all major policy changes and expansion occurring in the regulated cannabis industry.”
And according to Dietrich, the industry will continue to grow if other states – particularly on the East Coast – allow access to medical marijuana too. “We believe at least five states with close to 30% of the United States population will vote to regulate the production and sale of cannabis this year, accelerating the growth of the industry and hopefully forcing action at the federal level.”
Source: Alexander Price